The appropriate strategy depends not only on whether the debt is legally recoverable, but also whether enforcement is commercially worthwhile.
For many ordinary contractual debts, s 5 of the Limitation of Actions Act 1958 (Vic) imposes a limitation period of six years from the date the cause of action accrued.
The precise starting date depends on the circumstances. For example, an unpaid invoice, loan agreement or debt payable on demand may involve different questions as to when the cause of action arose.
Limitation issues should therefore be checked before delaying recovery proceedings.
Usually, yes.
A letter of demand should identify the basis of the debt, the amount outstanding, relevant invoices or agreements, a deadline for payment and what may happen if payment is not received.
A properly prepared demand may also clarify whether the debt is genuinely disputed before litigation costs are incurred.
Victorian civil litigation is also subject to the Civil Procedure Act 2010 (Vic) and its overarching obligations aimed at facilitating the just, efficient, timely and cost-effective resolution of disputes.
The Magistrates’ Court of Victoria can generally hear civil disputes involving amounts of up to $100,000, including debts and other monetary claims. Magistrates’ Court of Victoria
Higher-value or more complex commercial disputes may instead be commenced in the County Court or Supreme Court of Victoria.
After a Complaint is served, a defendant generally has 21 days to file a defence in the Magistrates’ Court.
If the debtor fails to pay and does not file a defence, the creditor may be able to seek default judgment without a trial. Magistrates’ Court of Victoria
This is one reason why ignoring Court documents can have serious consequences.
The proceeding becomes defended.
The Court may require pleadings, exchange of documents, evidence and attendance at a pre-hearing conference, mediation or trial.
The dispute may concern issues such as whether a contract existed, whether goods or services were properly supplied, whether payment was already made, set-off, misleading conduct or whether the amount claimed was properly calculated.
Many debt disputes resolve before trial once the legal and evidentiary positions are clear.
A judgment does not automatically put money into the creditor’s bank account.
Further enforcement may be required under Victorian Court procedures and the Judgment Debt Recovery Act 1984 (Vic).
The importance of acting promptly is illustrated by Commonwealth Bank of Australia v Saggese [2018] VSC 40, where the Supreme Court considered delayed enforcement of an old Magistrates’ Court judgment, including the operation of the 15-year limitation period for actions upon judgments under s 5(4) of the Limitation of Actions Act and procedural requirements affecting enforcement after substantial delay. CaseChat
Last updated: September 2026
Jurisdiction: Victoria, Australia
Disclaimer: This article provides general information only and does not constitute legal, financial or tax advice. The law may change and its application depends on individual circumstances. You should obtain professional advice before acting on the information contained in this article.