So a company or person owed you money and you’ve now managed to secure a judgment in a court of NSW ordering them to repay the debt (a judgment debt). What now?
When a person (the ‘judgment creditor’) obtains a court judgment ordering a person (the ‘judgment debtor’) to return goods or pay money, the judgment debtor will not always comply with the judgment. They may not have the money or resources to pay the debt or they may simply be avoiding payment.
In this situation, the judgment creditor has 12 years from the date of the judgment to enforce the judgment. This is known as an ‘enforcement’ action. Enforcing a judgment debt in New South Wales (NSW) involves a process of collecting the money that is owed to you by the judgment debtor.
Here are the general steps to enforce a judgment debt in NSW:
- Obtain a copy of the judgment: This can be obtained from the court that issued the judgment or from the Sheriffs’ Office. The ‘Office of the Sheriff of NSW’ is a government authority responsible for court security, administering the NSW jury system and specific law enforcement such as serving warrants and enforcing various court orders (such as a writ).
- Identify the judgment debtor’s assets: This can include property, bank accounts, vehicles, or wages. You will need to find out where the judgment debtor’s assets are located and how they can be accessed. You can do this through a court via an examination notice (a form the debtor must fill out responding to questions about their income, assets and liabilities) if the judgment debtor’s assets are not easy to ascertain.
- Issue a Writ for Levy of Property: Once issued, this type of writ authorises the Sheriff to seize and sell at auction personal property belonging to the debtor to pay the debt. You will need to provide the Sheriffs’ Office with a copy of the writ of execution, the judgment, and a fee for their services. The writ is valid for 12 months. If there is not enough personal property to satisfy the judgment debt that is owed to you and the debt is over $20,000, you can apply for an order seeking the sale of real property (land).
- Issue a Writ for the Delivery of Goods: This can be used if the court ordered the judgment debtor to return certain goods to you and they haven’t been returned. It authorises the Sheriff to seize the goods and return them to you (the judgment creditor) or recover their value by seizing other property and selling it. This type of writ is also valid for 12 months.
- Garnishee Order: If the judgment debtor has income, such as wages or salary, you can obtain a garnishee order. A garnishee order directs the judgment debtor’s employer or other organisation that holds money for the judgment debtor to pay some or all of the money owing to you, directly to you from their bank account, salary or wages.
- Charging Order: In the case of a judgment debt of the District or Supreme Court of NSW, you may wish to obtain a charging order. A charging order creates security over a specific asset(s) owned by the judgment debtor to the value of the judgment debt and restrains the judgment debtor from dealing with the asset.
- Debtor Examination: If the judgment debtor fails to comply with an examination notice you may apply to the Court for an examination order. An examination order summons the judgment debtor to Court to provide details of their financial affairs. To obtain an examination order you must apply to the appropriate Court and then personally serve it on the judgment debtor. The judgment debtor will then be required to attend an examination hearing where they will complete a statement of financial position attaching all relevant documentation.
- Bankruptcy Proceedings: Where the judgment debt is greater than the statutory minimum and the judgment debtor is an individual, you may wish to serve a bankruptcy notice. The current statutory minimum for a bankruptcy notice is $10,000.00. A bankruptcy notice must be personally served on the judgment debtor. Once served with a bankruptcy notice the judgment debtor has 21 days to make payment, or otherwise enter into a suitable repayment arrangement. If the judgment debtor fails to comply with the bankruptcy notice then they have committed an “act of bankruptcy”, and you are able to present a creditor’s petition seeking a sequestration order which effectively makes them bankrupt. A trustee in bankruptcy is then appointed to investigate the debtor’s financial affairs for the benefit of creditors.
|Obtain a copy of the judgment|
|Identify the judgment debtors assets|
|Issue a Writ for Levy of Property|
|Issue a Writ for the Delivery of Goods|
The process of enforcing a judgment debt can be complex and time-consuming, and it may be necessary to seek the advice of a lawyer or a debt collection agency.
Additionally, there may be limitations on the amount and types of assets that can be seized, and there are certain exemptions that apply, such as a principal place of residence and other assets with exemptions by law.