how to recover a debt

how to recover a debt A do-it-yourself Guide for CreditorS Legal Services Commission

......... Legal Services Commission July 2014 Published with the support of the Law foundation of South Australia inc. the Legal Services Commission gratefully acknowledges the assistance of students at the Magistrates Court Legal Advice Service (MCLAS) who undertook research for this guide. MCLAS is a joint initiative of the university of Adelaide Law School and flinders university Law School. disclaimer this booklet is published as a community service by the Legal Services Commission and is intended as general guide only. readers should not act on the basis of any material in this publication without getting legal advice about their own particular situation. the Legal Services Commission expressly disclaims any liability howsoever caused to any person in respect of any action taken in reliance on the contents of this publication. fees and costs referred to in this booklet should be checked with the Magistrates 3

Contents When to use this booklet...5 time limits...6 Proving your debt...6 Negotiation with the debtor...6 rules of conduct when pursuing a debt...8 Letter of request...9 Negotiation didn t work now what? Step one: decide whether to take legal action...11 enforceable Payment Agreement...11 further negotiation...12 Mediation...12 Commencing legal action...13 Writing off the debt...13 Step two: find out who to sue...15 Person, Business, Company...16 Step three: Give notice of intention to sue...19 final notice of claim...19 Letter of demand...20 Service...20 example of letter of demand...21 Step four: Start proceedings in the Magistrates Court Costs in minor civil actions...22 Serve the claim on the defendant...23 Possible responses from the defendant No response...24 Admission of the claim...24 denial of liability...25 Counter Claim...25 Going to Court directions Hearing...26 trial...27 Judgment enforcing Judgment...28 investigation Hearing...28 examination Hearing...29 other orders Warrant for sale...30 Charging order...31 Garnishee order...31 Chronic debtors...32 Bankruptcy...32 Winding up a company...33 Getting Help debt Collectors...34 More information...34 free Legal Services directory...35

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When to use this booklet this booklet can be used if someone owes you an established debt under $25,000, known as a Minor Civil Claim. if your claim is for more than $25,000 you should seek legal advice. An established debt means that the amount of money owed is fixed, for example: a dishonoured cheque money owed for work done money owed for goods, and money lent. to recover a child support debt. for help with child support debt telephone 8111 5576 do not use this booklet if: you are claiming money for loss or damage following an accident you are unsure how much money is owed to you the amount owed is more than $25,000. for information about claims arising from car accidents, see our Motor Vehicle Accident Kit. in other cases where the debt is not established, it is advisable to seek legal advice. 5

time limits A court case must be commenced within six years from the date when the debt first came about. if during that time the debtor acknowledges or confirms the debt (by making a promise in writing signed by the debtor or their agent to pay the debt) then the six year period begins again from that date. Proving your debt Whenever you are owed a debt you should have proof that the debt exists and proof of the debt s value. Always keep copies of any agreements, invoices, emails, letters or other documents that show how much money is owed, and the time, date or circumstances of the debt. When making a verbal agreement, write down any terms or conditions of the agreement and the time and date that it took place. in the case of a verbal agreement, it can be useful if there is a witness who saw the agreement take place or saw the debtor refuse to pay. evidence such as a bank transfer or cheque records may also substantiate the verbal agreement. Negotiation with the debtor it is important to keep communicating with the person who owes you money. Most debts can be resolved if both parties remain courteous and reasonable. Keep in regular contact with the debtor by mail, email or telephone so the debt does not fall to the back of their mind. Keep a copy of any correspondence and a record of phone calls, including the date and time they were made and what was said. it is important to find out if there is a reason the debtor cannot pay you. Perhaps they can afford to pay you part of the debt each month. remember, a court will never place a person under severe financial hardship to pay a debt, so there is no point asking for more than the debtor can afford. the debtor may also have a dispute about the debt. it helps to know why a person won t pay because fixing any problem (if it can be fixed) is better at the early stage before you have spent time and effort taking the debtor to court. debtors are more willing to pay if the creditor is polite and does not make unreasonable demands. if the debtor feels they are being treated rudely or unfairly, they will often ignore requests for payment or pay other debts before yours. A debtor who genuinely cannot afford to pay will be honest with you so long as you treat them fairly. 6

Can you prove your debt exists and its value? Have you kept copies of documents that show how much money is owed, and the time, date or circumstances of the debt for example; Agreements invoices emails Letters 7

