The creditor may adopt the following measures for enforcing an Order in his favour:

To seek an examination summons – the summon is intended to help the creditor to examine the debtor’s financial position, if not known;

To seek a garnishee Order – the garnishee Order made by the Court seeks to recover the judgement debt from the person who owes money to the debtor;

To apply for a writ of execution –by this Order, the Sheriff’s office can be directed to seize and sell the debtor’s personal assets and pay off the creditor; and

To apply for a writ against land – this Court Order directs the Sheriff or his officers to seize and sell the debtor’s real property and pay off the creditor.

Recent Developments

The Commonwealth Government has recently passed the Privacy Amendment (Enhancing Privacy Protection) Act 2012 containing major reforms to the Privacy Act including provisions of credit reporting. The new legislation has a 15 month transition period from the time it receives a Royal Assent. Some of the key overhauls of the credit reporting regime will include:

Creditors cannot put consumer debtors under the ‘default list’ until 14 days after notice of intention to default list; and

The minimum amount for default listing has been raised from $100 to $150.

The process of redrafting the Credit Reporting Code of Conduct is also in progress.

Our team of experienced lawyers at Owen Hodge Lawyers are here to assist you in the complex matter of debt recovery. We also have experience representing debtors, and assisting them in their dealings with the creditor.

In a debt recovery proceeding, a debtor is a person or an entity which owes a debt to another and a creditor is a person or an entity to which a debt is owed.

The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have set out specific standards for the collection of debts.

Process for Debt Recovery

Business, strata corporations and individuals have to face and overcome a number of challenges in the recovery and collection of debts. These include and are not limited to:

The complex nature of pursuing legal action for debt recovery;

The time taken for claims to go through the Court process;

The inconvenience of attending Court; the costs involved in pursuing debts;

Difficulties in enforcing judgment on debtors; and

The availability, accessibility and extent of information for creditors and debtors.

Establishing Direct Contact

Before approaching the Court, the creditor generally contacts the debtor directly to remind or encourage the debtor to repay the debt. However, in doing so the creditors should never harass the debtors to make payments. The Federal and State Fair Trading Laws include prohibitions on misconduct associated with debt collection activities. ACCC and ASIC protect companies and individuals alike and are also responsible for dealing with misconducts associated with debt collection activities.

Default Notice

According to the Consumer Credit Codes which are implemented by each State Government, the creditor must notifythe debtor that the latter is in default.The debtor is usually notified after 60 days by mail with a Default Notice/S80 and the debtor has to make the payment within the next 30 days. The Default Notice expires after this time. After the issuance of the Default Notice, defaults can be listed in the debtor’s credit history at any stage. Collection activity ceases if the debtor pays the outstanding amount.

Issuing a Letter of Demand

Once the Default Notice expires or between 90 and 120 days after non-payment of overdue payments, the creditor can issue a Letter of Demand to the debtor. Through this letter, the debtor is notified to make payment by a certain date of generally the full balance of the debt. In the letter the legal actions that might be taken against a debtor in case of non-payment is also specified. At this stage a creditor will lodge a Default with a credit reporting agency. This may prevent the debtor from borrowing money for five years.

Legal Proceedings

If the debtor fails to respond to the Letter of Demand, the creditor can commence legal action. The debtor will be served with a Statement of Claim and this document is issued by the local Courts. Within 28 days of the receipt of the Statement of Claim, the debtor has to respond to the local Court.

Enforcement

If the debtor violates the Court Order and fails to pay the outstanding amount, it is the creditor’s responsibility to enforce the judgment. The creditor can enforce the judgement of the Court anytime within 12 years from the date of the judgment. The enforcement of the judgement is largely dealt with under the Civil Procedure Act 2005.

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