By Bonnie McMahon Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.
When commencing debt recovery proceedings against a debtor, it is important to ensure that you are commencing proceedings in the right court. –
Collecting money under $10,000 – Debt collection proceedings to recover a debt under $10,000 should be commenced in the Small Claims Division of the Local Court of NSW.
Collecting money under $100,000 – Debt collection proceedings to recover a debt under $100,000 should be commenced in the General Division of the Local Court of NSW. However, there are circumstances where a debt up to $120,000 can be heard by the Local Court, although you will normally need the consent of the debtor.
Collecting money over $100,000 but under $750,000 – Debt collection proceeding to recover a debt over $100,000 but under $750,000 should be commenced in the District Court of NSW. However, like the Local Court, the District Court can hear matters up to $1,125,000, provided no party objects to the matter being heard in the District Court.
Collecting money over $750,000 – If you are seeking to recover a debt over $750,000 debt recovery proceedings should generally be commenced in the Supreme Court of NSW.
What happens if you commence debt recovery proceedings in the wrong court?
If you commence debt recovery proceedings in the Supreme Court and you obtain a judgment for less than $500,000, you may not be able to recover costs from the debtor, unless the Supreme Court is satisfied that commencing debt recovery proceedings in the Supreme Court was warranted.
Similarly, if you commence debt recovery proceedings in the District Court and obtain a judgment for less than $40,000, you may not be able to recover costs from the debtor, unless the District Court is satisfied that commencing debt recovery proceedings in the District Court was warranted.
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact Bonnie McMahon or a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au.
