Private loans and debt recovery (民间借贷) in Victoria
Reviewed by Justin Chua, principal, Chua Tan Associates · Updated 18 October 2026
A private loan made without a written agreement is still enforceable in Victoria if you can prove that money was lent and was to be repaid. Bank transfers, WeChat messages and part repayments are often enough. The usual path is a letter of demand, then court proceedings in the Magistrates’, County or Supreme Court depending on the amount, then enforcement; for most contractual debts you have six years from when the claim arose to sue.
What we see
Money is lent to a friend for a house deposit, to a relative to start a business, or to a business contact who promises a high return. The transfer is made from an Australian account, from China through a relative, or in cash. There is no contract, only messages such as “I will pay you back after the sale” or “thank you for your support”. When the borrower stops replying, the lender is not sure whether they have a claim at all.
Loan, gift or investment?
The first question a court asks is what the money was. A loan must be repaid. A gift need not be. An investment shares in the risk of the venture, so if the business fails the investor may get nothing back. Borrowers often say later that the money was a gift between family members or an investment in a joint business.
The court decides by looking at all the evidence: the words used at the time, the relationship, whether interest or repayment dates were discussed, whether any repayments were made, and how the borrower described the money to others (for example to a bank or in a family law case). Between parents and children, courts may be more ready to infer a gift, so family lenders need clear evidence.
WeChat messages and bank records as evidence
Australian courts regularly receive WeChat, WhatsApp and text messages as evidence. Their weight depends on whether they are complete and authentic.
- Keep the original phone and export full conversations, not selected screenshots.
- Keep transfer records showing the payer, payee, amount and date, including remittances from overseas.
- Get translations prepared by an accredited (NAATI) translator; machine translations are often challenged.
- Messages acknowledging the debt, asking for more time or making part payment are particularly valuable.
Guarantees, private mortgages and caveats
If a third party promised to repay if the borrower did not, that guarantee should be in writing and signed; an oral guarantee is usually unenforceable. Security over land is stronger. A registered mortgage gives the lender a right to the property itself. An unsecured lender generally cannot lodge a caveat on the borrower’s land simply because money is owed; a caveat needs a real interest in the land, such as an agreement to give a mortgage. Lodging a caveat without proper grounds can expose you to a compensation claim under the Transfer of Land Act 1958 (Vic).
Interest and the National Credit Code
You can recover interest that was agreed. If no interest was agreed, the court can usually award interest from the date of the claim or judgment. The National Credit Code generally applies only where the lender provides credit in the course of a business of providing credit (or incidentally to another business), charges for the credit, and the money is for personal, household or residential investment purposes. A one-off loan between friends is usually outside it. If you lend regularly and charge interest, take advice, because breaching the credit laws carries serious consequences.
Time limits
In Victoria the limitation period for a claim in contract, including a simple debt, is generally six years from the date the cause of action arose (Limitation of Actions Act 1958 (Vic)). Where no repayment date was agreed, time may start running earlier than lenders expect, sometimes from the date of the loan. A written acknowledgment of the debt or a part payment can restart the period. NSW also has a six-year period for contract claims. Do not wait until the last year.
Letters of demand, statutory demands and bankruptcy notices
A clear letter of demand setting out the amount, the basis of the claim and a deadline resolves a surprising number of matters.
- If the borrower is a company, a creditor’s statutory demand under the Corporations Act can be served for a debt of at least $4,000. If the company does not pay or apply to set it aside within 21 days, it is presumed insolvent and you can apply to wind it up. Statutory demands should not be used where the debt is genuinely disputed.
- If the borrower is an individual, you generally need a final judgment first. A bankruptcy notice can then be issued for a judgment debt of at least $10,000, and the debtor has 21 days to comply.
Which court
In Victoria, the Magistrates’ Court hears civil claims up to $100,000 (claims of $10,000 or less may go to arbitration). The County Court and the Supreme Court have no upper limit. The choice affects speed, cost and the costs you can recover.
Enforcing a judgment
A judgment is only useful if it can be collected. Options include a warrant to seize property, an attachment of earnings or of debts (such as bank accounts), a charge over land, and examination of the debtor about their assets. A judgment can be enforced for up to 15 years in Victoria, although interest and some steps are restricted after six years.
When the borrower is moving assets offshore
If there is evidence that the borrower is selling property, emptying accounts or moving money overseas to defeat your claim, you can apply urgently to the Supreme Court for a freezing order. These orders are powerful and require full and frank disclosure, a strong case and an undertaking as to damages. Speed and preparation matter.
Cross-border loans and Chinese judgments
Where the loan was made in China, a lender sometimes sues there first and then seeks to enforce the Chinese judgment in Australia. Australian courts have enforced Chinese money judgments, but they will refuse if the borrower was not properly notified of the Chinese proceedings.
- [Bao v Qu; Tian (No 2) [2020] NSWSC 588](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2020/588.html): a lender obtained judgments in Qingdao courts for unpaid loans of about RMB 2 million against a couple who later moved to NSW. The NSW Supreme Court enforced the Chinese judgment, including the additional Chinese late-payment interest, and declined to reopen the merits.
- [Wang v Duan [2025] VSC 516](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSC/2025/516.html): a Shanghai garment-trade partner obtained Chinese judgments on loans and guarantees after the debtor had moved to Australia. The Chinese courts served him by public announcement, although he could have been contacted by email or WeChat. The Supreme Court of Victoria refused to enforce the judgments because he had been denied natural justice. The lesson: if you sue in China, make sure the debtor actually receives notice.
Costs exposure
Costs generally follow the event. A successful lender usually recovers part, not all, of their legal costs, and an unsuccessful one may have to pay the borrower’s costs. A lender who lives overseas may be asked to provide security for costs. A realistic assessment of whether the borrower can pay is as important as whether you can win.
How we help
Chua Tan Associates acts for lenders and borrowers in private loan disputes in English, Mandarin and Cantonese. Where both sides are willing, a private resolution can be arranged through the Chinese Australian Dispute Resolution Centre (CADRC). Contact us on +61 3 9602 3988.
FAQs
I have no written contract, only WeChat messages and bank transfers. Can I still recover the money?
Often yes. A loan does not have to be in a formal contract; the court will look at the transfers and messages together to decide whether the money was lent and on what terms.
The borrower says the money was a gift. What happens?
The court weighs the evidence of what both of you said and did at the time. Messages discussing repayment, part repayments and the absence of any reason for a gift all help the lender.
How long do I have to sue?
Generally six years in Victoria from when the claim arose, but working out when time started can be difficult where no repayment date was agreed. Get advice well before six years have passed.
Can I put a caveat on the borrower’s house?
Not merely because they owe you money. You need an interest in the land, such as an agreement to give you a mortgage. An improper caveat can expose you to a compensation claim.
The borrower has gone back to China. Is it worth suing?
It depends on where their assets are. If they still own property or money in Australia, proceedings here, and if necessary a freezing order, may be effective. If all their assets are overseas, enforcement there needs separate advice.
Should I send a statutory demand or a bankruptcy notice first?
A statutory demand is only for companies and should not be used for a disputed debt. A bankruptcy notice needs a court judgment first. For most private loans, a letter of demand and then court proceedings is the usual path.
Talk to us about your matter
Book a confidential consultation in English, Mandarin or Cantonese, or call +61 3 9602 3988.
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General information only, not legal advice. Every matter turns on its own facts. Reviewed by Justin Chua, principal, Chua Tan Associates.
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