Debt is money that is owed to another person or organisation. Often, the money will be owed under an agreed contract, whether written or spoken.
A person or organisation in debt is known as a ‘debtor’. A person or organisation that is owed money is known as a ‘creditor’.
Both debtors and creditors have legal rights. There may be reasons why a debtor does not have to pay a creditor in full.
If a debtor cannot repay a debt by an its due date, it is important to seek advice and take action as soon as possible. There are free financial counselling services that can help in dealing with debt. Unpaid debt may result in a creditor seizing assets or taking a debtor to court in order to recover costs.
Disclaimer: The material in this print-out relates to the law as it applies in the state of Victoria. It is intended as a general guide only. Readers should not act on the basis of any material in this print-out without getting legal advice about their own particular situations. Victoria Legal Aid disclaims any liability howsoever caused to any person in respect of any action taken in reliance on the contents of the publication.
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Reviewed 07 April 2022