Debt recovery in Queensland: from letter of demand to enforcement

Q: How long do I have to sue for an unpaid debt in Queensland?

Generally six years from when the cause of action arose (Limitation of Actions Act 1974 (Qld) s 10(1)). For an invoice, that is usually the due date. A written acknowledgment or part payment can restart the period (section 35). A judgment can be enforced without leave for six years, and sued on within 12 years.

Recovering a commercial debt in Queensland usually runs from a letter of demand to a court claim, judgment and enforcement. The court depends on the amount: QCAT to $25,000, the Magistrates Court to $150,000, the District Court to $750,000, then the Supreme Court. For a company debtor, a statutory demand can be faster; for an individual, a bankruptcy notice follows judgment. Always weigh the debtor’s capacity to pay against the cost of pursuit.

Send us an enquiry Email us

Key points

A dated letter of demand is the usual first step and often produces payment.
A defendant has 28 days after service to defend a claim. Otherwise, you can seek default judgment.
A judgment can be enforced without leave for six years, including by seizure and sale or redirection of debts.
For a company debtor, a statutory demand for $4,000 or more, then winding up, may be faster than suing.
Check security, guarantees and solvency before spending money. Costs orders never cover everything.

General guidance only – not legal advice. Please obtain independent legal advice before relying on any of this information. The law is stated as at September 2026.

How do you start recovering a debt?

Start with the contract. Confirm the credit terms and due date, and look for clauses on interest, recovery costs, guarantees and retention of title. Check the Personal Property Securities Register (PPSR).

Then confirm who owes the money. ASIC and ABN searches identify the exact entity, its directors, and whether it is in external administration or deregistered. Watch for solvency signals such as insolvency notices and other financiers’ PPSR registrations.

A letter of demand should identify the contract and invoices, state the amount with interest, set a deadline and say what follows. Do not threaten steps you will not take.

Interest runs at the contract rate, or otherwise as the court awards under section 58 of the Civil Proceedings Act 2011 (Qld).

Match the step to the debt and the debtor. A demand costs little and resolves many matters. A judgment against a debtor with no assets is worth little, so negotiation backed by a guarantee or security is often the better answer.

Which court hears the claim, and how does it proceed?

QCAT: minor debt claims for fixed or agreed sums up to $25,000, excluding interest.
Magistrates Court: up to $150,000 (Magistrates Courts Act 1921 (Qld) s 4).
District Court: up to $750,000 (District Court of Queensland Act 1967 (Qld) s 68). Legislation introduced in 2026 would lift this to $1.5 million from 1 January 2027.
Supreme Court of Queensland: no upper limit.

Winding-up applications go to the Federal Court or the Supreme Court. Bankruptcy proceedings go to the Federal Circuit and Family Court of Australia or the Federal Court.

The Uniform Civil Procedure Rules 1999 (Qld) govern the courts. You file and serve a claim and statement of claim. The defendant has 28 days to file a notice of intention to defend and a defence (rule 137). If it does not, the registrar can give default judgment for the debt, interest and costs (chapter 9, part 1).

If a defence has no substance, apply for summary judgment (rule 292). The test is no real prospect of success and no need for a trial: Deputy Commissioner of Taxation v Salcedo [2005] QCA 227.

Costs usually follow the event (rule 681) on the standard basis (rule 702), which recovers only part of your fees.

How do you enforce a judgment in Queensland?

Enforcement is governed by chapter 19 of the UCPR. You may enforce without leave within six years after the order (rule 799), and with leave after that.

Enforcement hearing (rules 803 to 816): the debtor files a statement of financial position and can be examined on oath. Non-attendance can lead to arrest.
Seizure and sale (rules 828 to 838): a bailiff seizes and sells the debtor’s property, including land.
Redirection of debts (rules 839 to 854): a bank balance or receivable owed to the debtor is paid to you.
Redirection of earnings (rules 855 to 867): the employer pays part of the debtor’s wages to you.
Instalment orders (rules 868 to 872) and charging orders over shares (rules 874 to 880), the latter through the Supreme Court.