When pursuing a debt there are some very strict rules which apply to your behaviour. you MuSt Not: demand money without saying who you are and how much money is owed demand more money than is actually owed continue to demand money from someone who denies they owe the money without making further inquiries as to whether your demands for the money are valid contact people who know the debtor, for example a debtor s employer, friends, relatives or neighbours, unless you are doing so to get the debtor s address blackmail a debtor, which may occur if you threaten, or make reference to, possible criminal proceedings if the debt is not paid, or say that court action has started when it has not, or threaten to take court action when you do not intend to involve the court pretend to be authorised in some official capacity to claim or enforce payment of a debt. As well as being criminal, this behaviour is likely to anger the debtor, making them resistant, and will not be as effective as being polite. A letter of request is a way of formally asking for payment of the debt. it is not a necessary step in commencing legal action. As a first step you may send a letter of demand, see page 21. However a letter of demand must include a warning of legal action, which may upset the debtor and make them less likely to pay. 8

Joe Smith Assistant Manager Paper and Printing Co 1 My Street Adelaide SA 5000 Sam Johns 2 your Street Adelaide SA 5000 1 September 2013 dear Mr Johns reminder Notice - Account invoice No. 12345 this is a friendly reminder that your account for printing brochures on 7July 2013 for the sum of $1635 is now overdue. this amount was due to be paid on 1 August 2013. A copy of the invoice No. 12345 is enclosed. Please forward payment to the above address as soon as possible. We look forward to hearing from you. yours faithfully Joe Smith Assistant Manager encl. Sample letter of request follow up a letter of request with a reminder telephone call about a week later if the money is not paid. 9

10 Negotiation didn t work. Now what?

Step one decide whether to take legal action if the debtor refuses to pay the debt, there are five options: 1. offering the debtor an enforceable Payment Agreement 2. further negotiation 3. Mediation 4. Commencing legal action 5. Writing the debt off 1. offering the debtor an enforceable Payment Agreement (epa) instead of taking legal action, or at any stage after you have started legal action, you can offer an enforceable Payment Agreement to the debtor, as long as the debtor does not dispute the debt. An epa is an agreement for the debtor to pay the debt in instalments, and that the creditor will not commence legal action or report the debt to credit referencing agencies. if the debtor defaults on the epa by missing more than two payments, the epa and an affidavit verifying it can be accepted as proof of the agreement and judgment can be given without going through the processes described below. epa form 1B is available from your local Magistrates Court or www.courts.sa.gov.au. 11

Mediation is an informal process in comparison to the Court process, with less stress upon the parties and more likely to produce a desirable result. 2. further Negotiation further negotiation may be an attractive option, especially if the debtor indicates they may be able to pay the debt in the future. use the same techniques described in Negotiation with the debtor above. Consider suggesting an epa as part of your negotiations. if negotiations are successful, always put the agreement in writing. 3. Mediation Mediation is a process where both parties agree to sit down in the same room with a mediator to resolve their dispute. the mediator is a neutral third party who helps the parties discuss the problem. However, it is up to the parties themselves to arrive at a solution. Mediation can be seen as advantageous compared to going to trial because: mediation is an informal process in comparison to the Court process, with less stress upon the parties the mediator will not decide on how to settle the matter; this is for the parties to decide the parties have more control over the process and outcome free mediation services are available, whereas legal action involves court fees mediation generally gives a quicker resolution than the court process, and the privacy and confidentiality of the mediation process is assured (parties sign a confidentiality agreement prior to the first mediation session and, if you both agree, the outcome can remain confidential). the Magistrates Court offers a free mediation service. Mediation is available if you have sent the debtor a final Notice of Claim using the court s form 1A (see Give notice of intention to sue page 19) or if you have commenced legal action in the court. if you come to an agreement as to how to pay the debt, ensure you put it in writing. An enforceable Payment Agreement (form 1B) can be used for this purpose. 12

