Chapter 17: Sample templates and letters

You can use the following sample letters as examples of the type of letter you might write in each situation. You should insert your details and replace or delete any information that is not relevant to your situation. Always date your letters and keep a copy of the letter you send. We have also included case studies to give context to the samples provided.

You can also find useful samples and resources relating to debt on the Legal Aid NSW website.

17.1 Sample budget

Tracking your income and spending habits

You can find many simple budget templates online. For example, the MoneySmart website has a budget planner that you can complete online (or download as an Excel spreadsheet). Their template will even do the maths for you, so you can quickly figure out your budget surplus/loss. Preparing a personal (or household) budget can help you plan your spending, and understand how much money you have available to pay off debt(s). Having a budget can also help in your negotiations with creditors, as they will be able to see what you can/can't afford. If you need to negotiate a repayment or instalment plan with a creditor, you should be sure you can afford the instalment amounts proposed before you agree. If you agree to a plan you can't afford and break it, a creditor may take further action against you. If you are realistic about what you can afford to pay, you are more likely to be able to stick to your repayment schedule and avoid further adverse action and costs.

Sample budget

Sample budgetMonthly amounts
other income (rent, dividends, government payments etc.)$
Total income$
council rates$
car/travel expenses$
utilities (electricity, gas, water etc.)$
entertainment (eating out, movies, subscriptions etc).$
clothes/personal items$
regular debt repayments (credit cards, other debt repayments etc.)$
other regular expenses (e.g. child-related, medical, personal services, pet-related, regular savings etc.)$
misc. expenses$
Total expenses$
*Net position (income - expenses)$

Managing your spending 

*Your net position indicates how much money you have to spare each month. You should use this figure as a starting point when negotiating with creditors. If your spending exceeds your income, you may need to rethink your spending habits (or your income). You should always prioritise necessary spending/ debts (like mortgage repayments, rent, utilities and groceries) and think about cutting back on less essential things (like entertainment, clothing etc.) 

Assets and liabilities 

If you have significant debts and are facing court action or bankruptcy, you should also think about your asset pool. That is, what is the total worth of all your assets, minus all your liabilities? Do you have property/assets you could sell to pay off your debts and stop creditors taking adverse actions against you? In some cases, it might be sensible to sell your car/boat/ caravan (etc.) and pay off a debt, to avoid the creditor obtaining a judgment debt against you (which will ruin your credit rating and could put you at risk of bankruptcy). 

17.2 Response to a letter of demand 

It’s essential to respond to a letter of demand promptly and to keep lines of communication with the creditor open. Good communication is vital whether or not you agree about the debt. Putting your responses in writing is sensible, so you have a permanent record of your communications. Your response to a letter of demand should clearly state your position regarding the debt and should be formal. For example, you may acknowledge the debt but ask for more time to pay or to enter an instalment plan. You could offer to settle for a reduced amount just for the sake of settling the matter and avoiding court action. You could acknowledge a part of the debt but deny other aspects and offer to pay the part you agree with. You might also completely deny the debt (for example, where there has been an administrative or identity error). Whatever the case, be clear and truthful in your communications with the creditor and always remember that parties may use correspondence as evidence (if the matter has to go to court). If you’re making an offer to settle for a set amount, but don’t want admissions used against you in later court proceedings, you should write ‘without prejudice’, on your letter. 

Case study 1 — Letter of demand issued in error

Jeremy engaged Gates Galore to install a remote front gate, two new remote garage doors and a matching side gate at his home. The total amount payable for materials and labour was $15,450. When their employee came to deliver and install the items, Jeremy realised that the front gate was not the one he had ordered, and he was disappointed. The employee in attendance advised him that they had discontinued the gate he ordered and that he would give Jeremy a $1500 discount on the contracted price if he was okay with him installing the similar gate they had in stock. Jeremy was happy with this arrangement, given the discount, so the items were all installed and Jeremy made payment of $13,950 to Gates Galore. Six months later Jeremy received a letter of demand for $1500. He wrote the following letter to Gates Galore in response.

15 August 2021 
Gates Galore 
PO Box 4112 

Dear Accounts Team, 

Invoice: #12345 
I refer to your recent letter of demand regarding the above invoice. 

Please be advised that it is my understanding that I have paid my account in full. 

