You have a Judgment Debt in your favour – now what?

25 July 2017 in Articles

Judgment Debt

If you have obtained a judgment from a Court or Tribunal in your favour, you are known as a judgment creditor. The person or business who owes the debt is known as the judgment debtor. Even if you obtain a judgment, the judgment debtor might not have the means, or the inclination, to pay the judgment debt. If that is the case, there are a number of procedures which you can use to enforce the judgment. We look at some of the more common methods to enforce a judgment debt in Western Australia below. Most other states have similar schemes (although the names might be different).

Means Inquiry (also called an Examination Summons)

You can apply to the Court to summons a judgment debtor to appear before Court to be examined about what income or assets the debtor has to satisfy the judgment debt. This can sometimes be a useful procedure to ascertain the financial status of the judgment debtor and can help you decide what further action to take, if any. If the debtor fails to turn up to Court for a Means Inquiry they can be arrested.

Property (Seizure and Sale) Order (also called a Writ of Execution)

A Property (Seizure and Sale) Order or PSSO entitles the Sheriff’s Office (of the Bailiff in some cases) to go to the judgment debtor’s house and seize property owned by the judgment debtor to sell at auction in order to satisfy the judgment debt.

Earnings Appropriation Order (also called a Garnishee Order)

An earnings appropriation order is given to the judgment debtor’s employer and requires them to pay a portion of the judgment debtor’s salary to you, until the judgment debt is paid.

Bankruptcy/Winding Up

The most aggressive (and most complicated) procedure to enforce a judgment debt involves issuing and serving a Bankruptcy Notice (if the debtor is a person) or serving a Statutory Demand (if the debtor is a company). These procedures require payment of the debt within 21 days can have very serious consequences for debtors if they fail to pay, including bankruptcy for an individual debtor and winding up and deregistration in the case of companies.

Other Considerations

Before taking steps to enforce a judgment debt, you should consider whether the debtor has any income or assets to pay the debt. Although the costs of enforcing a judgment debt are added to the debt that is owed to you, if the debtor does not have any way of paying, you may end up throwing good money after bad. If you or someone you know wants more information or needs help or advice, please contact us.