4. Commencing Legal Action there are several factors to consider before taking legal action. Proof Can you prove that you are owed money by the debtor? do you have documentation of the debt such as an invoice, or witnesses who will back up your version of events? do you have a text message, letter or email from the debtor that confirms the debt? if the debtor disputes the debt think very carefully about taking legal action because there is a risk (however small) that the court may agree with the debtor s version. time A matter in the Minor Civil Claims Court (under $25,000) can be settled at any time. However, it will be some months before a trial occurs if the debtor does not agree to pay the debt. enforcing the judgment will take some time after this and the debt may not be paid in full straight away but in instalments. if you are representing yourself, you would need to be available in court at the time set for your directions hearing and trial. Costs fees need to be paid when: you give notice of intention to sue using Magistrates Court form 1A, which is obtained from the Court for a nominal cost you file a claim the cost of filing a Minor Civil Claim is $127 and increases each year, so check www.courts.sa.gov.au/courts/magistrates/fees.html you need to enforce the judgment (the amount varies according to the method of enforcement used check www.courts.sa.gov.au/courts/magistrates/fees.html and see Judgment page 28. All these costs are usually recoverable from the opposing party if you win. other factors do you wish to preserve the relationship with the debtor or others? Will mediation or further negotiation be more likely and less time-consuming to achieve the same result? 5. Writing the debt off if negotiation and mediation are not successful or possible, and if any of the above factors mean that you do not wish to take legal action, then you can choose not to recover the debt, that is, you can write the debt off. in some cases, a business debt may be tax deductible. 13

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Step two find out who to sue the first step in making a claim is to find out exactly who you should sue. if you do not put the correct person s name or business name on the forms, you may have difficulty obtaining judgment or a judgment made in your favour may be set aside. if you do not find out the correct and current address, the debtor may not receive your forms and you may have to start the whole process again. Similarly, you need to identify yourself correctly on the claim form. if the debt is owed to your business or partnership, use this name on the claim form. if you do not find out the correct and current address, the debtor may not receive your forms and you may have to start the whole process again. 15

An action can be brought against a person, a business (sole trader or partnership) or a company. Person to find the address of a private person: see if any documents contain the debtor s address telephone the person and ask them for their address check the White Pages check the electoral roll, which can be done for a nominal fee. Business for a business (sole trader or partnership), to find the business owner s name and the correct business name and address, you can search the Australian Securities and investments Commission (ASiC) register of Business Names www.asic.gov.au/search or phone ASiC on 1300 300 630. you can buy a search which will confirm the current address of the business for service of documents including court papers. Company for a company, you must use the company s name and registered address on any documentation, not the name and address of individuals running the company. if you do not have the company name, go to https://connectonline.asic.gov.au and use the company ABN or ACN (these numbers should be on any documentation you have from the company) to search for the company name. you will need to buy a company search which will give you up-to-date information about the current registered office of the company, and also the addresses of the directors. A company search costs around $9 but you should be aware that the registered address may be different to the principal place of business. it might be an accountant s office or the home address of one of the directors. Always use the registered Address for serving documents. Looking at the company search will also tell you if the company is still in business. if it is under external administration, you cannot sue it, and you should contact the administrator or liquidator instead. if you are having trouble doing your search, contact ASiC on 1300 300 630. 16Give notice of intention to sue

Before commencing proceedings in court, notice of intention to sue should be given to the debtor. if no notice of intention to sue is given, the costs of filing the claim will not be recoverable. 17

A final Notice of Claim gives notice to the defendant that you intend to start an action to claim the debt owed to you, although this is not the beginning of the court action. this form can be obtained from the Magistrates Court registry or at www.courts.sa.gov.au. there is a cost for the form and the form cannot be obtained without paying the fee. you must serve the form yourself; the court will not do it for you (see Service page 19). After serving the form the defendant, you must wait a minimum 21 days for a response before taking any further action. Send an enforceable Payment Agreement with the final Notice of Claim if you are willing to accept payment in instalments (see enforceable Payment Agreement page 11). the advantage of using a form 1A is that you can use the Magistrates Court mediation service. debtors may also take a court form more seriously, although care also needs to be taken so that the debtor is not misled about the existence of legal proceedings. Letter of demand A letter of demand is a formal request that the debtor pay you the money owed. A letter of demand can be used instead of a final Notice of Claim (form 1A, above) and must include: The date of the letter The amount owed Why the debt is owed (for example, there was a contract, or services were provided) A demand for payment within 21 days from the date of the letter A statement that you intend to take legal action if the money is not paid within 21 days Copies of agreements or invoices if applicable; and A warning that the Court can order the debtor pay the costs of any legal proceedings should the debtor fail to pay on demand. if the defendant wants to negotiate, note that you can only use the court s free mediation service if you have used the court s final Notice of Claim form. you can, however, use a free community mediation service. the court s mediation service will be available if you have to take the next step and file a claim. 18