When your employee, Fred, attended my premises to deliver materials and perform the contracted work, he acknowledged that your company did not have the front gate I ordered in stock. He offered to install another gate type with a discount of $1500 to the contract price. I agreed to this arrangement, and I also recall that Fred called his boss (while onsite), to confirm the variation to the contract price. I made a full payment of $13,950 on the same day. Accordingly, I believe I do not owe any more money. 

My mobile number is 0435 789 654, should you wish to discuss this further. 

Yours sincerely, 
Jeremy B 


Gates Galore later contacted Jeremy and apologised for the error. Their accounts department had not been advised of the contract variation and had issued the letter of demand in error.

Case study 2 — Unable to pay an agreed debt

Melissa and Zac were involved in a car accident. Melissa only has third-party insurance, which will not cover her damage, but Zac is uninsured. Zac was responsible for the accident as he sped through a red light and hit Melissa’s turning vehicle. They exchanged details at the scene, and Zac acknowledged his mistake. Melissa got three quotes for repairs, with the cheapest being $3450. She sent Zac a letter of demand seeking payment of $3450 within 14 days. Zac has recently had his hours at work reduced, and he has no savings, but he thinks he could pay the amount over a few months. 

13 May 2021 
By email: 

Dear Melissa G, 


Motor Vehicle Accident on 15 March 2021 

I confirm receipt of your letter of demand. I am willing to pay $3450 for the damage caused to your vehicle, but I currently have no savings, and I cannot pay within the 14 days requested. I could, however, pay you instalments of $500 per fortnight, until the debt is paid. If you agree I would like to prepare a simple deed of settlement and I could make the first payment within 14 days. I look forward to hearing from you. 

Kind regards, 
Zac C 


Melissa agrees to Zac’s proposal, they both sign a simple deed of settlement and Zac makes full payment to Melissa over a few months.

17.3 Request for further and better particulars 

A request for further and better particulars is simply a request for further information about the alleged debt. It’s your opportunity to get a clear picture of what the creditor says you owe and why you owe it. So, it is essential to ask for more information if you’re unsure about a debt, disagree with the amount owed, or want evidence of alleged costs. You can request ‘further and better particulars’ before court action has commenced, or after being served with a statement of claim. Being properly informed will help you consider your options and decide on the best way to deal with a claim. 

Case Study 3 — Request for further and better particulars after receiving a statement of claim 

Natalia receives a statement of claim from Fernando, claiming she owes him $4450 for damage to his front fence. One year previously, Natalia accidentally reversed into Fernando’s front fence, when she was visiting her friend (Fernando’s neighbour). Her car dislodged a few bricks, and she apologised to Fernando’s wife at the time. In his statement of claim, Fernando claimed liquidated damages of $4450, but it’s not clear how he calculated this amount. Natalia agrees that she caused some damage but honestly believes the damage could be fixed much more cheaply. Natalia is not insured for property damage. 

28 October 2021 
Fernando Curro 
12 Blake Avenue 

Dear Mr Curro 

Statement of claim — relating to fence damage 
Curro v Barker (Court File No: 5871 of 2020) 

I refer to your statement of claim filed on 15 October 2021 and served on me on 20 October 2021. Could you please provide the following further and better particulars:

At point 4 of your statement of claim, you claim $4450 for the cost of fence repair. Could you please provide me with at least two quotes for the cost of the fence repair and full details of the alleged damage caused? 

As I am considering defending this matter, I ask you not to enter judgment until I have had the chance to look at the information requested. In any event, please give me at least 14 days’ notice of your intention to apply default judgment. 

Yours faithfully, 
Natalia Barker 


17.4 Offer of settlement 

Parties can make an offer of settlement at any time (even while proceedings are on foot). An offer of settlement is essentially a compromise offer, which will resolve the issues in dispute on a full and final basis. If you agree to the debt but can’t pay, you could make an offer of settlement to pay a smaller amount, in a lump sum, in full and final payment of the debt. Even if you don’t agree to the debt, you could simply decide to make a commercially minded decision to cut your losses and pay a set amount, without admissions, to avoid court action and more wasted time and resources. 

