Factsheet No. 7
What happens when I have a Judgment Debt to pay?
- Do I have to pay straight away?
- I would like to pay by instalments. What do I have to do?
- How can the money be recovered from me if I don't pay?
- If I don't have any money or wages which can be taken, will my goods be seized and sold?
- What property can be taken?
- Do I have to let the bailiff or sheriff into my house?
- What happens if I am unable to pay the debt in any way at all?
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 Judgment Debt (Court Order) made which you would have to pay. Judgment Debts can be enforced at any time within the 12 years after they were ordered.
Do I Have To Pay Straight Away?
Usually, you are given thirty (30) days to pay the debt after the order is made. Then, if you donâ€™t pay, or canâ€™t pay, the person who wants to enforce the judgment debt can apply to the court to recover their money in other ways. You can also apply to the court to be allowed to pay the money in a different way if it would be easier for you, usually by instalments. Payment by instalments may be an easier way of paying a judgment debt. Interest will also start to run on any unpaid judgment. Currently as at 17 March 2008 the rate is 10.00% per annum.
I Would Like To Pay By Instalments. What Do I Have To Do?
You can ask the magistrate at the time of the judgment to order that you pay by instalments. You can also apply to pay by instalments at any time after the judgment. If you apply after the judgment is ordered, there are forms you need to fill in and you will have to prove that your circumstances would not enable you to pay straight away. A Chamber Magistrate may be able to help you with the forms.
You can also make a formal agreement with the person to whom you owe the money. This agreement needs to be entered into by both of you signing a form, which outlines the terms agreed to. This needs to be provided to the court and both parties should keep copies. You should always get legal advice before signing anything, especially if you are unsure. You may also make an informal agreement with the other party, whereby they will not enforce the judgment against you if you pay a particular amount as agreed. It is best to have this agreement in writing and for you to keep receipt of your payments.
How Can The Money Be Recovered From Me If I Don't Pay?
There are a number of options available to the person seeking to enforce the judgement debt against you. They can summons you to court so that they can question you about your financial situation. You would have to be served with an â€˜Examination Noticeâ€™ which will set out what information you would need to present to the court. You might have to prove your income and assets or disclose other financial information about yourself in court. These proceedings will more often involve the Judgment Creditor (who you owe money to) asking you questions about your financial situation. This allows the judgment creditor to work out what would be the best way to recover its debt from you. You will then probably be ordered to pay in a certain way, often by instalments.
The other way you can be forced to pay is by taking a regular amount from your wages or bank account. This is called a â€˜garnishee orderâ€™ and it usually means that quite a lot of money is taken each time until the debt is paid off. The first you might know of a garnishee order on your wages or bank account is when the money is actually taken out.
A garnishee order can mean great financial hardship for you, and may affect your ability to pay other debts and bills such as your rent. If you are having your wages reduced in this way and it is causing you hardship, you should apply immediately to the court for an instalment order. With an instalment order, the repayments can be smaller over a longer period and therefore be more manageable.
If I Don't Have Any Money Or Wages Which Can Be Taken, Will My Goods Be Seized And Sold?
Yes, a bailiff or 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 owed and reasonable enforcement costs. Most bailiffs and sheriffs will give you time to negotiate and you should try to come to some agreement. However, be careful that you do not make an agreement you cannot keep. It is very stressful being threatened with the seizure and the sale of your goods and you should try not to be scared into any unfair arrangements.
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, or anything that is not paid off because it is used as security for a loan (called a Charge or a Bill of Sale or Mortgage). If the bailiff or sheriff tries to take something that is not yours, you might need to show receipts to prove ownership. However, if goods are held in joint names they can be seized and your share/value could be used as payment towards the debt.
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 bailiff or sheriff cannot take your land, 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.
Be careful of people you owe money to who threaten to take your goods where court proceedings have not yet commenced and there is no order against you or another party whom you own property with. The only way that this can happen is where that person holds some security over some of your goods, such as a car, or whitegoods (refrigerator, washing machine etc) where it has the legal right to repossess that item where there is a breach under the contract. Specific rules exist, such as the notices that are required to be given to you before this can happen. However, in some instances notices are not required. You should get legal advice immediately if someone is threatening to take your goods or have already done so.
Do I Have To Let The Bailiff Or 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 bailiff or 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 other than the house, such as garages and sheds
What Happens If I Am Unable To Pay The Debt In Any Way At All?
If the debt is greater than $2000, the person who you owe can start proceedings to bankrupt you. There are many serious implications of being bankrupt. You can also become bankrupt voluntarily but you should seek legal, and financial advice from a qualified Financial Counsellor before deciding to do this.