Debt RecoveryDebt recovery is all about maintaining a constant relationship with the debtor and finding the point where the resistance to paying is removed.

Enforcing Court Orders

Before commencing enforcement proceedings, here are some notes about issues that you should consider.

Enforcement is only available once a court order has been obtained either by default or following a defended hearing.

There are a number of enforcement options available. The most usual ones are listed below. Whilst the names of the various processes change from state to state, you would expect each of these processes to be available in each state. The cost estimates given are indicative only and will be confirmed once a particular enforcement option is selected as appropriate.

Warrant to Seize & Sell Personal Property

This is the most common method of enforcing judgment. It involves issuing a Warrant against the debtor and instructing an officer of the Court known as the Sheriff to attend at the premises of the debtor to seize goods belonging to the debtor and then sell those goods in satisfaction of the debt.

If you believe that the debtor in this matter has personal property standing in the debtor’s name then this procedure can be undertaken. However, our experience is that debtors are quite easily able to avoid handing over goods in their possession and that the warrant to seize and sell personal property does not often bring a result unless we can direct the Sheriff’s officer to particular personal property.

To this end, we would recommend using a warrant to seize and sell property where a specific asset e.g. a motor vehicle can be identified. If you believe that the debtor owns a motor vehicle in his or her name then you should let us know the vehicle details e.g. make, model, registration number, where is it usually garaged etc.

The estimated cost will be:

Vehicle Registration Search
$121.00
Magistrates Court Fees
$40.00
Sheriff’s Fees
$200.00
Solicitors Fees
$150.00

Warrant to Seize & Sell Real Estate

In the event that the debtor owns real estate, it is possible to make an application to the court for the sale of this real estate in satisfaction of the debt. Only the debtor’s interest in the real estate may be taken to pay the debt. As such, if the debtor has little or no equity in the real property, then this may not be a viable enforcement option.

A warrant to seize and sell real estate can only be issued once an attempt at a warrant to seize and sell personal property has been tried and failed.

The issue with attempting to sell land in satisfaction of the debt is the amount of time involved in the process. Orders from lower courts need to registered in the Supreme Court which has the jurisdiction to order sale of land. Once the judgment is registered in the Supreme Court, the warrant can be issued.

If you believe that the debtor in this matter has real estate standing in the debtor’s name then this procedure should be undertaken as it has a high probability of bringing a positive financial return.

The estimated cost will be:

Title Search
$30.00
Certified Extract of Judgment
$506.00
Registration of Judgment in Supreme Court
$300.00
Sheriff’s Fees
$600.00
Solicitors Fees
$800.00

Oral Examination of Judgment Debtor

This procedure is one which involves gathering of information only. It comprises of issuing a Summons for the debtor to appear in court and answer a series of questions about the debtor’s financial position. The Registrar of the court interviews the debtor, completes a financial position summary and reports back to us. The idea is that once the debtor’s financial position is known, we will be in a better placed to decide which specific method or recovery is most suitable to pursue. The Summons for Oral Examination is a valuable tool because it is often the first time in the legal process where the debtor must physically appear in Court. Up to this point, the debtor can simple ignore the process but if the debtor fails to appear for a Summons for Oral Examination then the court will usually direct the debtor be arrested. This usually provides incentive for an appearance which in turn often prompts action in relation to payment.

The Summons is a document prepared by E C Legal and issued by the court. It states the details of the judgment debt and requires the attendance of the debtor at court at a particular time and day to be examined. The date for the examination will be approximately 8 weeks from the time the Summons is issued and the court venue will the venue closest to the address for service of the debtor. The Summons also requires the debtor or debtor company’s director to produce all relevant financial documents for examination.

Once the Summons is issued it must be personally served on the debtor. We will organise this.

The estimated cost will be:

Court Fees – Issue
$40.00
Court Fees – Hearing
$80.00
Service
$80.00
Conduct Money
$10.00
Solicitors Fees – Documents
$200.00
Solicitors Fees – Attend Hearing
$300.00

Attendance by a solicitor at the hearing is optional in most states but is recommended.