In other cases, you might only agree to part of the debt and make an offer to pay this part. Offers of settlement should be reasonable and achievable. Don’t make an offer of settlement that you can’t afford to pay, because the default of your settlement agreement could lead the creditor to take further action against you. If an offer of settlement is accepted, you should prepare a deed of settlement (see sample at 17.5) or enter consent orders (if your matter is already in court (see 17.14 below). It is sensible to include the term ‘WITHOUT PREJUDICE’ in any offers of settlement made. ‘Without prejudice’ means that the other party cannot use the content of the offer as evidence of admission in any court proceedings. 

Case study 3 — Fernando and Natalia (continued from 17.3) 

Fernando sent Natalia two quotes and a description of the damage caused. One quote of $1200 was for re-laying the brickwork that had been dislodged/loosened. The other quote of $4450 was for replacement of the entire fence. Fernando claimed the whole fence had started to ‘lean, due to the impact of Natalia’s car’. Given the fence and home was about 50 years old, and already subject to significant wear and tear, Natalia thought Fernando’s position was unreasonable. She decided to make an offer of settlement, to avoid having a judgment entered against her. 

11 November 2021 
Fernando Curro 
12 Blake Avenue 

‘Without Prejudice’ 

Dear Mr Curro 

Statement of claim — relating to fence damage 
Curro v Barker (Court File No: 5871 of 2020) 

I refer to the above matter and the quotes and information recently provided. While I acknowledge reversing into your fence and causing some damage to the brickwork, I believe your current claim is unreasonable. The quotes you’ve provided indicate that the dislodged bricks can be repaired for $1200. I do not believe it is reasonable for you to claim for the replacement of the entire fence, especially given that your fence appears to be about 50 years old anyway. I am willing to offer you payment of $1400, in full and final settlement of this matter, to cover the costs of repair and your court costs. If you agree to this offer, I propose that we enter a deed of settlement and that the proceedings be discontinued. I will make payment immediately upon your signed agreement. 

Yours faithfully, 
Natalia Barker 


Fernando decides to accept Natalia’s offer, and they sign a deed of settlement and Natalia makes payment on the spot. Fernando discontinues the court matter, and Natalia has no judgment entered against her. 

17.5 Deed of settlement 

A deed of settlement is simply a document which captures the terms of your settlement agreement. While lawyers may draft complicated (and unnecessarily lengthy) deeds of settlement, the key components are: 

  • Full names and details of the parties 
  • Background information (often called ‘recitals’) 
  • Terms of the agreement (Who will pay what and when? Is the agreement confidential? Is the agreement made without admission of liability? What about related costs? Does the agreement represent full and final settlement of all issues in dispute? Will court action be discontinued? etc.) 
  • Signatures and dates — signatures (of all parties) should be witnessed by an independent adult witness. 

You can use a deed of settlement as evidence of your agreement (if complications arise in the future). If the creditor or their solicitor has drafted the deed of settlement, be sure to read it carefully (and get advice if necessary) BEFORE signing. 

The following sample deed is based on the Fernando and Natalia case study (continued from 17.4).

This deed is made on 15 November 2021. 

Between Fernando Curro of 12 Blake Avenue, MENAI NSW 2234 
Natalia Barker of 131 Norma Street, MENAI NSW 2234 


  1. A dispute has arisen between the parties relating to damages caused to Mr Curro’s front fence by Ms Barker’s vehicle on 14 March 2020. 
  2. Mr Curro has filed a statement of claim in the Local Court of NSW, seeking liquidated damages, regarding this property damage. 
  3. The parties have agreed to settle the dispute, fully, as set out below. 

Terms of settlement 

  1. 1Without an admission of liability, Ms Barker will pay Mr Curro $1400 for the damage which occurred to Mr Curro’s fence. 
  2. Mr Curro accepts the settlement sum of $1400 from Ms Barker, as full and final satisfaction of the dispute, including any claim for related legal fees and disbursements. 
  3. Ms Barker will pay Mr Curro the agreed amount of $1400, immediately upon the parties signing this deed. 

Signed, sealed and delivered by: in the presence of: 

[Signature] [Witness Signature] 
Fernando Curro [Witness Full Name] 
[Witness Address] 

Signed, sealed and delivered by: in the presence of

[Signature] [Witness Signature] 
Natalia Barker [Witness Full Name] 
[Witness Address] 

Note: Another option would be entering your terms of settlement as a consent judgment (see example at 17.14). 