Step three Before commencing proceedings in court, notice of intention to sue should be given to the debtor. if no notice of intention to sue is given, the costs of filing the claim will not be recoverable. Notice of intention to sue can be given by either filling out and serving a final Notice of Claim (form 1A) or sending a Letter of demand. final Notice of Claim Service Service is a formal term for delivering documents to the other side. there are a number of ways you can serve a final Notice of Claim or letter of demand: regular post - Keep a copy of the document and make a record of the date it was sent. A posted document is assumed to have been received by the person it is addressed to. registered post - registered Post is where the addressee must sign for receipt of the document. While using registered Post shows that the letter was sent, it is not strictly necessary. the other disadvantage is that the debtor may not collect the letter and it will be sent back. Hand delivery - you can deliver it to the debtor or leave it with someone at their address. Be sure to take a note of when and what time you delivered it, and the name of the person who took the document. you can use a process server to do this, but unless personal service is absolutely necessary (or the court orders it) you may not be able to claim the cost. 19

Joe Smith Assistant Manager Paper and Printing Co 1 My Street Adelaide SA 5000 Sam Johns 2 your Street Adelaide SA 5000 1 october 2013 dear Mr Johns overdue account for printing 1 July 2013 invoice No. 12345 i refer to our reminder letters dated 1 September 2013 and 14 September 2013 regarding your outstanding account for the sum of $1635. A copy of the invoice is enclosed. i advise that unless the outstanding sum of $1635 is paid within 21 days of receipt of this letter, we will have no option but to issue legal proceedings without further notice to you. Court costs will be added to the claim, should you fail to pay the amount demanded. in addition, if we obtain judgment against you, it may have an adverse effect on your credit rating. yours faithfully Joe Smith Assistant Manager encl. Sample letter of demand 20

Possible responses from the defendant 1. No response if the defendant does not respond within 21 days, you can start proceedings in the Magistrates Court by filing a claim. 2. the defendant pays the full amount. you do not have to do anything further. 3. the defendant may wish to make payment in instalments. in this case, it is advisable to use an enforceable Payment Agreement (see page 11). 4. the defendant may ask for longer to pay the debt. When considering the defendant s offer, take into account how long further court action may take, and consider whether an enforceable Payment Agreement (see page 11) may be a preferable option. 5. the defendant may dispute some or all of the claim. Mediation is an option, if the defendant agrees. if you used the court s final Notice of Claim form, you can use the court s free mediation service. free community mediation services can be used regardless of the way you have given notice of intention to claim (tel: 8384 5222). 21

A claim for a debt can be settled at any time during the process. the minor civil claims procedure is designed to help parties settle before the matter reaches trial. Keep communicating with the debtor throughout the process. Circumstances change and debtors are often able to pay their debts or work out a part payment plan after initial negotiations have failed. Costs and fees in Minor Civil Actions item $1-$25,000 filing an action (if prepared and filed by a solicitor) $20 plus 5% of the judgment sum up to a maximum of $500 filing fee for a final Notice of Claim $19.30 filing fee for Commencement of Minor Civil Action $131.00 Any attendance at Court by party or solicitor (where solicitor is entitled to attend) Witness fees 0.5% of the amount of the judgment sum $80.00 (or actual charge by witness if allowed by Court) filing and serving a summons to witness $50.00 request for investigation/examination summons including attendance at the hearing Any other request (form 18) for enforcement of judgment Preparation of a trial plan where the Court permits it due to special circumstances (Magistrates Court Act 1991 Section 38(5)) All other Court fees $50.00 $50.00 3% of the judgment sum As allowed by the Court other disbursements As allowed by the Court 22 figures are correct at the time of printing. See www.courts.sa.gov.au for the current fees.

