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Other options for Enforcement of a Judgment Debt

New Uniform Civil Rules 2020 for legal proceedings in the Magistrates, District and Supreme Courts of South Australia commenced on 18 May 2020.

You may wish to consider other orders to enforce the payment of a debt. These can be made at any time after the investigation hearing.

Other orders will not be made if there is a payment agreement in place from the investigation or examination hearings.

  1. Warrant for sale

A warrant for sale can be issued in relation to either the debtor’s real property (land) or personal property (such as non-essential household items). It is a good idea to check if the debtor owns a home or land, or has other significant assets before you enforce judgment. These will be disclosed on the debtor’s financial statement or you can search the records of ownership of land for a fee at the Land Services Group.

If the debt is under $12000 and does not relate to the running of a business, you cannot issue a warrant of sale as the first step in enforcing the debt. It is only when the debtor misses two or more payments after an order made at an investigation summons hearing that you can ask for a warrant of sale of property.

To apply for a warrant of sale, you need to complete an Application to Enforce a Judgment (Form 141) [Rule 203.10 UCR]. You also need to include a copy of the certificate of title for the property, which is obtained for a fee from the Land Services Group.

The process for the sale of the debtor’s property is covered in Rule 206.7 UCR and section 7 of the Enforcement of Judgments Act 1991 (SA). The Sheriff’s office is responsible for executing the warrant, and will contact you regarding the sale. You also need to undertake to pay the Sheriff’s fees in executing the warrant. You also must register the warrant on the title with the Land Services Group. You may need to use a conveyancer to prepare the forms as required.

Section 7 (2) of the Enforcement of Judgments Act 1991 (SA) prohibits the sale of personal property that cannot be taken in bankruptcy to satisfy a warrant of sale. This means that goods such as household items, a motor vehicle worth less than approximately $8,000, tools used to earn income with a value of less than $3,800 are protected, and cannot be taken by the Sheriff to sell to pay your debt.

  1. Charging order

A charging order allows the court to “charge” the property of a debtor. This means that the debt will be registered on the real estate of the person or on the assets of a company. If the property is sold then it will be subject to the charge and you have priority over the owner for any proceeds of the sale.

To apply for a charging order you need to complete and lodge an application and affidavit and a Form 150 draft order. You need to also obtain a copy of the certificate of title for the debtor’s real property.

Costs are fixed under the rules for obtaining a charging order, and include the cost of preparing the charging order for lodging and registration over the debtor’s property, as well as the cost of lifting the order once the property is sold. A charging order does not give you the right to sell the property so you will have to wait until the property is sold by the debtor or someone else.

If you are unsure about how to obtain a charging order and what forms you need to complete, get legal advice. You may also need to engage a conveyancer to prepare the right documents to lodge with the Land Services Group to register and remove the charging order.

  1. Garnishee order

This is an order requiring a third party to pay the debtor’s money to you. It may be money held in a bank account, dividends or wages. In South Australia, a debtor must consent to wages being garnisheed before an order can be made. A Centrelink income is protected and cannot be the subject of a garnishee order.

Seek legal advice on the correct procedure for a garnishee order.

  1. Bankruptcy

NB: From 24 March 2020 due to the COVID19 pandemic, the minimum amount for a bankruptcy notice increased to $20,000 and the time for responding increased to six months. This temporary measure will remain in place until 24 September 2020.

If the debt is for more than $5000 you may start bankruptcy proceedings against the debtor. If a person is declared bankrupt then all of their property (with exceptions similar to those for a warrant of sale) comes under the control of a trustee. You can lodge a proof of your debt (the judgment) with the trustee to receive a share of the profits from the sale of the debtor’s property if the debtor owns anything of value.

Consider carefully if making a person bankrupt is worthwhile. If the debtor has no assets or is a low income earner, the likelihood of a return is minimal. Making a person bankrupt involves considerable cost, and there is also the risk that the debtor will declare themselves bankrupt first if they have a number of debts.

The first step in making a person bankrupt is issuing a Bankruptcy Notice. This form requires the debtor to pay the debt within 21 days and is available on-line from the Australian Financial Security Authority (formerly ITSA). The cost of issuing a Bankruptcy Notice changes every year so it is wise to check the fees and charges on the AFSA website for any updates. A bankruptcy notice can only be issued for a judgment debt.

Once 21 days have elapsed from the service of the Bankruptcy Notice on the debtor, a creditor’s petition must be lodged in the Federal Circuit Court. There are fees associated with filing a creditor’s petition, which can be claimed back from the bankrupt estate, assuming that there are any assets for the trustee to seize.

Current court filing fees for bankruptcy matters can be checked on the Federal Circuit Court website [links opens in new window].

Making someone bankrupt is a complex and expensive process. You should seek independent legal advice before commencing bankruptcy proceedings. Further information on bankruptcy proceedings can be obtained from the website AFSA 'Sending Someone Bankrupt' . Information about filing creditor’s petitions is available at the Federal Court Registry, or from the Federal Circuit Court creditor's petitions website.

  1. Winding up a company

Winding up a company is the equivalent of declaring a person bankrupt, although the end result for the company is that it is usually liquidated and then de-registered.

If your judgment debtor is a company, you should seek legal advice from a private law firm regarding how to go about issuing the right documents. If a company has no assets and many creditors, spending the money on issuing winding up proceedings does not guarantee that your judgment debt will be paid, and you may also not recover your associated costs.

Other options for Enforcement of a Judgment Debt  :  Last Revised: Tue May 19th 2020
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.