17.6 Letter confirming repayment arrangement 

If you’ve made an offer to repay a creditor by instalments, and they’ve accepted, it is sensible to put your agreement in writing. This document need not be complicated but should be signed/dated and include party details, background information and repayment plan. 

Case study 4 — PC Plumbing and Kay Squire 

Kay contracted with PC plumbing to do plumbing work for her bathroom renovation. The initial quote was for $3500, but complications arose during the renovation, and additional work was required, which Kay agreed to. After the work was complete, PC Plumbing sent a final invoice for $5500. Kay did not dispute the bill, as the additional work was necessary. Unfortunately, Kay lost her job the same week as she received the invoice and was having difficulty finding alternative employment. Kay had to use all her savings to pay the other contractors who had billed her earlier, and she did not have enough to pay the plumbing bill. Kay’s partner works but also has no savings left. Kay and her partner prepared a household budget, and they calculated that they should be able to pay off the entire debt by five monthly instalments of $1100. Kay approached the plumber with this proposal, and he was happy to agree but wanted a written document from Kay confirming the repayment plan. 

22 September 2021 
Attention: Brett Spout 
PC Plumbing 
PO Box 121 

Dear PC Plumbing, 

Invoice: #987654 

I refer to the above invoice and our conversation earlier today, during which you agreed to my proposal to pay this invoice by instalment (on the basis that I am currently experiencing financial hardship). 

I confirm that I will make monthly instalments of $1100, to your nominated bank account, commencing on 30 September 2021 and continuing on the 30th of each month after that (until the debt is paid in full). Accordingly, I anticipate that your account will be paid in full by 30 January 2022. 

If I regain employment and have the capacity to pay my account earlier, I will. 

Thank you again for agreeing to this payment proposal. 

My mobile number is 0425 876 465, should you wish to discuss this further. 

Yours sincerely, 
Kay Squire 


17.7 Letter requesting debt-release/write off 

Sometimes, there is simply no way you can repay debt, and you may need to ask for debt waiver or write off. Debt write off is where the creditor agrees not to pursue the debt, either for a set time or indefinitely, but retains the right to revive the debt in the future. For example, a creditor may agree to write off a debt when you have no income, assets or capacity to pay (because chasing you would be fruitless). Still, they may later choose to revive the debt if you come into a big inheritance or enter gainful employment. Debt waiver is where the creditor agrees to cancel your debt permanently. For example, if you have a permanent disability or terminal illness. If seeking debt write off or waiver, it’s a good idea to provide as much evidence of your financial situation as possible — that is, to prove that you really can’t pay the debt. 

Case study 5 — debt collection for an insurer

Kim is on the age pension, and her health is not the best. Many years ago, Kim was ‘at fault’ in a motor vehicle accident and caused significant damage to another vehicle. Kim was not insured, but the other driver was. The other driver’s insurer covered their damage but later tried to recover the debt off Kim. Kim couldn’t pay at the time and ignored the correspondence. Recently, Debt Collection Co has contacted Kim to try to recover this old debt. Kim simply cannot afford to pay anything to anyone and seeks debt waiver or write off, based on financial hardship.

17 May 2021 
Debt Collection Co 
PO Box 6589, 

Dear Debt Collection Co, 

Debt reference: #9576 (motor vehicle damages debt of $35,000) 

I refer to your recent correspondence regarding the alleged debt above. 

Please be advised that I simply cannot pay any debts. I am 69 years of age and currently on the age pension, which is my only source of income. I do not own any assets of value, and I live in rented premises. After I pay for my rent, groceries, utilities and medical expenses, I have about $10 per fortnight left over. 

I have enclosed evidence of my Centrelink income, bank and rental statements, to prove my current financial circumstances. I have also enclosed a budget that summarises my weekly income and expenditure. 

I respectfully request write off or waiver of this debt. 

Yours sincerely, 
Kim Sharp 


17.8 Letter to debt collector — old debts 

A creditor or debt collector has six years from the date a debt is accrued or acknowledged to commence legal action. Debts older than this are ‘statute barred’ (see sections 14 and 63 of the Limitation Act 1969 (NSW)). If someone is chasing you for a debt that is more than six years old, you should not acknowledge the debt (this will start the limitation period again). Instead, you should get legal advice or write to the creditor noting that the limitation period has expired and that the claim is statute barred. 