Attachment of Earnings – Garnishee Orders

Where the debtor’s place of employment is known, this procedure enables an application to the court to be made on your behalf for an order that the debtor’s employer deduct a certain amount of the debtor’s earnings in order to pay the debt by way of instalments. These payments are deducted directly from the debtor’s salary by the employer and sent to us.

The estimated cost will be:

Court Fees – Issue
$100.00
Service
$80.00
Solicitors Fees – Documents
$400.00
Solicitors Fees – Attend Hearing
$350.00

Attachment of Debt

Where it is known that the debtor has an amount owing, it is possible to apply to the Court for an order that the person who owes the money to the debtor should pay it to you rather than the debtor.

The estimated cost will be:

Court Fees – Issue
$50.00
Service
$80.00
Solicitors Fees – Documents
$400.00
Solicitors Fees – Attend Hearing
$350.00

Bankruptcy

Bankruptcy is process where the control of the debtor’s assets are taken away and placed in the hands of another person known as the Trustee. A number of restrictions are imposed on the debtor including the amount that is able to be retained from earnings, owning of property, overseas travel etc.

Because of the nature of the jurisdiction and the drastic consequences to the debtor, this procedure is very strictly controlled by the Federal Court and can be costly. It is only useful where the debtor has assets either in his own name or recoverable by a trustee that the debtor refuses to sell in order to pay your debt. It may also be effective where the debtor wishes to avoid the stigma and inconvenience of becoming bankrupt and as such the threat of bankruptcy forces the debtor to come up with the money to pay you.

Bankruptcy proceedings can only be taken against an individual.

For more information on bankruptcy, see www.itsa.gov.au

The estimated cost will be:

Issuing of Bankruptcy Notice
$450.00
Solicitors Fees – Bankruptcy Notice
$250.00
Service of Bankruptcy Notice
$120.00
Federal Court Issue Fee
$700.00
Service
$200.00
Solicitors Fees – to conclusion
$3,000.00

Company Liquidation

Company liquidation is the corporate equivalent of issuing bankruptcy proceedings.

The procedure starts with a Creditors Statutory Demand which requests payment of the debt owed by the company with a specified period. If the debt is not paid, the company can be wound up.

If the company is trading and wishes to continue trading then liquidation can be an effective option.

The estimated cost will be:

Solicitors Fees – Statutory Demand
$250.00
Company Searches
$100.00
Federal Court Issue Fee
$1,000 or $2,000
Advertising
$500.00
Solicitors Fees – to conclusion
$3,000.00

YOUR CONSIDERATIONS

Cost

As in all successful proceedings, the solicitors costs and out of pocket expenses are recoverable on a successful action against the debtor. However, these expenses will be lost if no recovery occurs.

Some enforcement proceedings such as Bankruptcy and Warrant for Seizure and Sale of Real Estate are expensive and therefore if the debt is small, it may not be worthwhile pursuing them.

E C Legal can provide you with an exact price for the work to be done provided that the nature of the legal work can be accurately defined. The more information that you are able to provide us, the more likely this is to be the case.

Information about the Debtor

Information about the debtor’s financial position is vital at the enforcement stage. For example, if you know that the debtor is employed, you may apply to attach his/her earnings. If the debtor has substantial personal assets or real assets it may be possible to seize and sell these assets. If the debtor operates a business it may have debtors of its own, in which case an attachment of debts application may be appropriate.

We strongly recommend that you find out about the debtor’s circumstances and advise us accordingly.

Information about other Creditors

If the debtor has other substantial creditors, it will be necessary to take into account the impact of this on the debtor’s position. If for example there are other creditors taking recovery action against the debtor such as bankruptcy proceedings or winding up proceedings, it may not be worthwhile for you to take any action whatsoever as this will not benefit you directly.

Starting the Enforcement Action

If having read this, you are in agreement that enforcement action against the debtor is necessary, then I you need to identify which type of enforcement action you think will work and I will arrange for E C Legal to confirm the cost.

Lawyers from E C Legal are available to discuss your case with you personally. To obtain full and proper legal advice, you should consult a lawyer in person. However, you need to be aware that E C Legal will charge you scale for the time spent in such a consultation – allow about $50.00 – $100.00 if you wished to have a short consultation about enforcement options which will last about 15 minutes by phone.