Step four Start proceedings in the Magistrates Court you can begin formal legal action if the debtor does not pay the debt or negotiates payment of the debt within 21 days of you serving the form 1A or letter of demand. fill out a Claim (form 3), which you can get from the registry or over the internet (www.courts.sa.gov.au), and lodge it with the registry. you will need four copies of the Claim. Serve the claim on the defendant the Court registry can post the claim for you - there is no fee for this and it is the most usual way of serving the claim. tick the box on the form that says Method of Service registrar. if there is some doubt about whether the debtor is at the address on the claim, you can deliver the claim personally or have a Sheriff s officer serve the claim for you. if you serve the claim yourself, you must attach a multilingual notice form 17. After serving the claim, you must also fill out and file with the registry the proof of service form (on the back of one of the copy claim forms), explaining how you served the claim. to have a Sheriff s officer serve the claim for you, you will have to pay a fee. 23

Possible responses from the defendant 1. No response 2. Admission of the claim 3. denial of liability 4. Counter claim 24 1. No response if the defendant does not respond within 21 days, you can apply for judgment to be signed in your favour without the need for a court hearing. to do this, complete a form 18 and file it with the court with proof that a Minor Civil Claim form 3 has been served on the debtor. Allow an additional 2 or 3 days for the claim to reach the debtor by post before asking the Court to sign judgment in default. this judgment can be set aside if the defendant can show they did not receive the claim and they have a good defence to the claim. this is why it is important to find out the defendant s correct address, and, if there is any doubt about the address, to have a Sheriff s officer serve the claim or serve it personally yourself. 2. Admission of the claim if the defendant admits the claim and agrees to pay, ensure you negotiate a specific final date for payment. if the defendant does not pay by the agreed date, follow the process set out above for having judgement signed, and then apply for an investigation hearing (see page 28). the defendant can admit liability for all or part of the debt owed. if the defendant only admits part of the debt owed, and you aren t happy with that, you can continue with the action. However, you may have to pay the defendant s costs if the court awards you no more than what the defendant paid into the Court. A defendant can admit liability by filing an enforceable Payment Agreement (form 1B) document with the Court (see page 11).

3. disputed liability the defendant has 21 days to file a defence from the time a Claim is served. A defendant has to complete a form 4 (defence) and file it at the Magistrates Court registry. A copy of the defence will either be sent to you by the Court or by the defendant. 4. Counter claim if the defendant thinks they have a claim against you, the plaintiff, they can complete and file a counterclaim. this is a form 5 from the Magistrates Court. the counterclaim needs to be filed with the defence, and, if for any reason your claim does not proceed or is dismissed, the counterclaim can still continue as a separate action. if you have a counterclaim filed against you, the Court assumes you are defending it; therefore you do not need to file a separate defence. 25

Going to Court (if a defence is filed) 1. directions Hearing 2. trial 1. directions Hearing once a defence has been filed, the court will post out to both parties the date, time and place of a directions hearing. A directions hearing is not the trial but is held to determine the position of each party and to encourage a resolution of the matter. you do not need to bring any witnesses to a directions hearing, but you should bring all relevant documents. Mediation may also be suggested by the Court. if agreement is reached during the directions hearing, the terms of settlement may be recorded as a judgment. examples of orders which may be made at a directions hearing are: an order for discovery, that is, that one or both of the parties must provide copies of the documents they will use in court to the other party an adjournment for settlement terms - if the parties appear to agree in general but not on the finer points, they will be given more time to finalise their agreement, a consent order and payment arrangement filed - if the defendant admits to the debt and agrees to a payment arrangement a date for trial may be set if no agreement is reached. it is important that you understand and comply with any orders made by the court at the directions hearing. if you are confused about what orders the court has made, you may get a copy of the court record of your hearing from the court registry. if you do not understand the order, you may ask at the registry. 26

2. trial Most debt matters do not make it to trial because there is generally no dispute about the debt. if your matter does make it to trial you should be prepared in the following ways: ensure your witnesses are available on the trial day ensure you have all relevant documents arrive at court 15 minutes early and check the time and location of your hearing on the court notice board. you will be called into the courtroom when it is time to hear your matter. the witnesses will be asked to wait outside. you should stand whenever the magistrate enters or leaves the court and address him or her as Sir or Madam, or your Honour. the procedure for Minor Civil Claims is less formal than in most other courts. the magistrate will conduct the hearing more like an inquiry, and will ask questions of the parties, ask to see documents, and ask questions of any witnesses. Speak slowly and clearly as the Magistrate and their clerk will need to write down details. if you are confused about the procedure you may ask the Magistrate questions. Lawyers are only allowed in certain circumstances (if the other party is a lawyer, if all parties agree or if the court gives permission). 27

