Debt Recovery - Debtor's point of view - Part 2

The Plaintiff Also Owes Me Money; What Can I Do?

You should claim the money from them as part of your defence. This is called a cross-claim. It must be filed with the court within 28 days of the Statement of Claim being served on you. You should file the cross-claim at the same time as you file your Notice of Grounds of Defence. You will then need to arrange for a copy of the cross-claim to be served on the person claiming against you. 

I Agree I Owe The Debt. What Do I Do Now?

By having your lawyer sort the matter out with the person making the claim before it goes to court, it will be cheaper. If the matter goes to court and you lose, you risk having to pay the other side's costs. Also, by negotiating the matter before it goes to court, you might also be able to work out a payment system that is easier for you. Even if you agree that you owe the money but don't agree on the amount, you can try to negotiate the matter before it goes to court. If you make an agreement with the person making the claim, you will need to submit an "agreement as to judgement" form in the court, which tells the court that there is no need to have the matter heard by a magistrate.

I Agree That I Owe Only Some Of The Money Being Claimed. What Can I Do?

You will need to file a Notice of Grounds of Defence or a Statement of Confession to part of the debt. If you file a defence you should deny the part of the debt that you do not owe and admit to the part that you do owe. Remember that if you admit to part of the debt, you will have to arrange payment.

There Is A Judgement Against Me. What Happens Now?

A judgement debt means that the Court has ordered that you owe the money to the Plaintiff. There are a number of ways a judgement debt can be enforced. You might have to pay in full, or by instalments, or the money could be taken from your bank account or wages. Sometimes your furniture or other goods can be taken and sold under an order called a 'Writ of Execution'. 

What happens when I have a Judgement Debt to pay?

If you go to Court to defend yourself against a claim that you owe money and you lose, or if there is a Default Judgement made in your absence, there will be a Judgement Debt that you have to pay. Judgement Debts can be enforced at any time in the twelve years after they were ordered.

Do I Have To Pay Straight Away?

Usually, yes. If you don't pay, or can't pay, the person who wants to enforce the judgement can apply to the court to recover their money in another way. You can also apply to the court to be allowed to pay the money by instalments if you can't afford to pay the lump sum owed.

I Would Like To Pay By Instalments. What Do I Have To Do?

Your lawyer will ask the magistrate at the time of judgement to order that you pay by instalments. You can also apply at any time after the judgement. If you apply after the judgement is ordered you will have to prove that your circumstances would not enable you to pay straight away. You can also make a formal agreement with the person to whom you owe the money. Always discuss your options with your lawyer.

How Can The Money Be Recovered From Me If I Don't Pay?

The person seeking to enforce the judgement debt can summons you to court so that they can question you about your financial situation. You will have to be served with an 'examination summons' which will set out what information you will need to present to the court. You might have to prove your income and assets or disclose other financial information about yourself in court. This is so the court can work out what would be the best way for you to pay the debt. You will then probably be ordered to pay in a certain way, often by instalments.

If you receive an examination summons you MUST attend the court on the day specified.

The other way a creditor can make you pay is by taking a regular amount from your wages or bank account. This is called a 'garnishee order'. The first you might know of a garnishee order on your wages or bank account is when the money is actually taken out. If you are having your wages reduced in this way and it is causing you hardship, you can apply immediately to the court for an instalment order. 

If I Don't Have Any Wages Which Can Be Taken, Can My Goods Be Seized And Sold?

They can be. A sheriff can come to your house and ask you to pay the debt or have your goods taken and sold to cover the amount. Most sheriffs will give you time to negotiate and you should try to come to some agreement. 

What Property Can Be Taken?

Only property that belongs to you. They cannot take something that belongs to another member of the household, anything rented or hired, anything that is not paid off or anything that has been used as security for a loan. If the sheriff tries to take something that is not yours, you might need to show receipts to prove ownership. They also cannot take your basic living equipment such as pots, pans, blankets, beds and refrigerators or anything you, or another household member, uses to earn a living (with some exceptions). Most of the time, the sheriff cannot take land owned by you, but if they have already sold your other property and the debt is more than $3000, they might be able to sell your land. Any money that remains after the goods are sold and the debt is paid off is returned to you.

Do I Have To Let The Sheriff Into My House?

No. They are not allowed to force their way into your house and you can refuse them entry, but you must do so politely. Assaulting or obstructing a sheriff is an offence and you could be fined or gaoled. They can, however, enter an open or unlocked door without your permission. They are allowed to force their way into buildings on the property that is not physically connected to the house, for example, garages and sheds.

What Happens If I Am Unable To Pay The Debt In Any Way At All?

If the debt is $2000 or more, the person who you owe can start proceedings to bankrupt you. There are many serious implications of being bankrupt. You can also go bankrupt voluntarily but you should seek legal, or financial, advice before deciding to do this. Don't forget when you owe a debt and a pursued to pay it the final outcome will be that unless it is paid, part paid by agreement or extinguished it will effect your credit rating and you will be listed as a judgement debt which effectively destroys your credit rating.

Remember, most lawyers do not want to deal with small debts because only limited costs can be recovered on the clients behalf.

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