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Debt Recovery

Commercial Law / Melbourne

Debt Recovery Lawyers in Melbourne

For businesses chasing money they are owed. We act for creditors on unpaid invoices, letters of demand, statutory demands, recovery proceedings and enforcement, and we tell you early whether the debt is worth pursuing. Recovering a debt is a commercial decision before it is a legal one.

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Debt recovery in Victoria

We act for the party that is owed

This page is for the business on the receiving end of an unpaid invoice: a customer who keeps promising, a debtor who has stopped answering, a contract performed in full and never paid for.

We act for creditors. Sole traders, SMEs, suppliers, professional firms and larger businesses recovering commercial debts from other businesses. We do not act on personal bankruptcy or consumer debt, and we do not take insolvency practitioner appointments.

The distinction that matters most at the outset is simple. Debt recovery is for a debtor who can pay and has not. If the debtor genuinely cannot pay, the problem is insolvency, the tools change completely, and speed matters even more. We handle both, and we will tell you which one you actually have.

Commercial law at Pentana Stanton

Letters of demand

Properly framed, and often enough on their own.

Statutory demands

The sharpest tool, and the easiest to misuse.

Recovery proceedings

Getting judgment, in the right court.

Enforcing a judgment

Turning the order into money.

Guarantees & security

Personal guarantees, PPSA, retention of title.

When the debtor fails

Protecting your position in an insolvency.

Before you spend anything

A judgment is a document, not a payment

Most debt recovery advice is about proving you are owed the money. That is usually the easy part. If you performed and they did not pay, you will very likely win.

The hard question is the one that comes first: is there anything there to recover? A judgment against a company with no assets is an expensive piece of paper. So the first work on any debt worth chasing is not drafting, it is assessing: what the debtor owns, what is already secured against it, who else is chasing, and whether the business is still trading properly.

Winning establishes the debt. Enforcement is what turns it into money, and they are two different exercises.

The second thing worth knowing is that you are in a queue. You are not only up against the debtor, you are up against every other creditor chasing the same shrinking pool of money, and the law is unusually explicit about timing here. A failed statutory demand only supports a winding-up application for three months (section 459C(2) of the Corporations Act). An execution on a judgment that comes back unsatisfied is itself a ground for presuming the company insolvent (section 459C(2)(b)). Moving early is not just commercially sensible, it changes what is legally available to you.

And there is a sting in the tail that very few people are told. Being paid is not always final. If the debtor is wound up, a liquidator can recover a payment you already banked as an unfair preference, reaching back six months from the relation-back day (sections 588FA and 588FE). Recovering aggressively from a business that is about to fail can mean handing the money back a year later. That is why we look at the debtor's solvency before we choose the strategy, not after.

Recoverability first

Before the first letter, the question is whether there is money or security to reach. This is a short piece of work and it decides whether the rest is worth doing.

The queue is real

A failed statutory demand supports a winding-up application for three months. An unsatisfied execution grounds a presumption of insolvency. Timing is a legal fact here, not just a commercial one.

Payment is not always final

If the debtor is wound up within six months, a liquidator can claw the payment back as an unfair preference. Worth knowing before you push.

How we work

Assess, choose the instrument, enforce

Work out what is recoverable

Company searches, security and PPSA position, property, and whether the business is still trading. If there is nothing to reach, we say so early rather than billing you to establish a debt you cannot collect.

ii.

Choose the right instrument

A well-framed letter of demand resolves a great many debts on its own. A statutory demand is faster and much sharper, but it is only safe on an undisputed debt. Proceedings are the answer where the debt is contested. Picking wrong is where costs are wasted.

iii.

Enforce, or change tack

Judgment is the halfway point. Enforcement means warrants, garnishee of debts or wages, or charges over property. And if enforcement shows the debtor cannot pay at all, the strategy shifts to protecting your position in the insolvency.

The three routes

Which instrument, and when

Most commercial debts are recovered by one of three routes. Choosing between them is most of the value, and it is a decision made on the debtor's position rather than on how strongly you feel about the debt.

