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How Your Business Can Recover Debt if You Have Received a Court Judgement

recovering debt business

If you’re a business and you’re owed money and have received a court judgement to recover the debt, what are the next steps? In this podcast, Cameron Marshall, Business Lawyer of OMB Solicitors sets out the ways your business can recover the debt.

Dan:  Cameron, where does a business start to recover this debt?

Cameron:  Yes well that’s a good question. The first place to start is if we’re dealing with the civil courts in Queensland, the uniform civil procedure rules as they’re usually the best place to start. Now I’ll just talk about an individual today, but these can also apply to some, in some cases, corporations. So the first thing you’d be looking at is to enforce the judgement, which you would have, in the courts in the uniform civil procedure. So that’s after the judgment’s been given, and you make an application to the court.

Cameron:  Usually the first step is what they call an enforcement hearing. Now that’s really a process just to ascertain what the debtor might has to do to pay your debt. So that’s a very important thing to start off with. So you can show up and you know which actual tool that you wish to use to be able to get your money back.

Dan:   So Cameron is the fact that the the court judgment’s been done and dusted, is that sort of half the battle won?

Cameron: Oh definitely, that’s in some cases the easy part. We have a famous saying, you can’t get blood out of stone, but people don’t like paying money and a lot of the time you’ve got to drag them to make them pay, and the way to do that is through the recovery process. So yes.

Dan:  Right okay so the person’s got the court judgement . Now practically what is the next step? So are they sending out a letter to the person who owes them the money or what happens?

Cameron: So we’ll just look at the Uniform Civil Procedure Rules procedures at this stage. So what the first thing you would do is what they call a Form 71, which is a statement of financial affairs or financial position, and you send that out to your debtor. Hopefully if they’re a good and honest debtor they’ll fill it out to the best of their ability and swear what assets they have. If they do that you can then take the next step of deciding how to enforce it if they don’t pay.

Cameron:  But if they don’t return that you then make an application to the court. It’s fairly straightforward, however you need to know what you’re doing, and I’d of course advise you see a solicitor to do it.

Cameron: Now what that effectively does is allow you to decide the best way and the best angle to get try and get your money back. If they don’t turn up, you can apply to the court and have an enforcement warrant issued. Now I’ve done that a few times unfortunately, where the enforcement warrant’s issued, and in those unfortunate cases the police actually go and drag the debtor back before the court, so they’re required to answer the questions that you require of them. So it is a tool that’s used often, and it is useful because it allows you to identify what money that there is.

Cameron:  Now once you’ve got that and you know what their financial position, you can go to the next step and try and enforce the debt. Now if they’ve got personal property or real property, which is land, you can get what they call an enforcement warrant in seizure and sale. And that will allow the bailiff to attend the property and obtain certain items, depending on what they are. There are some excluded items under the Bankruptcy Act. And he can sell them and you can get the money through that.

Cameron: Another good way is garnishing wages if the person is an income owner, PAYG earner, you can make application to the court to have their wages each week garnished and they can pay you. There’s also another useful one which I use quite often, is unfortunately I get the bank details and if they’ve got sufficient money in the bank that you can redirect the debt from the bank straight to you. But the one thing with those orders as well as the garnishing orders, you need to do attend to the enforcement hearings so you are not unfairly or harshly treating the debtor, so you’re not putting him or her into a point of destitution. So that’s one of the things that the court will need you to satisfy.

Dan:   Now Cameron, you’ve got the judgement , is there like a certain timeframe that you need to recover the debt?

Cameron:  Yes it does expire. It technically expires after six years but my advice is as soon as you’ve got that judgement  you need to act on it sooner than later. The longer you leave it the less chance you’re ever gonna get paid. If it goes beyond the six years you have to ask the court and show the court why you didn’t enforce it previously. So yeah.

Dan:  And what about legal costs to do so? So for example if somebody is owed a debt they’ve got the judgement  and now they’ve taken heed of what you’ve said about getting some legal advice and help with this. Is there any chance that they can recover some of the legal costs on top of that debt?

Cameron: Yes it’s fairly procedural. As opposed to the legal steps that are required to get a judgement of going to trial et cetera which are very technical, the steps of enforcing a judgement  are often more procedural. Now the court scales do allow you to add those costs into the recoverable amount that you’ll be seeking to be paid. And because they’re more procedural in nature then they generally are closer to the actual scale cost, the cost that you pay, and you can be paid them as well. They increase the debt that’s owed to you and is of course recoverable. You’re also allowed interest as well, that continues to be applicable under the various legislation.

Dan:  You’d have to have rocks in your head not to seek legal help and representation in this respect, given that you’re gonna recover the costs anyway.

Cameron:  Yes 100% because they can be very particular. A lot of the time they’ll require what they call personal service, a lot of these documents, and the courts are very stringent in the procedural application of it. So unfortunately if you make a little mistake in one of the forms or something like that which looks fairly insignificant, the magistrates or the registrars can sometimes or often refuse to allow you to take the next step, because the step … what you’re asking the court to do is basically sell someone’s assets and they take that very seriously. So you should get legal advice, yes.

Dan: Cameron, thanks for joining me.

Cameron:  No worries, thank you.

 

 

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