Once a creditor has obtained a Default Judgment or Judgment against a third party (‘the judgment debtor’), the creditor may experience difficulties in recovering the judgment money from the judgment debtor.
This article will discuss some of the enforcement options available to creditors to recover the outstanding judgment debt.
The first step creditors should take following the judgment, or Default Judgment, is to issue an Examination Notice to the judgment debtor. The importance of beginning with an Examination Notice is to gain a more in-depth insight into the judgment debtor’s liabilities and assets. Ultimately, this approach will assist the creditor and their representatives to identify a cost-effective and strategic approach to recover the outstanding judgment.
The Examination Notice is a document that contains specific questions regarding the assets and liabilities of the judgment debtor. Some of the questions contained in the Examination Notice are the judgment debtors:
Place of employment and income received;
Property owned and the value of the property;
Bank account details and the sum of money held in their bank account;
Investments owned;
Personal assets owned and their respective values; and
Liabilities, which includes living and maintenance expenses.
The creditor can also request additional documents from the judgment debtor such as their:
Tax returns for the preceding financial year;
Bank statements; and
Proof of ownership documents.
Suppose the judgment debtor does not comply with the examination notice within 28 days of receiving the notice, the creditor then has the option of making an application to the Court for an examination order. The Examination Order requires the judgment debtor to attend Court to produce the documents and information sought in the Examination Notice.
Should the judgment debtor not comply with the Examination Order, the creditor can then apply to the Court for an Arrest Warrant. Once an Arrest Warrant is granted, the Court will list a new Examination Hearing date and provide direction to the Sherriff or enforcement officer to attend the judgment debtor's residential address and make an arrest. The Sherriff or enforcement officer will then transport the judgment debtor to Court on the date of the hearing, which is where the judgment debtor will be required to provide the sought documents and information.
Once the judgment debtor has complied with the Examination Notice by providing the sought documents and information, the creditor may find that the judgment debtor does not have the relevant funds to repay the judgment debt. Ultimately, this will frustrate the debt recovery process as it may take a significant period of time for the judgment debtor to repay the judgment debt.
Alternatively, the judgment debtor may be in a position to make some instalment payments to reduce the judgment debt due to their current financial circumstances. In this instance, the creditor and the judgment debtor will enter into negotiations with the hope of achieving a fair and reasonable instalment arrangement.
In the instance the judgment debtor and creditor do not reach agreeable terms, the judgment debtor can make an application to the Court for an Instalment Order in the absence of the creditor. Should this occur, the judgment debtor would be required to attend Court and provide evidence that supports their proposed weekly instalment payments. The Court will consider some of the following factors before entering the Instalment Order:
The judgment debtor's living expenses;
The judgment debtor's income;
The judgment debtor's liabilities, such as credit cards, loans, or personal loans;
The judgment debtor's dependents; and
Whether the judgment debtor is a pensioner, receiving Centrelink payments, or is receiving disability payments.
If the Court is satisfied with the evidence produced by the judgment debtor, then the Instalment Order will be granted.
Once the Instalment Order is in place, the creditor is unable to take any further enforcement proceedings. However, the creditor can make an application to the Court to have the instalment order varied, suspended or rescinded on the following grounds:
The judgment debtor has missed payments and is in breach of the instalment order; or
The creditor has reason to believe that the judgment debtor has additional assets or income and can afford an increased instalment amount.
If the Instalment Order is rescinded, the creditor can recommence enforcement proceedings to recover the outstanding judgment debt.
The judgment creditor can make an application to the Court for the Writ for the Levy of Property. A Writ for the Levy of Property provides direction to the Sherriff or an enforcement officer to attend the judgment debtor’s residential address and seize property.
The property that can be seized is the judgment debtor’s personal assets, such as their motor vehicles, televisions, and computers. This is a non-exhaustive list. Alternatively, the order may provide direction to the Sherriff to take possession of the judgment debtor’s land.
In both instances, the judgment debtor is provided with notice to make payment of the outstanding judgment debt within a prescribed period of time. In the instance of non-payment, the Sherrif or enforcement officer will conduct an auction of the judgment debtor’s personal property or their property, which would provide a means of recovery for the creditor.
At Arida Lawyers, our experienced team can assist creditors by:
Providing cost-efficient and effective advice on recovery strategies.
Negotiating instalment agreements with the judgment debtor.
Preparing:
Examination Notices;
Examination Orders;
Application for the Writ of the Levy of Property; and
Application for an Arrest Warrant.
Representing the creditor at Court for the enforcement hearings.
We can also assist debtors by:
Assisting in negotiations with the creditor for a fair and reasonable instalment arrangement;
Making an urgent ex-parte application to the Court to have any enforcement proceedings stayed in the instance the Default Judgment was unjustly entered;
Making an application to the Court to have the Default Judgment set aside in the instance the judgment debtor has a defence on the merits;
Preparing a Defence; and
Defending the proceedings brought by the creditor at Court.
The Arida Lawyers team can also assist with contract law, consumer law, and building and construction law. Contact us today on 1300 146 390 or email info@aridalawyers.com to arrange a free consultation.
This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.
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