How to report a bad debtor in Australia

Why report a bad debtor?

Reporting a non-paying debtor serves two purposes: it creates a formal record that may affect the debtor's ability to obtain credit in the future, and it warns other potential suppliers or lenders about the debtor's payment behaviour. In practice, the prospect of credit bureau listing is also a powerful motivator for some debtors to pay — particularly individuals or businesses that rely on credit to operate.

It is important to understand, however, that reporting does not itself recover the debt. It is a consequence-creation tool, not a collection mechanism. The primary path to getting paid remains formal demand and — if necessary — collection agency engagement or legal proceedings.

Credit bureau reporting (commercial)

Commercial credit reporting in Australia operates through credit reporting bodies such as illion, Equifax, and Experian. Businesses that subscribe to these services can report overdue commercial accounts. A commercial default listing can affect the debtor's ability to obtain trade credit from other suppliers, finance from lenders, and business banking products.

Commercial credit reporting rules are less prescriptive than consumer credit reporting. There is generally no mandatory notice period before listing a commercial debtor (unlike consumer credit, which requires 14 days' notice and a 60-day overdue threshold). However, you should ensure the debt is genuinely owed and not under legitimate dispute before listing — a disputed listing can expose you to a complaint or legal claim.

Consumer credit reporting

If the debtor is an individual (or a sole trader where the credit was personal in nature), consumer credit reporting rules apply. The Privacy Act 1988 and the Privacy (Credit Reporting) Code require that the debt is at least 60 days overdue and that the debtor has been given at least 14 days' notice of the intended listing before you can register a default. Only creditors who are members of the credit reporting system can list defaults directly — if you are not a member, a collection agency or credit bureau intermediary can facilitate this.

Reporting phoenix activity to ASIC

If you suspect a debtor company is engaging in phoenix activity — transferring assets to a new entity to avoid paying creditors while the old company is wound up — this can be reported to ASIC. ASIC investigates illegal phoenix activity and can take action against directors involved. Reporting does not guarantee a result, but it creates an official record and may trigger an investigation that helps you and other creditors.

To report to ASIC, use the online tip-off form on the ASIC website. Provide as much detail as possible: the company names (old and new), the ABNs or ACNs, the directors involved, and the specific conduct you have observed.

Court judgments as public record

If you obtain a court judgment against a debtor, the judgment becomes a matter of public record. It will appear on the debtor's credit file (for individual debtors and many small businesses) and can be found by other creditors, lenders, and landlords conducting due diligence. A judgment that is not paid promptly can trigger enforcement action and can significantly affect the debtor's commercial standing.

Merion can assist with the collection process that precedes reporting, and with preparing matters for legal escalation where a court judgment is the appropriate next step. Request a free debt appraisal to discuss your situation.