The letter of demand

Still the highest-return step. A demand that sets out the debt precisely, names the consequence and gives a real deadline resolves a large share of commercial debts without proceedings. It also builds the record you will rely on later.

Terms of trade

The statutory demand

Where the debt is clear, undisputed and owed by a company, this is the fastest lever available. Twenty one days to pay, and non-compliance opens the way to a winding-up application. It is also the most misused document in commercial recovery.

Corporate insolvency

Proceedings and enforcement

Where the debt is contested or the debtor is simply refusing, the answer is a claim in the right court and then enforcement of the judgment against whatever the debtor actually has.

Commercial litigation

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Find out early whether it is worth chasing

A short initial conversation will usually tell you whether the debt is realistically recoverable and which route fits. That is a better first step than a letter written in frustration.

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The instrument most often used wrongly

Statutory demands

A statutory demand under section 459E of the Corporations Act 2001 (Cth) requires a company to pay a debt that is due and payable and at least the statutory minimum, within the statutory period, which is twenty one days unless a longer period is prescribed. Unless the debt is already a judgment debt, the demand must be supported by a verifying affidavit. If the company does not comply, it is taken to have failed to comply, and the court must presume it is insolvent on a winding-up application made within three months (sections 459F and 459C). That is real leverage.

The danger is the mirror image. The company has the same twenty one days to apply to set the demand aside, and it must both file and serve its application and affidavit inside that window (section 459G). If the court finds a genuine dispute about the debt, or an offsetting claim, it will set the demand aside (section 459H). Serving a statutory demand for a debt that is genuinely disputed is not a shortcut, it is a costs order against you and it can be treated as an abuse of process. So the first question is never how quickly you can apply pressure. It is whether any part of the debt is actually in dispute.

The clock, and the fact that it restarts

Limitation periods

In Victoria you generally have six years from when the cause of action accrued to sue on a simple contract, which for an unpaid invoice means six years from when payment fell due (Limitation of Actions Act 1958 (Vic), section 5(1)(a)). A debt owed under a deed has fifteen years (section 5(3)). Miss it and an otherwise sound debt is unrecoverable.

What is far less well known is that the clock can start again. Under section 24(3), where the person liable for a debt acknowledges the claim or makes any payment towards it, the cause of action is deemed to have accrued on the date of that acknowledgment or last payment. An acknowledgment has to be in writing and signed by the person making it (section 25(1)). In practice a debtor's signed email conceding the debt, or a single part payment, can reset a six-year period that looked nearly expired. It is a reason to keep every piece of correspondence about a debt, and a reason not to write off an old one before it has been looked at.

What our clients say

Trusted on the matters that mattered most

Absolutely brilliant firm! Sarah was handling our matter and was incredibly thorough, communicative and clear from start to finish. Pentana Stanton really stood out as integral and competent with getting my matter resolved.

Sean Faingold, Google review

Highly professional, compassionate staff with a high level of knowledge and competence. Reliable, reassuring and there when you need them. Highly recommend.

Gaynor Martyn, Google review

From the moment I contacted Pentana Stanton Lawyers, I was under significant stress and needed clarity about my case. Their prompt and professional response stood out immediately, especially compared to other firms I had reached out to.

Mohannad Ahmed, Google review

Frequently asked

Questions creditors ask first

A customer will not pay. What is the first step?

Establish two things before you spend anything: whether the debt is genuinely undisputed, and whether the debtor has the means to pay. If both hold, a properly framed letter of demand setting out the debt, the consequence and a real deadline resolves a large proportion of commercial debts without proceedings. If the debt is disputed, or the debtor looks to be in trouble, the route changes and it is worth taking advice before the first letter goes out.

How long do I have to chase an unpaid invoice?