What if the debtor is a company, a guarantor or already insolvent?

Companies. For an undisputed debt of at least $4,000, a creditor’s statutory demand gives the company 21 days to pay. Non-compliance raises a presumption of insolvency that supports a winding-up application. Never use a demand for a genuinely disputed debt.

Individuals and guarantors. A final judgment of at least $10,000, no more than six years old, supports a bankruptcy notice (Bankruptcy Act 1966 (Cth) s 41). The debtor has 21 days to comply; failure is an act of bankruptcy supporting a creditor’s petition. Where a director has personally guaranteed the debt, demand on the guarantor and consider suing both together.

Retention of title. These clauses are security interests under the Personal Property Securities Act 2009 (Cth). Unregistered, they generally vest in the customer on administration or liquidation (section 267).

Debtors in external administration. Once a liquidator is appointed, suing the company needs the court’s leave (Corporations Act 2001 (Cth) ss 471B and 500(2)). Lodge a proof of debt and look to guarantors or security (see our insolvency practice). Late payments received in the six months before liquidation may be clawed back as an unfair preference.

What should you do if a customer stops paying?

Stop extending credit and review the contract, invoices, guarantees and security.
Confirm the debtor’s identity and run ASIC and PPSR searches.
Send a written demand with a firm deadline and keep proof of service.
Talk to the debtor, but document and secure any arrangement.
Choose the tool: court claim, statutory demand or a call on the guarantee.
Get advice before accepting late payments from a company that may be insolvent.

How Taylor David can help

We act for businesses, financiers and insolvency practitioners in Brisbane and across Queensland. We can:

review contracts, guarantees and security, and recommend the best path
prepare letters of demand and statutory demands
run claims in QCAT and the Magistrates, District and Supreme Courts
obtain default or summary judgment and enforce it
run winding-up applications and bankruptcy proceedings
negotiate settlements and secured payment arrangements.

This work sits within our litigation and insolvency practices.

Frequently asked questions

Questions we are often asked

How long do I have to sue for an unpaid debt in Queensland?

Generally six years from when the cause of action arose (Limitation of Actions Act 1974 (Qld) s 10(1)). For an invoice, that is usually the due date. A written acknowledgment or part payment can restart the period (section 35). A judgment can be enforced without leave for six years, and sued on within 12 years.

Can I recover my legal costs from the debtor?

Partly. If you succeed in court, the debtor is usually ordered to pay your costs on the standard basis. That covers only a portion of your fees, and Magistrates Court costs are limited by scale. A clause requiring the customer to pay recovery costs helps. In QCAT debt claims, recovery is generally limited to filing and service fees.

Can I charge interest on an unpaid invoice?

Yes, if your terms provide for it, at the rate they state. If not, the court may award interest under section 58 of the Civil Proceedings Act 2011 (Qld). For default judgments, the registrar applies 4% above the Reserve Bank cash rate. After judgment, interest accrues at 6% above the cash rate until paid.

What if the debtor company is deregistered or in liquidation?

A deregistered company no longer exists and cannot be sued. A person aggrieved by the deregistration can apply to reinstate it (Corporations Act 2001 (Cth) s 601AH). If the company is in liquidation, you need the court’s leave to sue it. The practical steps are usually a proof of debt, then guarantors or security.

Should I use a debt collector or a lawyer?

Debt collectors suit high volumes of small, undisputed debts and usually charge commission. They cannot start court proceedings or give legal advice. A lawyer makes sense where the debt is significant, disputed, secured or guaranteed, or where court action, a statutory demand or bankruptcy is likely. Lawyers also advise on preference risk.

General guidance only – not legal advice. Please obtain independent legal advice before relying on any of this information. The law is stated as at September 2026.

Related expertise

Litigation →Insolvency →Reconstruction & Turnaround →

The earlier we talk, the more options you have.

To discuss your situation in confidence, call Scott D. Taylor on +61 7 3229 9800, email [email protected] or send us an enquiry online.

Send an enquiry Email us