Case study 5 — debt collection for an insurer (continued from 17.7) 

Debt Collection Co refuses to write off or waive Kim’s debt, as they know that her elderly mother recently passed away and that Kim will be inheriting her entire estate. They are calling Kim daily and threatening to take her to court. Kim’s mother was also on the age pension, but she did leave her a small apartment that Kim was planning to move into so she doesn’t have to pay rent every week. If Kim has to sell the apartment, she will struggle to support herself in old age as she has no family left to help her. Kim goes back through her records and realises that the accident occurred in 2012, more than eight years ago. Kim was so afraid of calls from the insurer in the past that she never admitted liability, she just tried to ignore the issue. She is not aware of any prior court cases relating to the matter either. Kim got some advice from a community legal centre and now realises that the debt is actually statute barred and that she can’t be forced to pay it back. She writes the following letter, upon the advice of the legal centre.

29 June 2021 
Debt Collection Co 
PO Box 6589, 

Dear Debt Collection Co, 

Debt reference: #9576 (motor vehicle damages debt of $35,000) 

I refer to the above matter and previous correspondence. 

I dispute owing the alleged debt on the basis that it occurred over six years ago and is statute barred under sections 14 and 63 of the Limitation Act 1969 (NSW). 
I am unaware of any court judgments in this matter, however, if a judgment has been entered, please forward me copies of all relevant accounts and judgments within 14 days. I also ask for an additional 14 days, after receipt, to consider any relevant documents and obtain legal advice. 

I otherwise respectfully request that you close my file and cease pursuing this matter. If your harassing calls do not cease, I will make a complaint to the Australian Financial Complaints Authority (AFCA). 

Yours sincerely, 
Kim Sharp 


17.9 Letter to debt collector — alleging harassment 

See Debt collectors, 3.4 in Chapter 3 for further information about debt collection and harassment by debt collectors. Debt collectors should communicate with you in a professional manner and according to the rules outlined in Chapter 3. If a debt collector is contacting you at odd hours, hounding you with calls and other correspondence or is being aggressive, you should consider making a complaint. If you are assaulted or threatened with physical violence, you should contact the NSW Police. Below is a sample letter of complaint regarding harassment by a debt collector. 

Case study 6 — debt collector harassment

A debt collector has been calling Jane repeatedly regarding her car loan. She has already put a proposal to her finance company, proposing a new repayment plan for the $6000 owing, which they are considering. Despite this, the harassment continues. Jane believes that the tactics used by the debt collectors are unprofessional, and she decides to lodge a formal complaint. 

15 July 2021 
Attention: Complaints Department 
Car Finance Co 
PO Box 182 

Dear Car Finance Co, 

Debt reference: #7776 (Personal loan) 

I would like to complain about the debt collection practices of your organisation. I have experienced undue harassment by a number of your employees, as follows:

  1. During the last four weeks, I have been contacted more than 30 times, by phone. Some of these calls have occurred after 9 pm. Jeremy Smith of your organisation made these calls. 
  2. On 30 June 2021, Jeremy Smith called my place of work demanding to talk to me and asked my co-worker for personal information about me. This call caused me professional embarrassment. 
  3. On Saturday 4 July 2021, Rodney Martin attended my home at 7 am and verbally harassed my son at the front door (as I had already left for work). 
  4. On Saturday 11 July 2021, Rodney Martin attended my premises at 6.30 am. He demanded the keys to my car and pushed past me to grab them from my hall table when I refused. He then took my vehicle, even though I explained, clearly, that I have made a repayment proposal and was waiting on approval. 

I demand that you return my car, that the harassment detailed above stops immediately and that all future correspondence is in writing. 

If your harassing calls do not cease, I will make a complaint to the Australian Financial Complaints Authority (AFCA). 

Yours sincerely, Jane Melody 

Car Finance Co wrote to Jane, offering her a formal apology. She got her car back and her new repayment plan was approved.

