Garnishee Orders

18 February 2022 in Debt Recovery | 3 min read | skip to FAQs

There are several legal enforcement mechanisms which can be used to obtain a debt that you are owed. Garnishee orders are a type of enforcement mechanism used in debt recovery. This article gives a brief overview of the debt recovery process and the role of garnishee orders in enforcing a court judgement.

The Process of Debt Recovery

1. In general, the first step in the recovery of a debt is a letter of demand. This is a relatively inexpensive and rapid process where a letter is send to a debtor outlining the details of the debt and demands payment by a certain date. The debt recovery lawyers at BSM Sydney Lawyer consistently find that a letter of demand results in the recovery of a debt in over 75% of the debts that we handle.
2. If a letter of demand doesn’t result in the payment of a debt, the next step is the issuing of a statement of claim. This is a legal document that initiates legal proceedings, describes the course of action, the nature and often the amount of the claim. This document is filed with the court and subsequently served on the debtor, who is then known as the defendant. Once served on the defendant, they have 28 days to file a defence to the court.
3. If the debtor/defendant doesn’t pay the debt or file a defence, debt recovery lawyers can make an application to the court for a default judgment. If a default judgement is awarded by the court, the person who is owed the debt, who is known as the plaintiff is legally able to recover the debt.
4. Sometimes, the debtor will file a defence and attend court to contest the debt.
5. The amount of the debt determines which court the matter is heard in. For instance, debts between $20,000 and $100,000 are heard in the Local Court, debts between $100,000 and $750,000 in the District Court and debts over $750,000 are heard in the Supreme Court.

What Happens if the Court finds in favour of the person owed the debt?

In legal terms, the magistrate, judge or justice issues a judgment that the debtor or defendant must pay the debt that they owe to the plaintiff. This judgement is valid and available for enforcement for 12 years. Once this judgement is received, the defendant will usually pay the money that is owed.

However, sometimes the defendant refuses to pay and other methods of enforcing the judgement may need to be employed by debt recovery lawyers. This includes garnishee orders, bankruptcy, insolvency or writ for levy of property. For more information on writ for levy of property, please see our dedicated article.

What are Garnishee Orders?

Garnishee orders are an effective way to enforce a court judgement for the repayment of a debt. They are useful where a debtor refuses to pay a debt contrary to a court decision. In general terms, these orders compel third parties that control funds of the debtor (the person who owes money) to pay money directly to the creditor (the person who is owed money). Examples of third parties include the debtor’s bank and employer. It is important to note that time limits apply to payments from garnishee orders. These time limits change depending on the circumstances in which the order was made. The process and rules governing applications for garnishee orders in NSW are found in Part 8 Division 3 of the Uniform Civil Procedure Rules 2005 (NSW).

Non-Compliance in garnishee orders

When a garnishee order has not been complied with, a creditor can seek assistance from the court. The court can determine the liability of a party to pay the money sought under a garnishee order. Upon determination of the party’s liability, the court may choose to order the party to pay the creditor the appropriate amount or may refuse to do so at it’s own discretion.

Debtor Applications in garnishee orders

Debtors can make certain applications in response to a garnishee order made by a court for a debt that they owe a creditor. Debtors can apply to have the court vary or suspend payments made under a garnishee order.

How can BSM Sydney Lawyers assist you?

The debt recovery lawyers at BSM Sydney Lawyer are experts in debt recovery. We are highly effective negotiators and work hard to avoid litigation, thus saving our clients time, money and stress. We successfully recover over 90% of debts without litigation. In over 75% of cases, a simple letter of demand results in debt recovery.

Our debt recovery lawyers appear regularly in the Local, District and Supreme Court, handling all financial levels of debt recovery ranging from small amounts owed to individuals through to several millions owed to large companies. We are very familiar with the range of enforcement of judgement techniques including garnishee orders. The debt recovery lawyers at BSM Sydney Lawyers offer a free 20-minute consultation.

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BSM Lawyer Sydney have conveniently located offices in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.