You are owed money. You send a letter of demand and receive no response. You may decide to send a further two demand letters but still receive no response. You then lodge your debt in court by filing what is called a statement of claim. One of two things could happen: either the debtor responds or may still choose not to. Either way, once the court makes a judgment in your favour for repayment of your debt, this judgment is enforceable.
Normally, once there is a judgment against them, a debtor will pay within the specified timeframe. However, in some instances this does not happen and the debtor ignores the court judgment and still does not pay. This means that although you have a judgment against the debtor, you will need to commence enforcement proceedings against the debtor to collect your debt.
The amount of time that you have to start proceedings enforcing the judgment varies from state to state and is between 6 to 12 years from the time the judgment is given in your favour.
To begin enforcement proceedings against a debtor you must first register the judgment at your local court if it is not already in their records. Each time enforcement proceedings are commenced against a person, the judgment is entered on the debtors' credit record for 5 years. This means that even if the debtor subsequently pays you, it will remain on their credit record. The impact this may cause and the threat of this on the debtor's record may be enough for them to finally pay you.
Once this enforcement proceeding is on court record, there are a number of ways that the court can enforce the judgment to obtain your money. These remedies include garnishing the debtor's wages, ordering the debtor's assets to be sold and may even go as far as imprisoning the debtor. Unfortunately, even after all this, there is no guarantee that you will receive full or any payment of your debt at all, particularly if the debtor is bankrupt or is unable to be located. If you have personal knowledge of the debtor's financial situation, it may be best to wait until you are certain that they have enough assets to satisfy the judgment debt against them before asking the court to enforce your judgment.
If you choose to wait to enforce your judgment and obtain your money, it is essential to the limitation period is to enforce your judgment in your particular state or territory. If this period lapses then there can no longer be enforcement of your judgment and you lose your opportunity to be repaid by the debtor permanently.
Other options you may consider to enforce your judgment for your debt include applying to the court to have the debtor made bankrupt and similarly in the case of a company that owes you money, applying to have the company wound up. In order to take this extreme measure, there is a minimum debt amount required for the debt owed. In New South Wales, for example, this minimum amount is currently $5000. In any event, you should seek legal advice before considering this avenue and taking this serious action.
In summary, if a debtor does not agree to pay after a settlement or a judgment against them, it can be a cumbersome and lengthy process to recover the debt owed to you, particularly if they continue to elude payment.
Want to know more? Click here for Free information on Legal123 Statement of Claim. Australian legal agreements and forms from http://www.legal123.com.au/.
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