17.10 Letter to credit provider about severe financial hardship 

If you’re struggling to meet your mortgage or loan repayments, you should contact your credit provider and explain your circumstances. Financial institutions will have a financial hardship department and they are obliged to try to assist you (see Financial hardship provisions in Chapter 6). Options may include more time to pay (but this could add further interest and time to your loan); interest-only payments; or reduced repayments. You should be realistic — if you can no longer service your mortgage, you might consider selling the property and repaying the debt before the bank acts. Refinancing may be another option. If you need assistance, speak to a financial counsellor. 

Case study 7 — mortgage financial hardship application

Jenny is a single mother who owns a small apartment, which she’s paying off with a bank mortgage. Jenny recently had to take unpaid leave from work to provide care and assistance to her mother, who was diagnosed with cancer. Jenny fell behind in paying her mortgage and received a mortgage default notice from her bank. Given that Jenny’s mother appears to be getting better and that Jenny will be able to return to work soon, she writes to the bank seeking a temporary deferral of repayments (so she can catch up). 

Dear ABC Bank, 

Mortgage account: #987654N 
I refer to your recent default notice. I seek a variation of my current loan based on temporary financial hardship. My circumstances recently changed, and I require more time to pay. In summary, I am a single mother and the sole income earner in my household. I am employed as a manager at a not-for-profit organisation but have recently had to take five months leave to provide care for my mother, who was diagnosed with cancer. I used up all my leave entitlements and savings, and I have had to take unpaid leave for the last two months. Thankfully, my mother is now in remission and I can return to work this week. I will be able to resume repayments next month but ask for a three-month stay on repayments so that I can catch up on my mortgage payments and other debts. 

I have enclosed evidence of my leave entitlements from my employer, bank statements and medical evidence regarding my mother’s care needs. 

Yours faithfully 
Jenny M. 

17.11 Letter regarding severe financial hardship — general 

Finance providers are obliged to consider applications to vary loan agreements based on financial hardship, but being able to demonstrate financial hardship may also help you effectively negotiate with other creditors. Being proactive with creditors, by clearly communicating about your circumstances, may deter further action. If you are experiencing financial hardship, you should explain your income, assets and expenses, and be clear about the outcome you want. For example, do you want more time to pay? Payment by instalments? Settlement for a reduced sum that you can afford? Write off or debt waiver? See 17.7 and 17.10 for further examples. 

17.12 Request for postponement of enforcement 

A creditor can start enforcement action after they have obtained a judgment debt (as outlined in Chapters 14 and 15). If you agree with the debt but need more time to pay, you can write to the other party directly or lodge applications to the court, requesting more time to pay or to pay by instalment.

Case study 8 — request to postpone enforcement

Bill is 57 years old and was recently made redundant from his factory job. Bill’s principal assets are his house, an old car and essential household contents. He lives alone and has no other source of income. He has some superannuation but is unable to access it. Bill used his redundancy to finish paying off his mortgage and some other old debts. Unfortunately, he didn’t leave any money for ongoing expenses, as he assumed he would be able to find a new job or get unemployment benefits. Bill didn’t realise there would be a waiting period for Centrelink benefits and given his age and poor health, he is finding it impossible to find a new job. Since losing his job, Bill has failed to pay a couple of council rates bills, and council have obtained a default judgment against him. Bill acknowledges the debt and wants to pay, but needs more time. 

Your reference: X8789 
15 September 2021 
Solicitors and Co 
PO Box 789 

Dear Solicitors and Co, 

Default judgment — council rates (Bill Murphy) 

I refer to the recent default judgment you obtained regarding my unpaid council rates. 

I was recently made redundant and used my redundancy to pay off my mortgage and other outstanding debts. My home is my only real asset. I also have a car valued at $1000 and I have essential household contents. I have no other assets or income sources. I am 57 years of age and I am in poor health, which has made it difficult for me to find new employment. I have been informed by Centrelink that I will be eligible to receive income support payments from 22 December 2021. I am currently making an application to make a superannuation withdrawal based on financial hardship. When my funds are released, I will be able to pay the amount due in a lump sum. My super fund should process my application by mid-October 2021. On this basis, I respectfully request that you stay any enforcement action until 31 October 2021. By this time, I will hopefully have my super available to repay this current debt in full. 

Yours faithfully,
Bill Murphy 

Note: Bill could also file an instalment or stay application with the Local Court if the council does not accept his offer to defer and pay by instalments (see Chapter 15 for further information about stopping enforcement action). 

