5 ways you can recover your debts

Leading up to Christmas, many business owners are trying to close off the year by recovering their outstanding debts. In a recent article we covered the early stage recommendations on recovering debts.

Let’s assume that you have just been awarded a judgement in a Court. What may surprise you is that obtaining a judgement does not necessarily mean you will recover your money. In situations where a judgement debt remains unpaid, creditors are required to commence enforcement proceedings. In this article, we will explore the various methods available to a creditor to recover a judgement debt. 

While enforcement proceedings are an additional step to the recovery process, the legal costs incurred during enforcement can be recovered in addition to the debt.   

Here are five Court judgment enforcement methods available to a debtor:

1. Seizure and sale of the debtor’s property

A judgment creditor can apply to the Court for a Writ for levy or property, which in essence is a Court order that authorises a sheriff to seize valuable goods belonging to the debtor for sale at auction. The proceeds of the sale are attributed to the judgment debt and any associated interest or legal fees.

2. Deduct money from the debtor’s wages

The option to apply for a Garnishee Order for wages is also available to the creditor. This is a Court order that requires a person who owes the debtor money to forward payment to the creditor. For this to work against an employer, the identity of the debtor’s employer must be known so that the order can be made and served on the respective employer.

The employer will have fourteen days to comply with the Garnishee Order by forwarding a portion of the debtor’s wages to the creditor. If an employer does not forward the monies to the creditor, a separate application can be made to the Court for judgment to be entered against the employer. This means that the debt can be enforced using the available enforcement methods against the employer.

3. Deduct money from the debtor’s bank account

If the debtor’s bank or financial institution is known, consideration should be given to applying for a Garnishee Order for debts. This type of Garnishee Order will require any bank or financial institution to forward monies it holds to the creditor to pay off the judgment debt.

We always recommend that you retain bank account information to assist with enforcing a judgment debt.

4. Examination of debtor’s financial position

If little is known about the debtor’s financial affairs, a creditor can issue an Examination Notice. The Examination Notice encloses a financial statement for the debtor’s completion. If the debtor does not complete the financial statement, the creditor can apply for a Court order requiring the debtor to attend Court and disclose their financials.

In the event a debtor does not attend Court once ordered, the creditor can apply to Court for an order that the debtor be arrested for the purpose of disclosing their financials.

5. Bankruptcy or wind-up proceedings

A creditor can issue a bankruptcy notice to a debtor if they have a judgment debt over $5,000. The debtor will have 21 days to pay the full amount to pay the debt otherwise, the creditor may proceed with a creditors petition. If a sequestration order is made, the debtor will be made bankrupt and their assets will be administered.

Similarly, if a debtor is a company rather than a natural person, a creditor can issue a statutory demand providing that the debt exceeds $2,000. If the company fails to comply with the statutory demand within 21 days, they are presumed insolvent and the creditor can commence wind-up proceedings, which may ultimately result in administration.  

These are just a few ways that you can progress your case and recover money owing to you or your business. Fern Lawyers can help you recover your money with swift action, simply give us a call and see how we can help you get to where you’re going.