Judgment 1. enforcing Judgment 2. investigation Hearing 3. examination Hearing once the trial has finished, the magistrate will decide if the debt is owed to you. Whoever receives judgment in their favour has won the case. if you have won, you should request the magistrate to award costs and interest on your claim, see page 22. Judgment in your favour may be for the entire debt or for part of it. A judgment in your favour means that the court recognises that you are owed the debt and that it must be paid. However, a judgment is no guarantee that money will be paid and it is up to you to enforce judgment. even with judgment, you cannot force someone to pay if they do not have the money. the following processes also apply if you have obtained default judgment see page 24. NB if the debtor is a business (run by a partnership or incorporated association) or a company, some of the following procedures for enforcement of a debt do not apply. However, if the business is run by an individual the following procedures do apply. 1. enforcing Judgment Many defendants will pay once judgment has been given but you may need to remind the debtor to pay the debt. if you do not think the debtor will pay, you can commence enforcement proceedings immediately after judgment. you have six years from the date of the judgment to start enforcement proceedings. A court judgment will be remain on the credit record of the debtor for five years. this means they may not be able to obtain credit or borrow money. in many cases, this may be incentive enough for them to pay the debt. the debtor may be unaware of any judgment obtained by default, such as following a failure to file a defence within 21 days. there is no obligation to inform the debtor that you have done so and they will only know when you enforce the debt. 28

2. investigation Hearing if the debtor is present at court after judgment is given at a trial, you can ask the magistrate to conduct an investigation hearing into the defendant s financial position immediately after giving judgment. otherwise, if you have obtained judgment by default (see page 24), you can instigate an investigation hearing. you will need to fill out and file a request to registrar (form 18) and a date for the hearing will then be set. if the debtor owns real estate (a house or land), you can make an application to the court for a Warrant of Sale (see page 30) to be issued at the same time as asking for an investigation hearing. Before the investigation hearing, the debtor will fill out a form detailing their financial situation. this will include how much they spend on rent, bills, food and other expenditure. during the hearing you will have a chance to question the debtor on this information. the registrar in charge of the hearing will then usually make an order for the debt to be paid in instalments. the court will only order the debtor to pay instalment amounts they can afford. if the court decides the debtor has no means to pay the debt, you may ask for an adjournment (usually for a year) so that the court can reassess the debtor s circumstances at a later date. 3. examination Hearing if the debtor fails to comply with two payments under the order made at the investigation hearing, you can apply for an examination hearing by filling out a request to registrar (form 18). there is a cost to do this. At this hearing the debtor will be asked to explain why he or she has not complied with the order from the investigation hearing. if the creditor s circumstances have changed then the instalments to be paid under the order may be modified or even rescinded if the debtor has no ability to pay. 29

other orders 1. Warrant for Sale 2. Charging order 3. Garnishee order you may wish to consider other orders to facilitate the payment of the 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 against the debtor s personal property (such as nonessential household items that could ordinarily be seized if the debtor was bankrupt ) or real property (if the debtor owns land). A warrant of sale must first be exercised against personal property before seeking an order for the sale of real estate. you will also need to explain to the Court why you want the debtor s property sold to pay your debt, instead of accepting a payment plan. A warrant for the sale of personal property authorises a Sherriff s officer to enter the debtor s address and seize property of sufficient value to cover the debt. Certain items such as cars under a certain value, ordinary clothing and necessary household goods cannot be seized. items which are under finance or jointly owned will not be seized. if the debtor is bankrupt, their property cannot be taken. only about a third of warrants for sale for personal property are successful in recovering any money at all. therefore, you should consider whether it is worth applying for a warrant for sale. try to find out whether the debtor owns more than one car or any valuable assets. if not, it may not be worth paying the fee to issue a warrant for sale. 30

if you wish to exercise a warrant of sale against real estate you must do a search at the Land titles office to discover whether the debtor owns any land (there is a small fee for this service) and enter the details of the title on the form. you must also give a written undertaking that you will pay for any costs involved in the auction of the property. these costs are recoverable from the debtor upon sale of the land. Very few warrants for sale of real property are realised as the debtor will usually pay the outstanding amount before the property goes to auction. 2. Charging order A charging order allows the Court to charge the property of a debtor (whether that is property owned by a person or a company). 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 the proceeds of the sale. to apply for a charging order you will need to do a search at the Land titles office to identify any property owned by the debtor. you will then need to make a form 21 application. in the space provided write charging order over (name of property) for the judgment debt of $.... 3. Garnishee order A garnishee order is an order that any money owed to the debtor is paid directly to the creditor. these orders are not common because if money was available from a third party the debt would usually have been paid at an earlier stage. A garnishee order for wages requires the consent of the debtor. 31