17.13 Sample witness statement (Local Court, Small Claims Division) 

If you’re unable to settle your debt matter with the creditor, or dispute the debt, you may need to participate in a defended hearing. If you choose to file a defence in response to a statement of claim, it can be useful to include written witness statements to support your position. If you’re in the Small Claims Division, a written statement will be sufficient (see Witness statements in Chapter 11 for further information). 

The critical elements in a witness statement include: 

  • case name 
  • court name and case number 
  • name, address and occupation of the witness 
  • relationship of a witness to the plaintiff/defendant 
  • relevant facts, including conversations in direct quotes, dates, amounts etc 
  • relevant documents attached 
  • signed and dated.

Case study 9 — interpersonal loan and repayment 

Josh, Jenny and Matthew were housemates when they were at university a few years ago. During this time, Josh agreed to loan Jenny $5000 to pay a significant debt. She agreed that she would repay the $5000 within six months of finishing university and starting full-time employment, with an interest rate of 5% per year. Soon after they entered the agreement, Jenny came into an inheritance and agreed to pay Josh’s share of the rent for six months, which happened to equate to $5600, in full repayment of the debt. This repayment variation was a verbal agreement, which Matthew witnessed. Josh is now chasing Jenny, saying she still owes him the $5000 plus interest, under their initial written agreement. He files a statement of claim in the Local Court, which Jenny defends. Matthew prepares a witness statement for Jenny, confirming that the money has already been repaid. 

Court: In the Local Court at Campbelltown 
Case Number: SC 2020/1256 

  1. My name is Matthew Neem of 14 Waterview Street, St Peters, in the state of NSW. I work as a civil engineer. 
  2. This statement is true and correct to the best of my knowledge. 
  3. I am a former housemate of the plaintiff (‘Josh’) and the defendant (‘Jenny’), and the defendant has asked me to supply this statement. 
  4. Jenny, Josh and I lived together as housemates in Leichhardt, between January 2017 and December 2020. 
  5. I was present when the parties entered the loan agreement, which is the subject of the current statement of claim. I recall that on 20 January 2018 Jenny came home and said, ‘I’ve lost my job at the pet store, and I won’t be able to pay out my car debt. Is there any chance either of you could loan me $5000? I’ll be good for it after I finish uni and get a job’. 
  6. I said, ‘Sorry, I’m broke at the moment’. 
  7. Josh said, ‘Okay. I’ll give you $5000, and you can pay me back with 5% interest within six months of finishing uni and getting a job. Does that sound fair?’ 
  8. Jenny said, ‘Great. Thanks. Let’s write something up’. 
  9. They then wrote up and signed the loan agreement, which is the subject of Josh’s current claim, and I was a witness to their signatures. 
  10. About four months later, Jenny came home and said, ‘Mum’s just told me I’m getting an inheritance of $150,000 from my Aunty Joan, who died last year’. I’d like to repay my debt to you, Josh, so I can start saving for a house deposit without your debt on my mind’. 
  11. Josh said, ‘Okay, why don’t you pay my share of the rent for the rest of the year? By my calculation that works out at $5500, which is about what you owe me?’ 
  12. Jenny said, ‘Perfect. I’ll set up the direct payments for the year now, so I don’t forget’. Jenny then got out her phone and set up her payment schedule and showed both Josh and me.  
  13. As far as I am aware, Jenny paid the rent and Josh never mentioned anything about Jenny not covering his rent. 

Signed: Matthew Neem 
Dated: 24 June 2021 

17.14 Terms of settlement (court matters settled by agreement) 

If you reach an agreement on the day of the hearing, you can write up ‘terms of settlement’ and ask the magistrate to make ‘consent orders’ per your agreement. For debt matters, the key things are that your agreement is signed/dated by both parties and includes full details of your agreed terms of settlement. The following example is based on Case study 3 — Fernando and Natalia (as an alternative to entering a ‘deed of settlement’ as outlined in 17.5). You can also prepare a consent judgment (UCPR Form 44), and file this with the court. 


  1. Judgment to be entered for the plaintiff for $1400. 
  2. The defendant will pay the plaintiff the amount of $1400 immediately. 
  3. The defendant will not be liable to pay any additional interest if she pays $1400 immediately. 
  4. The terms of this agreement are confidential. 
  5. Each party will pay their own costs.