How To Go About The Small Claims Procedure (NSW)


As a business person, every coin counts. That’s why it makes sense to pursue all your debtors to pay. Debt collection management is a very challenging activity for most businesses. It not only takes time off your core business but also costs money. 

Because it steals precious time, most businesses choose to hire a debt collection agency to ease the burden. The debt collection process has its clearcut procedures that every business and debt collection agency in New South Wales must follow. 

In the case of a small claims procedure too, there are clearly defined ways to go about it. The rules that govern small claims touch on several factors, including the amount of money owed. 

If you want to recoup an amount of money owed to you through a small claims procedure in NSW, the first rule is that the amount must be less than $10,000. As you institute a claim, ensure that you’ve got an entitlement under the Australian workplace laws. 

Another crucial factor to consider is the period that has elapsed since your entitlement became due. 

How to Go About The Procedure

If you want to institute a small claims procedure, you must get a brief outline of the claims procedure to help you follow everything step-by-step. The first step, usually, it to fill a small claims statement form and file it at a local court. The court will require that the debtor be served with the claim form to alert them of the development and inform them of their responsibilities relating to the procedure.

Before taking the court process, you must first weigh its importance to your business and whether it’s worth your penny. Why is this important? The process costs time and money and should, therefore, be an option only when the other not-so-costly options have failed.

Response to a Letter of Demand

In the small claims procedure, the debtor has a right to respond. A debtor can respond by clearing the debt, proving that they don’t owe you any money, or request for a review of the terms of payment. If you’re not satisfied with the debtor’s response or the debtor fails to respond, the case will continue towards the court’s verdict. 

Where the response is unsatisfactory, you have the option to write off the debt. For example, if the debtor owes you $2,500, you may decide to let it go, considering the time and cost that’d be involved to pursue it.

The beauty of a small claims procedure is that it’s pretty much informal, allowing you and your debtor to negotiate a settlement. If the two of you fail to agree, that’s when you’ll have to await the court’s decision. 

The final judgment is legally enforceable and binding on the two parties. 

Before going to court in pursuit of a debt through the small claims procedure, there are some things to consider besides time, cost, and your entitlement.

Debtor’s Financial Status

If the debtor isn’t in a position to pay, there is nothing much the court can do. In some cases, you realise that there isn’t even an option to issue garnishee order. Therefore, you should first consider the financial status of the debtor to be sure that if the outcome of the small claims procedure is in your favour, the debtor will be able to pay you. 

Out of Court Settlements Have Failed 

Before you or your debt recovery agency takes the small claims procedure in debt recovery, explore ways through which you can receive the debt amount through an out of court settlement. It’s crucial to do this because it’s one of the things that the court will first examine. 

Facts About The Debt

A small claims procedure relies on facts and not hearsays. You must, therefore, choose that path only if you have all the facts relating to the debt in your possession. Your debtor might deny your claims and the onus thrown back to you to prove your claims using verifiable facts. 

Before you reach out to the courts in pursuit of debt, therefore, ensure that you have all your facts right. Whether it’s documents, financial transactions, or any other testimonies that’d be admissible, ensure you put them together to present before the court if the need arises.


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