By Chloe Howard, a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group
Whilst there are many options for enforcing a judgment debt, in the right matter a Garnishee Order can be an extremely effective debt recovery tool. They are inexpensive to issue and all you need is the debtor’s name to get the process started. So, what is a Garnishee Order and how can a Garnishee Order help in recovering a debt owed to you?
What is a Garnishee Order?
A Garnishee Order is an order of the Court which allows a judgment creditor to recover or ‘garnish’ a debt from a judgment debtor by essentially ‘seizing’ monies from the judgment debtor without their permission by going directly to a third party for payment.
How can a Garnishee Order help recover the debt owed to me?
A Garnishee Order can be enforced in any of the following ways:
Wages
If the judgment debtor is employed and earns an income, a Garnishee Order can be issued to the debtor’s employer. In this situation, the employer will deduct funds from the debtor’s pay cheque and pay that amount directly to you by way of instalments.
The debtor must be left with at least $512.10 per week (this amount is adjusted every April and October), so if the debtor is not making more than this, a garnishee order for wages will not be successful.
Depending on what the debtor is earning, this process can take some time before the debt is satisfied. However, the Garnishee Order does not expire so the wages of the debtor will continue to be garnished until the debt is satisfied.
Bank accounts
If the judgment debtor has an amount saved in their bank account, whether it can completely cover the debt or not, you’re in luck! By issuing a Garnishee Order on the bank, you can bypass the judgment debtor completely and the bank will be forced to pay those funds to you. The debtor must have $512.10 plus $20.00 in their account before the bank will comply with the Garnishee Order, so it’s important to have some knowledge that the debtor has sufficient funds in their account to satisfy a Garnishee Order before applying, or at the very least which bank or financial institute they hold an account, otherwise the Courts may take a hard line and refuse the application for a Garnishee Order (no fishing expeditions here).
If the funds held by the bank are from Centrelink payments, you’re generally out of luck as there are rules in place that limit whether you can obtain any of those funds.
Monies owed to the Judgment Debtor
Knowing a little bit about the judgment debtor can help find avenues for debt recovery. Maybe the judgment debtor has an investment property and is getting in rental returns. Maybe you know the debtor is a contractor and is owed money by a third party? If that is the case, a Garnishee order is a great solution to recovering the debt owed to you.
A Garnishee Order can be issued against a third party (such as a real estate agency) so that any funds they receive that are due to the debtor can be paid directly to you. The same rules apply for these third parties that apply to banks, with the third party holding amounts greater than $512.10 for a Garnishee Order to be successful.
If you would like more information or advice in relation to the use of Garnishee Orders in your debt recovery matter or in relation to insolvency, restructuring or debt recovery law in general, please contact a Principal of the Matthews Folbigg Insolvency, Restructuring and Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
