Obtaining judgment against a debtor is an important step in recovering money, but it does not always result in immediate payment.
If a debtor does not voluntarily pay a judgment made by the Magistrates’ Court of Victoria, the judgment creditor may need to take further enforcement action.
The appropriate enforcement method will depend on the debtor’s circumstances, including whether they are employed, own assets, have money in a bank account, or are owed money by another person or business.
There are several enforcement options available through the Victorian Magistrates’ Court, including:
examination summonses;
warrants to seize property;
garnishee orders;
attachment of earnings orders; and
instalment orders.
Examination Summons
Before deciding how to enforce a judgment, it is often useful to determine what assets, income and liabilities the debtor has.
A judgment creditor may apply for an examination summons requiring the judgment debtor to attend Court and be orally examined about their financial circumstances.
The examination may cover matters including:
the debtor’s income and the source of that income;
property and other assets;
cash available to the debtor;
debts and liabilities;
other financial obligations; and
the debtor’s general ability to satisfy the judgment.
The examination summons must generally be personally served on the judgment debtor at least seven days before the examination, and conduct money must be provided. The debtor is examined on oath or affirmation.
If the debtor fails to attend as required, the Court may issue a warrant for their apprehension for the purposes of the examination.
An examination summons can therefore be particularly useful where the creditor has obtained judgment but does not know enough about the debtor’s financial position to determine the most effective enforcement method.
Warrant to Seize Property
Another option is to apply for a warrant to seize property.
Under the Magistrates’ Court General Civil Procedure Rules, a registrar may issue a warrant to seize property for the purpose of satisfying a judgment debt in the circumstances provided by the Rules.
A warrant may allow property belonging to the debtor to be seized. This can include money, bank notes and certain financial instruments such as cheques, bills of exchange, promissory notes, bonds and securities.
Property seized under an enforcement process may ultimately be sold by the Sheriff, with the proceeds applied towards the amount owing.
A warrant to seize property may be particularly relevant where the judgment debtor owns valuable assets capable of being seized and sold.
Garnishee Orders
A garnishee order can be an effective enforcement tool where a third party owes money to the judgment debtor.
A garnishee is generally a person from whom the judgment creditor claims a debt is due or accruing to the judgment debtor.
For example, depending on the circumstances, a garnishee process may potentially be directed towards money owed to the judgment debtor by a third party.
Once the garnishee summons is served, the relevant debt may become attached and bound in the hands of the garnishee to the extent specified in the summons.
At the hearing, the Court may order the garnishee to pay the attached debt, or sufficient money from that debt, directly to the judgment creditor to satisfy the judgment together with applicable interest and costs.
Garnishee orders do not apply to earnings, which are dealt with separately under the attachment of earnings procedure.
Attachment of Earnings
Where the judgment debtor is employed, a judgment creditor may be able to apply for an attachment of earnings order.
This process can require deductions to be made from the debtor’s earnings towards payment of the judgment debt.
An application is made by summons and must be supported by an affidavit. The relevant documents must generally be served on the judgment debtor at least 14 days before the hearing.
If an attachment of earnings order is made, it must be served on both the judgment debtor and the person to whom the order is directed. The order does not come into force until seven days after service on that person.
Attachment of earnings can be useful where a debtor has regular employment income but does not have readily identifiable assets available for immediate enforcement.
Instalment Orders
A judgment debt may also be paid by instalments.
When giving judgment, the Court may order that the judgment debt be paid by instalments and specify the amount and timing of each payment.
A judgment creditor or judgment debtor may also apply after judgment for an instalment order or, where an instalment order already exists, a substituted instalment order.
Importantly, once an application for an instalment order is served, the application can operate as a stay of enforcement until the application is dealt with by the proper officer or the Court.
Instalment orders may be appropriate where the debtor cannot pay the full amount immediately but has sufficient income to repay the judgment debt over time.
Which Enforcement Option Should You Use?
There is no single enforcement method that is appropriate in every case.
The most suitable option will often depend upon what is known about the debtor.
For example:
If you do not know what assets or income the debtor has, an examination summons may help establish their financial position.
If the debtor owns assets capable of seizure, a warrant to seize property may be appropriate.
If a third party owes money to the debtor, a garnishee order may be considered.
If the debtor is employed, an attachment of earnings order may be available.
If the debtor can only afford to pay progressively, an instalment arrangement may be relevant.
The enforcement strategy should generally take into account the amount of the judgment, the likely assets and income of the debtor, the cost of enforcement and the prospects of actually recovering money.
Obtaining Judgment Does Not Automatically Mean You Get Paid
A court judgment formally establishes the debtor’s obligation to pay, but enforcement may still be necessary if payment is not made voluntarily.
Taking the appropriate enforcement action promptly can improve the prospects of recovering the judgment debt.
Debt Recovery and Judgment Enforcement
O’Haire Legal assists individuals and businesses with debt recovery matters throughout Victoria, including the enforcement of Magistrates’ Court judgments.
We can assist with:
examination summonses;
warrants to seize property;
garnishee proceedings;
attachment of earnings applications;
instalment order matters; and
broader debt recovery and enforcement strategies.
If you have obtained judgment and the debtor has not paid, contact O’Haire Legal to discuss the enforcement options available in your circumstances.
O’Haire Legal
Debt Recovery Lawyers – Victoria
