The debt recovery process does not end with a win in Court, it ends when the money is paid.
What is a judgment debt?
A judgment debt is another term for an order of a Court or Tribunal that requires a person or company to pay money owed to another person or company. The person or company who owes the money is known as the “judgment debtor”, and the person or company who is owed money is known as the “judgment creditor”.
The order will generally require the judgment debt to be paid within a period of time, usually 28 days. However if the judgment debtor does not pay, it is the responsibility for the judgment creditor to take further steps in the Court process to attempt to enforce the debt.
How can I enforce a judgment debt?
There are a number of options available to enforce a judgment debt including:-
(a) Garnishee Order
A Garnishee Order is a Court order directing a third party to pay money owing to the judgment debtor to you. If the garnishee fails or refuses to comply with the order, they can be made directly liable for the payment to which the order relates.
A Garnishee Order may be issued in respect of money that is:-
- held in the name of the judgment debtor by a financial institution;
- owing to the judgment debtor now or in the future for wages or salary; and
- owing to the judgment debtor by a third party.
A Garnishee Order is particularly useful if you are aware of the judgment debtor’s bank accounts; or employer or debtors.
(b) Writ for the Levy of Property
An application can be made to the Local Court for the issue of a writ for the levy of property. This writ will authorise the office of the sheriff to attend to the judgment debtor’s premises and seize the personal property of the judgment debtor. Execution is limited to tangible items of personal property.
The debtor will be given notice of the issue of the writ by the Sherriff and will be requested to contact the Sheriff’s office to discuss payment. The Sheriff may lawfully enter the defendant’s premises to seize property.
If seizure is made the Sherriff’s office will sell property by auction and account to the creditor for the proceeds of sale up to the judgment amount. There are fees involved with the execution of the writ for the levy of property.
(c) Examination Notice and Examination Order
An examination notice is a notice that is served on the judgment debtor requiring them to:-
- answer questions about their financial circumstances; and/or
- provide copies of documents about their financial circumstances.
An examination notice can be useful if you are not sure of the best way to enforce a judgment because a judgment debtor is required to provide you with information about their financial circumstances which you can then use to determine the best way to enforce the judgment debt.
If the judgment debtor does not respond to the examination notice, you can apply to the Court for an examination order. An examination order is a Court order requiring the judgment debtor to attend Court and answer questions under oath and provide documents about their financial circumstances. The examination is held at the Court and is carried out by lawyers.
The primary purpose of an examination order is to make contact with the debtor and attempt to obtain as much information as possible in relation to the debtor’s financial circumstances and reach an agreement with respect to payment of the judgment debt to you.
(d) Instalment Order
At any time, the debtor may make an application to the Court to pay the judgment debt by instalments. The Court may grant; refuse; or object to making a decision to make an instalment order. If the defendant makes an application to pay by instalments, the debtor has to prepare an affidavit in relation to his/her or its financial circumstances and disclose all assets and income. If an order is made and the debtor defaults on the payment plan, the order is terminated.
What are the time periods?
In NSW, judgment debts can be enforced for 12 years after the date of the order.
Enforcing a judgment can be complicated and technical. Taking prompt action once a Court order is made can improve the chances of success. We can help you with the enforcement process.
Kristy Nunn is a director of the Dispute Resolution & Litigation Group at Mullane & Lindsay. Mullane & Lindsay have extensive experience in professional negligence claims.
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