If a debtor has been ordered to pay you money but they have still not paid in full, then you may like to read on.
Many people who pursue a debt through the courts are surprised to learn that obtaining a monetary judgment is only the first step in a debt recovery proceeding. Enforcing a judgment is sometimes necessary when you are dealing with a debtor who for whatever reason simply will not pay, or at best drags things out unnecessarily.
The main enforcement options available are to seek:
- a ‘Time for Payment Order’ which in simple terms is a Court Order that the debtor pays you the judgment sum by a certain date or within a certain timeframe (eg 14 days) which is ordinarily the preferred outcome if at all possible;
- an ‘Instalment Order’ which in simple terms means that the judgment sum is paid off over time by regular instalments, but which potentially will be defaulted on requiring another round of court hearings;
- a ‘Debt Appropriation Order’ which in simple terms means that if you are aware of a debt owed by a third party to the debtor then you can apply for that debt to be paid directly to you in part or whole satisfaction of the debt owed to you by the debtor;
- a ‘Property (Seizure and Sale) Order’ which in simple terms means that you can apply to send the bailiff to the debtor’s home or business to seize personal property (eg a vehicle) or potentially even real estate to satisfy the judgment debt in part or full;
- an ‘Earnings Appropriation Order’ which in simple terms means that the debtor’s employer pays a portion of the wage directly to you until the debt is satisfied in full (which in practical effect is a very similar outcome to an Instalment Order); or
- to wind up the judgment debtor (if it is a company) or force bankruptcy (if an individual).
Each of the above options has pro’s and con’s. For example, an Earnings Appropriation Order may be a good option if the debtor has been with the same employer for a long time and is approaching a period of long service leave ,but a poor option if the debtor changes employer on a semi-regular basis. Similarly, an Instalment Order may seem like a good outcome where a debtor is of limited means but if the debtor has the ability to pay then an Instalment Order is effectively allowing repayment of the debt to be further dragged-out and as such sending the bailiff around may be a better option.
Further, each of the above options has different costs associated with it, from the court and service fees to legal fees. For example, if you send the bailiff around then you will also pay some additional bailiff travel costs whereas if you elect to pursue a Time for Payment Order or an Instalment Order then you may well go through what is called a ‘Means Inquiry’ process where the debtor is called upon to provide evidence of their financial position. If you engage a lawyer to assist and/or represent you in that process then your legal costs can potentially be quite high if it becomes drawn-out for any reason. However, regardless of which option you settle on initially, you can always change tack if you need to. The standard application form is a Form 6 (which can be downloaded from the Magistrates Court website) and you only pay the application fee the once. That fee is recoverable from the debtor in addition to the judgment.
Furthermore, you have six years as of right to enforce a judgment so if a debtor is of limited means now, sometimes sitting back after obtaining judgment and waiting to see if their circumstances improve can be a sensible approach.
Finally, if you have read this far and need to get some further practical advice about how to go about taking enforcement action through the Magistrates Court then get in touch. Commencing an enforcement action is not without risk but where a debt simply needs to be recovered it is often a concrete step toward getting paid.