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Debt

A debt is money that you owe to another person or business.

If you owe the money you are the ‘debtor’. The person or business you owe money to is the ‘creditor’. Both debtors and creditors have legal rights.

If you can’t repay your debts in the way you have agreed to with the creditor, it is important to get advice and take action as soon as possible.

Depending on when you act, you may still have choices. You are more likely to stay in control of your situation if you act quickly. The longer you leave it the more likely it is that your creditors will take control of your affairs.

A free financial counselling service can help you make a plan and deal with your creditors. See ‘Getting help with financial problems’ (link below).

If you do not pay your debts, ‘secured’ creditors can take back and sell any assets that are specified in your contract with them. These assets are sometimes called ‘security’.

If there are no assets specified in the contract as security, or if selling the assets doesn’t repay the whole amount owing, an ‘unsecured’ creditor has to take court proceedings against you (sue you) to recover the debt.

The 'Debt flowchart' (link below) shows the stages and outcomes of being in debt and debt recovery.

More information

Debt flowchart

Debtors' rights & options

Getting help with financial problems

Related publications

Falling on hard times: a guide for people in debt

Weighing it up: a consumer guide to bankruptcy

How we can help

Call Victoria Legal Aid’s (VLA) Legal Information Service for free information over the phone about the law and how we can help you with your legal problem. You can speak to a legal information officer in English or ask for an interpreter. Phone (03) 9269 0120 or 1800 677 402 (country callers), Monday to Friday from 8.45 am to 5.15 pm.
VLA’s other free legal services include:

  • advice at VLA offices and other locations across Victoria
  • lawyers who are on ‘duty’ to help at many courts and tribunals.

For some matters we can provide you with a lawyer to help you run your case.

To find out more about any of our legal services see What we do.

Who else can help?

See Getting help with financial problems for details of free financial counselling services in your area and other organisations that can help you.