A creditor can take steps to recover a debt from you through the formal court process. Debts of less than $100,000 are recovered through the Magistrates Court of SA. If the debt is greater than $100,000 it can be recovered in the District Court of SA.

A creditor is required to give notice of an intention to sue. If you don’t get notice of the claim, the creditor may not get all of the additional costs added to the amount owed. Notice is given in the form of a pre-action notice of intention or a Final Notice (Form P1). This notice gives you 21 days in which to try and resolve the matter or seek mediation.

If a creditor (the ‘Applicant’) serves a pre-action notice of intention on a debtor (‘the Respondent’) it must include:

[see Uniform Civil Rules rule 332.2]

The debtor (‘the Respondent’) is then required to serve a written response on the creditor (‘the Applicant’ which includes:

[see Uniform Civil Rules rule 332.3]

If, however, the creditor serves a court issued Final Notice (Form P1) on the debtor, then the debtor is not required to respond in writing to the debtor. [r 332.3(3)]

If you do not respond the creditor can then choose to file a Claim (Form 1 Claim or Form 1S Statement of Claim uploaded with Claim for a claim under $12,000). The creditor will pay a fee to the court which is then added onto the claim amount. There are other fees that can also be added. The court does not check that the details of the claim are true. It will be up to you to accept the claim or not - for further information see Disputing a debt.

Do not ignore the claim because you may lose important rights. Read the details carefully. Ask for help if you do not understand anything in the forms or you are not sure what you can do now.

You have 28 days from the date the claim was given to you to dispute the debt or reach agreement with the creditor regarding payment. After that a judgment about the debt may be made and the creditor can take enforcement action against you through the court.

Judgment about the debt can happen without you being involved. If you do nothing judgment against you will be “a rubber stamp” – it will be automatic and you will not know it has happened (see 'Judgment'). You will then receive another notice from the court to enforce recovery of the debt. If you wish to set aside a default judgment made against you, please see Judgment and Enforcement Action.

[see Uniform Civil Rules 2020 rule 143.2]

How will I get the court forms?

The claim will be served (delivered) to you by an authorised person working for the creditor including the Sheriff and can be delivered to you almost anywhere (e.g. at home or work). You may also get the documents delivered by express post or email if you have been communicating with the creditor regularly by email. The creditor or their agent will do an affidavit saying how the claim was served on you. If there are doubts about what happened, you can ask for a copy of the affidavit.

What are my options?

Important: read the next section carefully before deciding what you will do next.

I don’t think I should have to pay

There may be legal reasons why you do not have to pay some or all of the debt. You can dispute all or part of the amount owing or you may be in financial hardship (see 'Disputing a debt' and 'Paying a debt'). You still have these options, but must act within 28 days to respond to a claim, and file a defence or cross claim (including a counter claim).

You could also take the matter to an External Dispute Resolution (EDR) Scheme if the creditor is the type of business that must be a member of an EDR scheme (see 'External dispute resolution'). It is a free service. An EDR process will stop the court action whilst the disputer is being investigated. Not all creditors are members of EDR schemes.

If there is not an EDR scheme, you can stop further action by the creditor including filing a defence or cross claim (including a counter claim) if you don’t think you owe the debt, or making an arrangement to pay. You can get legal or financial counselling advice about your options.

You can call our free Legal Help Line on 1300 366 424.

You must respond to the claim within 28 days of the date you received it. If you don’t respond, the creditor can ask for judgment to be entered on the debt.

The creditor has a number of options to enforce a judgment debt against you. More information about what happens when a judgment debt is enforced is set out below.

How do I file a defence or counterclaim?

To file a defence, you fill in a Defence (Form 51 or 51S) and take it to your nearest court within 28 days of receiving the Claim (Form 1 or 1S). You can fill in a Form 51S electronically through the CourtSA website.

Your defence must be legitimate and must be able to be proved see 'Disputing a debt'. Get free legal advice about what you should say in your defence.

Remember that if you admit the debt, but simply cannot afford to pay it, you are better off negotiating a payment arrangement. Being unable to afford to pay is not a defence to a claim, so if you are having financial difficulties consider seeing a free financial counsellor.

You risk extra legal costs if you cannot prove what you say happened, and the Court rejects your defence following a hearing. It is therefore important to get advice on whether or not your defence is valid.

If the creditor owes you money, you may be able to file a cross claim (including a counter claim) at the same time as your defence (Form 61 or Form 61S). You need to pay a filing fee to lodge a cross claim, but not to file a defence.

You need to get legal advice about whether or not you have grounds for a cross action, or if it is a defence. An example of a cross claim might be where you have not paid for building work, but the building work is defective and has caused you other loss.

What happens after I file a defence or other form to dispute the debt?

Once you have filed a Defence or other application with the court you will receive a notice telling you to attend a Directions Hearing. You must attend this hearing.

If you do not attend within 15 minutes of the appointed time judgment may be decided against you without anything else happening. [see Uniform Civil Rules rule 145.3(1) for Magistrates Court hearings] The creditor must attend the hearing or risk the case being struck out.

At the directions hearing, the Magistrate or Registrar will listen to each party briefly and work out whether there is any possibility of a resolution. The Magistrate or Registrar will encourage both parties to come to an agreement and will provide some assistance to help this happen. If the matter can’t be resolved the Magistrate or Registrar will explain the next steps.

I owe the debt – what can I do now?

You can pay in full

Payment in full is an option but remember that the creditor will probably also want you to pay their legal costs. The court process stops if you pay in full.

You can still negotiate with the creditor about making payments

You can still make payments or continue to negotiate directly with the creditor even after you receive the Claim (Form 1 or Form 1S) from the court. If you wish to dispute the debt, get some legal advice. Depending on the nature of the debt, you may be able use an external dispute resolution scheme (see 'Disputing a debt' and 'External dispute resolution')

What if I ignore the Claim (Form 1 or Form 1S) and do nothing?

The court will assume the creditor’s claim is correct. The creditor will ask the court to enter default judgment on the debt. This means the creditor can take enforcement action against you to recover the debt. The original amount claimed, plus costs, plus interest in some cases, becomes the amount you owe.

Will I go to prison?

You cannot be imprisoned for failing to pay your debts. However, the court can imprison you for up to 40 days for disobeying its orders, such as refusing to attend court or refusing to pay if you have the money. Imprisonment for breaching a court order is a penalty for showing contempt to the court and is not an alternative to payment of a debt. However, being imprisoned is rare and you will be given plenty of chances to rectify the problem. You will not be imprisoned if the reason for not being able to pay is financial hardship.