- It is important to think about whether a debtor can pay before commencing proceedings;
- The law tries to assist in recovering money following a judgment; and
- Enforcing a judgment is not always effective and its effectiveness varies from case to case.
Maybe you can’t get blood from a stone but we can help you try. It is often the case that once judgment has been handed down in a litigated matter, whether it be at the conclusion of a hearing or by way of default judgment, there is often an order for payment of some sort. These orders can relate to solicitor costs, or in debt recovery proceedings the orders can be the sum of the debt.
For most clients, a judgment in their favour is a big relief and can signify to them the end of a matter, but what if the losing party fails to pay in accordance with the judgment? Fortunately, the law provides a number of enforcement options to secure payment, each beneficial and limited in their own effectiveness:
Garnishee orders are a further order made by the court which directs a third party to pay the debt directly to the creditor. For example, you can ask the debtors bank to pay from their bank account directly to the person who is owed the money.
The pitfall with this enforcement method is that it relies on the creditor to have information about the debtor’s accounts, whether it be bank account details, employers detail etc. Secondly, if the debtor does not have enough money to pay the debt, the garnishee order will fail.
Writ for the Levy of Property
This enforcement method authorizes a sheriff to attend to the debtor’s property and seize goods to the value of the debt. The sheriff will auction the goods and provide the creditor with the debt owed.
A writ for the levy of property relies on the creditor knowing the address of the debtor, the debtor being able to be on the premises to accept service of the sheriff’s notice and the debtor having sufficient goods to repay the debt.
Further, it is possible to force the sale of a debtors house.
Examination Notice and Examination Order
An examination notice is not required to be filed with a Court. The notice is issued to the debtor by the creditor and requests that the debtor advises the creditor of their assets, income, debts. This notice provides the creditor with information to make a decision to further enforce the judgment through other methods.
If the debtor fails to comply with the notice, the creditor can apply to the court for an examination order. This will require the debtor to attend court and provide information on their assets, income and debts. In the event that the debtor does not comply, or provides insufficient information, they can be arrested.
There is an assumption that if an individual or a company cannot repay their debts, that they must be bankrupt/insolvent. This allows creditors to issue a notice to the debtor threatening that they will apply to the Court to make them bankrupt/deemed insolvent if payment is not received.
This enforcement option is only available for debts over a certain monetary value ($10,000.00 for individuals and at least $2,000.00 for companies).
As you can see, these enforcement methods all have their pitfalls and can quite easily become costly with no real guarantee of results. For this reason, it is important to think about the debtor’s assets and or ability to repay any debts before commencing and or participating in any litigious proceedings because you can try, but as the old saying goes,- ‘you can’t get blood out of a stone’.
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This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever to this blog, including all or any reliance on this blog or use or application of this blog by you.