Debt is when a sum of money is owed or due to be paid because of an express agreement; a specified sum of money that one person is obliged to pay and that another has the legal right to collect or receive.
Often debt becomes an issue when you receive a letter of demand from the person or company who says you owe them money. There could be a number of reasons why you have not paid, such as you:
- can no longer make the payment as agreed
- did not have the financial capacity to make the payment which was agreed to
- do not agree with how much you owe, or
- do not think you owe any money, or think that the debt has been paid in full.
The most important thing to remember about debt is do something even if you don’t agree with how much you owe, or think that you owe nothing.
Seek legal advice if you are not sure what steps to take to resolve issues around debt.
The usual steps in relation to debt and the Court Process are as follows:
You should try to get advice as soon as possible, but can ask for advice at any point in the above process.
IDRS would like to acknowledge that the above flowchart comes from the Legal Aid NSW ‘Are you being squeezed for Debt’ Flyer.