You have won the case! But sometimes that is just half the job and enforcement can be a real battle. This article explains the different avenues available to you to enforce a judgment against a person
You have done the hard work and been successful in obtaining a judgment against a debtor. Despite your demand, they simply refuse to pay. So where to from here?
The process of enforcing a judgement, will depend on:
The amount of the judgment; and
Whether the debtor is a person or a company.
For more information on enforcing a judgment against a company, see our other article:
Enforcement Proceedings Against a Person
Enforcement is a process of examining a person to determine:
What assets they have; and
Their ability to pay the judgment debt.
Depending on the outcome of the examination, as an enforcement creditor, you may then have the right to seek a court order a warrant for the:
seizure and sale of property;
redirection of debt;
redirection from a financial institution; or
order for payment by instalment.
Bankruptcy
If the Judgment debt is $5,000 or more and against a person, you will have the right to issue a Bankruptcy Notice to the debtor.
A Bankruptcy Notice must not be used as a form of debt collection, but rather is issued for the purpose of giving the debtor one last chance to pay. If they do not pay the Judgment Debt in full (or take steps to set aside the Judgment) within the time specified on the Bankruptcy Notice, they have ‘Committed an Act of Bankruptcy[1]’.
Once an Act of Bankruptcy has been committed, as an enforcement creditor you will have the right to file a Creditors Petition to the Federal Court for a Sequestration Order. This is the order which ultimately makes a person Bankrupt.
If a person is made Bankrupt, a trustee is appointed. The trustee collects in all of the bankrupt’s assets and determines how debts will be paid. If you are the petitioning creditor you will have priority to have your costs of the Bankruptcy paid first[2].
In the event of bankruptcy, a judgment debt is treated as an unsecured debt. As an unsecured creditor you will be entitled to vote at creditors meetings. The trustee will ultimately determine the rate of payment of all creditors from the assets collected in (if any).
Choosing the right method of enforcement, can see faster results and increase chance of actually being paid. However, these processes can be daunting if you are tackling it for the first time. We always recommend talking to a professional first to maximise your chance of getting paid.
Contact Us
We are happy to provide advice tailored to your business's needs about enforcing a judgment against a person. The law can be complicated, so let our experienced construction law practice give you peace of mind. Call us on 07 3128 0120 or email us at subcontractors@arbuildinglaw.com.au.
End Notes
[1] S. 40(g) Bankruptcy Act 1966
[2] Costs to be ordered are a discretionary power of the court and will not necessarily cover all of the costs you may have incurred.
