Enforcing a Judgment Debt in NSW


Enforcing a Judgment Debt in NSW

It is not uncommon for a judgment debtor to avoid complying with a judgment to repay a debt. When this occurs, how do you, as the judgment creditor, seek to enforce payment of the judgment debt?

There have been a number of changes to the debt recovery options in NSW arising from the pandemic, but coming in 2022 here are the ways in which a judgment debt may be enforced.

1. Examination Notice

As a preliminary step, if you have insufficient information as to the judgment debtor’s financial affairs you may wish to issue an examination notice.

An examination notice requires the judgement debtor to disclose to you, among other things, their income, assets, and liabilities. Once you are aware of the judgment debtor’s financial affairs you will be better placed to determine your next steps.

The judgment debtor must respond to an examination notice within 28 days of receipt.

2. Examination Order

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.

3. Garnishee Order

If you are aware that the judgment debtor holds a bank account(s), earns a wage or salary or is owed money themself, you may apply to the Court for an order to have money automatically deducted from the judgment debtor’s bank account(s), wages or salary and paid to you, or seek payment of the judgment debt from anyone else you can determine owes the judgment debtor money.

If the judgment debtor receives Centrelink payments, all or part of the money in their bank account may be protected from a garnishee order. A garnishee order must also not leave the judgment debtor with less than the weekly compensation amount to ensure they can meet their basic living expenses.

4. Writ for the Levy of Property

If you are aware that the judgment debtor owns either personal property or real property you may apply to the Court for the sheriff to seize and sell the judgment debtor’s property.

A writ for the levy of property lasts for a period of 12 months after being issued; however, you can apply to the court for an extension.

5. 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.

6. 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.

7. Insolvency Proceedings

Where the judgment debt is greater than the statutory minimum and the judgment debtor is a company you may wish to serve a statutory demand. The current statutory minimum for a statutory demand is $4,000.00.

Upon issuing a statutory demand by post to the company’s registered office, the company will have 21 days to address demand, or alternatively seek to have the demand set aside. If the company fails to address the demand, the company is presumed insolvent, and you may file an application in the Supreme Court of NSW or the Federal Court of Australia to wind up the company.

If a company is wound up, then a liquidator is appointed and takes control of the company.  The liquidator investigates the financial affairs of the company for the benefit of creditors.

Need advice?

At Hunt & Hunt, we have a national debt recovery team who can assist you with anything debt recovery related, including the enforcement of a judgment debt in NSW.

Our considerable experience across all jurisdictions within Australia can provide you with the comfort to know you are being looked after by the best during this stressful time.

If you require advice specific to your circumstances, please don’t hesitate to get in touch.

Article prepared by: Matt Gauci, Partner, Jess Egger, Associate & Dallas Torresan, Law Clerk