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Recovering debts through the district court

ARTICLE by Francis Peters

August 2012

You have successfully obtained judgment against a debtor in the District Court, Tenancy Tribunal or Disputes Tribunal. Most people would think that the battle has now been won. This line of thinking is commonplace among most creditors, despite being inherently wrong.

However, if you do not enforce a judgment, then you may never see the proceeds of the judgment that you have rightfully obtained.

This article shall canvass some of the possible methods of enforcing a judgment and recovering your debt through the District Courts.

Prior to engaging Court action in respect of enforcement, it is important to talk to your Solicitor about drafting formal demands to the debtor, to pay up within a specified time frame.

If these formal demands do not deter the debtor, you should instruct your Solicitor to advance the matter through the District court Enforcement process.

There are a variety of options available to you as a judgment creditor (someone who has obtained judgment against another – the judgment debtor).

DISTRICT COURT ENFORCEMENT OPTIONS:

1. An Order for Examination

The most common and successful enforcement option is an Order for Examination. This is when the judgment debtor will have to attend a hearing at Court and their financial situation will be assessed and if possible the Court will order a payment plan. 

 This is a necessary step to obtain an attachment order (which is an Order to the debtor’s employer to deduct a portion for their wages or benefit and send that deduction to you). If the debtor is not working or not on a benefit, and Automatic Payment authority is likely to be sought.

If the judgment debtor does not attend the hearing you may apply for a Warrant of Arrest to be issued. This means they may be arrested and brought in for an Examination hearing or given bail on condition that they appear at a set time and date for the Examination. Your Solicitor will need to apply for this during the Order for Examination Hearing.

The costs of lodging the application for an Order for Examination Hearing as well the Solicitor’s attendance can be claimed back at the hearing, and these costs will be added on to the judgment debtor’s total debt.  

2. A Distress Warrant

This method of enforcement permits the Court to send a Bailiff to the address you supply and demand payment for the said sum. 

If no payment is made at this time, they can seize assets to recover payment. If the Bailiff is successful in seizing an item of property the debtor has five days to pay the full amount owing.  If they have not paid after five days the seized property is sold at a public auction.

Any costs of having the goods seized, such as vehicle towing fees and auction fees, are deducted by the Court from the amount recovered from the sale of goods before you are paid

3. A Garnishee Proceeding

 If you know that someone else owes the debtor money, you can apply to the Court to get an order for that person to pay the money to you instead. This proceeding is very rarely used, but is available as a cause of action.

4. A Charging Order

If the debtor owns property, you can apply to get a stay put on their property, preventing them from selling the property until the debt is paid.

5. Contempt Proceedings

If the debtor has the means to pay but does not, you can apply to have them appear before a District Court Judge who has the power to issue and order them to serve community work, as they have breached a Court Order by not paying. 

It is important to note that this community work does not reduce the debt that they still have to pay you as a creditor. This application is also commonly known as an Application for Community Work. 

WHAT WE CAN DO FOR YOU?

Corban Revell Lawyers have a number of skilled Barrister and Solicitors who regularly appear in the District Courts in respect of Debt Collection matters.

Please contact the writer Francis Peters on 09 837 5743, or at fpeters@corbanrevell.co.nz to discuss your matter with him.

Francis is a Barrister and Solicitor in Corban Revell’s Litigation Team. He frequently appears in the;

  • Waitakere District Court;
  • Manukau District Court and the;
  • North Shore District Court;

for Orders For Examination. His clients include several major finance companies, debt recovery agencies as well as private creditors.

He is well versed in debt recovery options and the accompanying enforcement action, and will be able to advise you on the proceeding you choose to undergo. Francis has attended numerous Orders for Examination Hearings and Contempt of Court Hearings, and he will also be able to draft a variety of formal demands, and attend Court hearings on your instructions.