In Victoria, generally six years from when the cause of action accrued, which for an unpaid invoice is when payment fell due, under section 5(1)(a) of the Limitation of Actions Act 1958 (Vic). A debt owed under a deed has fifteen years under section 5(3). Importantly the clock can restart: under section 24(3), if the debtor acknowledges the debt or makes any payment towards it, time runs again from that date, and under section 25(1) an acknowledgment must be in writing and signed. So an old debt is not always a dead one.

What is a statutory demand and should we use one?

It is a formal demand served on a company under section 459E of the Corporations Act 2001 (Cth) for a debt that is due and payable and at least the statutory minimum. The company has the statutory period, twenty one days unless a longer period is prescribed, to pay, secure or compound the debt. If it does not, it is taken to have failed to comply and a court must presume it is insolvent on a winding-up application made within the next three months. It is the fastest lever available against a company, but only where the debt is genuinely undisputed.

The debtor says the debt is disputed. Can we still serve a statutory demand?

You should not. Under section 459G the company can apply to set the demand aside within the same twenty one days, and under section 459H the court will set it aside if it is satisfied there is a genuine dispute about the existence or amount of the debt, or that the company has an offsetting claim. The threshold for a genuine dispute is not high. If the demand is set aside you will usually pay the company's costs, and using the process to pressure a company over a real dispute can be treated as an abuse of process. Where the debt is truly contested, the answer is a claim, not a demand.

Which court will our claim go to?

It depends on the amount. The Magistrates' Court of Victoria has a jurisdictional limit in civil proceedings of $100,000 under the Magistrates' Court Act 1989 (Vic), and it handles most commercial debt claims. Larger claims go to the County Court or the Supreme Court. The choice affects cost, timetable and the procedure involved, and it is worth getting right at the outset, because the recoverable costs and the realistic timeframe differ substantially between them.

We have judgment and they still will not pay. What now?

Judgment is the halfway point. Enforcement is a separate step and there are several routes, including a warrant to seize and sell property, attaching debts owed to the debtor such as bank accounts or wages, and charges over land. Which is worth using depends on what the debtor actually has. It is also worth knowing that if an execution on your judgment is returned wholly or partly unsatisfied, that is itself a ground for presuming the company insolvent under section 459C(2)(b), which may change your strategy.

Can we recover from the director personally?

Not simply because they are a director. A company's debts are the company's. There are two main routes to a person behind it. The first is a personal guarantee, which is common in trade credit and supply agreements and is the most direct answer, so the first thing to check is whether you took one. The second arises only if the company is wound up: where a director let the company incur the debt while it was insolvent, a creditor may pursue compensation, with the liquidator's written consent under section 588R, or in the circumstances set out in sections 588S to 588U.

The debtor has gone into liquidation and the liquidator wants our payment back. Can they do that?

Sometimes. Under section 588FA a payment can be an unfair preference if it left you better off than you would have been proving in the winding up, and under section 588FE it is voidable if it fell within six months of the relation-back day. It is a claim to be assessed, not an invoice to be paid, and there are defences. This is insolvency work rather than recovery work, and it is covered on our corporate insolvency page.

When should we hand a debt to a lawyer?

Earlier than most businesses do, and specifically before two moments: before sending anything that could be read as a threat or a statutory demand, and before the debtor's position deteriorates further. Recovery gets harder as the queue lengthens, and the tools that carry real leverage, particularly the statutory demand, cause expensive problems when used on the wrong debt. An early conversation is usually short and it is often the difference between recovering and writing off.

Last reviewed August 2026. Statutory references are current to the Corporations Act 2001 (Cth) Compilation No. 147 (in force 1 July 2026), the Limitation of Actions Act 1958 (Vic) authorised Version 112 (in force 25 February 2026) and the Magistrates' Court Act 1989 (Vic) Version 238 (in force 15 April 2026). This page is general information, not legal advice.

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Before the next letter goes out.

If a customer is not paying, the useful call is the one made before you act. Arrange a consultation and we will tell you whether the debt is realistically recoverable, which route fits, and what it is likely to cost.

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