GETTIN' WHAT'S COMIN' TO YA.
Enforcement options for Judgments in Australia.
â€œA Lawyer with his briefcase can steal collect more than a thousand men with gunsâ€ Mario Puzo, The Godfather. â€¦..
When taking action against a recalcitrant Debtor, the obtaining of a judgement in the Court is sometimes only the start of the recovery process. Debtors, even after judgment has been obtained, will often refuse to pay.
Obtaining judgment does, however, give you the option to enforce judgment against the Debtor and these enforcement rights can prove effective in obtaining payment.
For Company Debtors, you can consider a Statutory Demand and Application for Winding Up of a Company (for debts over $2,000.00)
A Statutory Demand is served on the registered office of the company. If the company does not pay within 21 days of being served, you can apply for the company to be wound up.
When the company is wound up, a Liquidator is appointed. The Liquidator divides all assets amongst the creditors, with secured creditors being paid out first and the balance being divided amongst the unsecured creditors.
The winding up (or “liquidation”) of a company is the corporate equivalent of bankruptcy. It effectively puts the company to its end and the Liquidator then takes over the assets of the company to distribute to the creditors.
For individual Debtors, you can consider Bankruptcy Proceedings (for debts over $5,000.00)
Once a bankruptcy notice has been served on the Debtor, they have 21 days to pay the debt. If the Debtor does not pay, you can file a creditor's petition to declare the Debtor bankrupt, Bankruptcy can be a very powerful tool because the stigma and restrictions that bankruptcy places on the Debtor are great. It makes getting further finance very difficult.
Examination of Debtor
If you are unsure as to what income, assets or liabilities the Debtor has, the Court can issue a summons that directs the Debtor to attend the Court and provide details as to their current financial situation.
Once the Debtor has provided the relevant details, an Examination is then scheduled by the Court. During the Examination, you would be awarded scale legal fees for the cost of the Examination.
The advantage of this process is that it identifies the income and assets of the Debtor and helps identify which method of enforcement will be the most effective in getting the debt paid. It may even result in settlement of the debt.
The disadvantage of this process is that it provides you with information rather than money, and it can take months for the examination to take place. Depending on what the hearing brings to light, your options include the following;
Garnishee Orders are a means by which money which is owed or becomes owing to the Debtor may be diverted directly to you. This includes wages or salaries, moneys in bank accounts or even debts owed to the Debtor. This is often an effective way of recovering a debt.
Warrant to seize Personal Property
The Sheriff can be directed to attend at premises where the Debtor has assets and seize assets (cars, boats, furniture etc.) sufficient to satisfy the debt. However, the disadvantage of this is that the Sheriff routinely takes some time to act, as the Sheriff's Office has a heavy workload. Furthermore, the Sheriff has numerous legal restrictions on what they can and cannot seize. As such, the Sheriff has a fairly high rate of unsuccessful visits.
Warrant to seize Real Property
If the Debtor owns land, it can often be targeted for forced sale. Costs are considerable and the steps are complicated. However, the prospect of the Debtor's property being sold is often enough to cause the Debtor to pay. Eventually, in the event of sale, the costs incurred by you get reimbursed, but they do have to be paid up front. It is a necessary pre-condition to sale of land that a warrant to seize personal property is first gone through and has been unsuccessful.
Instalment Order (Not available in all jurisdictions)
This is an order for payment of the debt by instalments. Whilst an Instalment Order is in place, no other enforcement proceedings can be initiated. The advantage of this step are that the debt gets paid regularly and in a way that doesn't “crush” the Debtor. The disadvantages are that it can take a long time for the debt to be paid off and often Debtors fail to keep up payments once the “heat dies off a bit” from the instalment regime.
As can be seen from the above, obtaining judgment, even if it does not obtain the desired effect of getting payment first up, provides the judgment creditor with a wide range of tools for collection of the judgment debt. If a Debtor leaves you with no alternative, obtaining and enforcing judgment can be a powerful tool in â€œgetting' what's coming to ya'â€