Have you commenced proceedings in Court to recover an unpaid debt? Even if you’re successful in your claim, it can still be difficult to recover what you’re owed. This is especially the case where the debtor may not have the money or assets to repay you. A Garnishee order can be a good option where a defendant owing money has no liquid capital to pay it.
A Garnishee Order is a common way of recovering money from the parties who do not pay their Judgment debts. The Court directs a third party known as a ‘Garnishee’ that owes money to the debtor to instead pay the creditor. The Judgment debt is recovered from several sources:
- The other party’s bank account
- The other party’s wages
- Someone else who also owes money to the other party (e.g a real estate agent who collects the rent)
Recovering debt from a bank account
The Court can issue a Garnishee order to recover debt from the bank account of the other party. This type of order requires debtors to repay the debt in a single sum. As the order processes, the bank usually freezes the debtor’s bank account so the account becomes inaccessible for a while.
The other party requires a minimum bank balance of $504.60 after the withdrawal of the debt (as at 1st October 2018). If their minimum balance is lower than this, the creditor should get legal advice to discuss further options.
Recovering debt from wages and salary
Creditors can serve a Garnishee Order which will require the other party’s employer to pay some of their salary to the creditor. Importantly, it is not possible to garnish the entirety of the judgement debtor’s wages. The debtor requires a minimum of $484.10 per week to live (which is called a weekly compensation amount).
Also, creditors cannot garnish a debtor’s Centrelink benefits. If these benefits are the debtor’s only income, then recovering debt from wages is probably not the best option.
What can you do if you’re the defendant?
Apply to the Court for a Stay of Enforcement
In the case of needing more time to pay the judgement debt, you can request the court for a temporary order stopping enforcement. This may be because you need to borrow money, sell property etc.
Pay the Judgment Debt
You can pay your debt to the other party in full. If you are unable to pay the requested amount in full, you can negotiate with the other party. Further, your negotiations should clarify how and when you will pay the money.
Pay by Instalments
In order to pay by instalments, you need to fill in either one of these forms:
- Form 46– notice of motion to pay by instalments – individual or
- Form 47 – notice of motion to pay by instalments – corporation
Apply to set aside Default Judgement
If the other party got a default Judgment against you and you did not file a defence, you can apply to the court to set it aside. However, you need to explain to the court:
- Why you did not file a defence within 28 days
- Your defence to the claim
Conclusion
A Garnishee Order is a very useful debt enforcement tool which bypasses the Judgment debtor and also resolves the matter with a third party. However, it is a serious matter and you should seek legal advice if you receive one to prevent further repercussions.
