Introduction
Getting a debtor to pay a debt can be as much work as winning a lawsuit. Let’s say you obtained a judgment against the person who owes you money. Subsequently, this would require the debtor to pay the debt immediately or as ordered by the court. However, just because the court has ordered against the debtor doesn’t always mean that you will be paid immediately, or soon. In cases where the debtor does not pay the money, you will need to consider enforcing the judgement debt. In this article we will summarise different judgement debt recovery options that will allow you to enforce the judgement debt.
What is a Judgement Debt?
If someone owes you money, you (creditor) can go to court to get a judgement that the person (debtor) owes you the debt. After receiving a judgment against the debtor, the creditor must pay the debt. Thus, the amount of money in a judgement that the debtor owes to the creditor is a ‘judgement debt’.
When the payment of the judgement debt is not made, you may need to take steps to enforce the judgment.
What are the Methods of Enforcement?
Methods of enforcement which you might choose to pursue include the following:
Examination Notice
If you are unsure about the financial circumstances of the debtor, you can apply for a public examination of the debtor. This can assist you in identifying the debtor’s assets and income. Moreover, it can help you identify the best enforcement method.
Even though an examination notice is not an enforcement mechanism in itself, it is still a useful judgement recovery option. The idea of being publicly examined may encourage the debtor to pay the debt to avoid the examination.
Examination Order
If the debtor fails to provide sufficient answers or documents specified in the examination notice, then you may choose to make an application to the Court for an examination order. This will direct the debtor to attend the nearest Court for examination under oath as to his or her financial capacity to satisfy the judgement debt.
Garnishee Order
Another effective way of enforcing judgement debt is by applying to the Court for a garnishee order. This would allow or direct a third party (such as a bank or employer) to seize funds from the debtor’s bank account. Also, there will be serious consequences if the bank or employer fail to pay the money.
Refer to the article on Garnishee Order to learn more about its effectiveness in enforcing a judgement debt.
Writ of Execution of Property
This authorises and directs the Sheriff’s Office to attend the judgement debtor’s address and seize property owned by the judgment debtor and sell it at a public auction. A writ of execution is often valid for 12 months from the date of issue. Moreover, the Sheriff’s Office provides a written report in relation to the execution of the property.
Bankruptcy Proceedings (against an individual debtor)
Another way of enforcing a judgement debt is by a commencing a bankruptcy proceeding. However, this can only be done if the debtor has insufficient funds or assets to pay all of his debts and if the judgement debt is more than $5000. Generally, when a debtor is bankrupt, their property comes under the control of a trustee. Accordingly, you may lodge proof of your debt judgement with the trustee to receive a share of profits from the sale of the debtor’s property.
Winding Up Proceedings (against a company)
Winding up is similar to bankruptcy. You can choose to serve a creditor’s statutory demand for payment of a debt on the debtor company. However, if the debtor company still fails to satisfy the debt within 21 days of issue of a statutory demand and if certain conditions are met you can take further legal steps. You may be entitled to make an application to the Supreme Court to wind the company up on the basis of insolvency.
Learn more about winding up proceedings here.
Conclusion
If you have served a letter of demand and the debtor still refuses to pay the debt, you may go to the Court to get a judgement against the debtor. If the debtor still fails to make a payment, then you may use different recovery options to enforce the judgement debt. Irrespective of what enforcement mechanism you choose, you will generally require some legal assistance. Get in touch with a lawyer in order to receive advice on the most effective enforcement method.
