If you have unpaid invoices, loans that are not being repaid or rent arrears, selling the debt is one of the quickest ways to recover part of your money without spending years chasing it. In this guide we explain, step by step, how debt sales work in Australia.
What does selling a debt mean?
Selling a debt means assigning your right to collect it to a third party (the buyer or investor) in exchange for an agreed price, always below the face value of the debt. Legally it is done through an assignment of debt, recognised under Australian law — a legal (statutory) assignment follows the assignment-of-debt provisions of the relevant state property law (for example section 12 of the Conveyancing Act 1919 in NSW).
The original creditor receives immediate payment from the buyer and stops owning the receivable. From that moment, the new owner is the one entitled to collect the debt from the debtor.
Step 1: check that your debt can be sold
- You must be the legitimate owner of the receivable.
- The debt must be due and payable: you cannot sell debts that are still within their payment terms.
- It must be a provable money debt: invoices, contracts, county court judgments, acknowledgements of debt, etc.
Step 2: gather your documentation
The more documentation you have, the more attractive your debt will be to buyers: invoices and delivery notes, signed contracts, letters before action, emails, dishonoured cheques, and of course a court judgment (default judgment) if you have already been to court.
Step 3: set a realistic sale price
The price depends on the age of the debt, the debtor's solvency and the available paperwork. As a general rule, we recommend a minimum discount of 20% on the face value so that the deal is worthwhile for investors. Older or harder-to-collect debts may need bigger discounts.
Step 4: list your debt where the buyers are
On debtalia.com/au you can list your debt or portfolio in less than 5 minutes, from just AU$49 as a one-off payment and with no commission on the sale. Your listing becomes visible to investors, law firms and funds looking to buy debt every day.
Step 5: negotiate and sign the assignment
When an investor is interested, they contact you directly by email. Once the price is agreed, a deed of assignment is signed and the buyer pays you the agreed amount. The debtor must then be notified in writing that the debt has been assigned, so they know to pay the new creditor.
How long does it take?
Listing is immediate. How quickly you receive offers depends on how attractive the price is and the type of debt: well-documented debts with attractive discounts usually generate interest within days or weeks.
Conclusion
Selling a debt is a legal, safe and quick process that gives you immediate liquidity without the costs and uncertainty of court action. If you are owed money, don't write it off: put it up for sale.
