By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group
One powerful way to enforce a judgment against a debtor is by applying to the Court for a garnishee order.
Garnishee orders against a debtor can either attach to any monies owing to the debtor, including the debtor’s bank accounts, even the debtor’s employer.
A garnishee order against a debtor can be served on a bank, employer, or other entity/individual that owes money to the debtor, to garnish the debtor’s money from either:
- bank account/s;
- wages/Salary; or
- other means.
One advantage of a garnishee order is that should a garnishee fail to comply with the garnishee order in relation to the judgment debtor, a creditor will have liberty to apply to the Court for a judgment in relation to the garnishee order, pursuant to Section 124 of the Civil Procedure Act NSW (2005).
“Thinking outside the box” regarding debtors and garnishee orders can also be quite helpful when ascertaining what debt recovery avenues might lead to the best recovery from a debtor. An example of thinking outside of the box may be applying for a garnishee order in relation to a debtor in particular circumstances. For instance if a debtor is owed monies for a sale of property, or if a debtor is receiving rental income, these may be able to be attached by a garnishee order in relation to the debtor.
Many creditors do not always consider garnishee orders as an enforcement option as they are not presently aware of the debtor’s bank account details or have any information about monies owed to the debtor that might be used to apply for a garnishee order. However, there are some tricks to locating such information, and creditors often have useful information regarding a debtor’s financial circumstances, including credit applications, or previous communications or transactions which may reveal important information about a debtor, which may be able to be used to obtain a garnishee order in relation to a debtor.
There are some limits on garnishee orders including where there is simply insufficient information on the debtor’s possible assets / income, which may prevent use of a garnishee order. However, other steps may be able to be used to obtain such information about a debtor, and may make a garnishee useful at a later stage to enable recovery from the debtor. One lesson to be learned is that it is important to ensure that, if at all possible, plenty of documents and information is collected regarding a debtor’s financial position to make it easier to enforce a judgment against the debtor by way of a garnishee order.
Matthews Folbigg Lawyers has a specialist team dedicated to Insolvency, Restructuring and Debt Recovery.
If you would like more information or advice in relation to recovery from debtors, garnishee orders, or in relation to Insolvency, Restructuring or Debt Recovery practice and procedure, please contact Stephen Mullette or Jeffrey Brown on (02) 9806 7459 or (02) 9806 7446, or email stephenm@matthewsfolbigg.com.au or jeffreyb@matthewsfolbigg.com.au.