other orders (continued) 4. Chronic debtor 5. Bankruptcy 6. Winding up a company 4. Chronic debtor if a debtor has a history of enforcement action in the last 12 months for other debts, has no assets and cannot afford to repay the current debt within 12 months by instalment, the court may declare the debtor a chronic debtor. this means the court will make one order to cover all the debtor s debts and fines and you as creditor will be entitled to share in any payments collected by the Court from a chronic debtor. you cannot recover the costs of enforcement action from a chronic debtor but bankruptcy is still an option. 5. Bankruptcy 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 may then lodge proof of your debt (the judgment) with the trustee to receive a share of the profits from the sale of the debtor s property. Before you commence bankruptcy proceedings consider whether the debtor owns enough property to make declaring them bankrupt worthwhile. if they own real estate (check at the Lands titles office) or if they have a position that they will lose if declared bankrupt, then the threat of bankruptcy may force payment of the debt. the cost of bankrupting someone should also be considered. 32

the first step in bankruptcy proceedings is usually to serve the person with a bankruptcy notice. A bankruptcy notice is a form requiring the debtor to pay the debt within 21 days. this form needs to be filled in on-line at the insolvency and trustee Service Australia (itsa) website and costs $440. 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. the current filing fee to commence a creditor s petition depends on whether or not the applicant (the creditor) is a corporation (currently $2915) or an individual (currently $1215). Some people on low incomes can apply for the fees to be waived. Sending someone bankrupt is a complex process. Seek independent legal advice before commencing bankruptcy proceedings. further information on sending someone bankrupt is available at www.itsa.gov.au. A booklet on creditor s petitions is available at the federal Court registry, Level 5, roma Mitchell Commonwealth Law Courts Building, 3 Angas Street, Adelaide. 6. Winding up a company Winding up a company is the equivalent of declaring a natural person bankrupt. it starts with issuing a statutory demand to the debtor company under the Corporations Act. unfortunately, even if you issue a statutory demand, the company may not be able to pay it. Again, it is a complex and technical process and is not something that should be done without legal advice. 33

Getting Help debt Collectors debt collectors may be an attractive option if you do not have time to focus on debt collection. debt collectors will generally charge a fee, plus costs and perhaps a commission on the debt recovered. if you are interested in using a debt collector seek a quote. However, keep in the mind that the Magistrates Court keeps costs to a minimum and does not normally allow debt collection fees to be included in a claim. More information More information, in particular on the filing of documents, can be obtained from the Magistrates Court registry. Court staff can assist you with general queries but cannot give legal advice. See www.courts.sa.gov.au/representyourself/civilclaims. free Legal Services there are a number of free legal services available to assist you with your claim. these services are not there to represent you, but can help you to run your case. the Legal Services Commission and the Magistrates Court Legal Advice Service (MCLAS) provide free legal advice within the Adelaide Magistrates Court. the Legal Services Commission also provides free legal advice by telephone and at eight offices in metropolitan and country areas. A community legal centre may also assist with legal advice about your claim. 34

Legal Services Commission www.lsc.sa.gov.au Legal Help Line 1300 366 424 (free advice and information Mon to fri 9.00am-4.30pm) Child Support help 8111 5576 Adelaide 159 Gawler Place Adelaide 5000 8111 5555 elizabeth Windsor Building elizabeth Centre elizabeth 5112 8111 5400 Holden Hill tenancy 7, 560 North east road Holden Hill 5088 8111 5440 Mount Barker 18 Walker Street Mount Barker 5251 8111 5320 Noarlunga Noarlunga House Colonnades Shopping Centre 5168 8111 5340 Port Adelaide 306 St Vincent Street Port Adelaide 5015 8111 5460 Port Augusta 13 flinders terrace Port Augusta 5700 8686 2200 Whyalla tenancy 7, 169 Nicolson Avenue Whyalla Norrie 5608 8686 2240 Magistrates Court Legal Advice Service Adelaide Magistrates Court 260-280 Victoria Square Adelaide South Australia 5000 8204 2444 Central Switchboard for all courts. Magistrates Courts are located in most metropolitan and regional centres. Community Legal Centres for details of community legal centres visit www.saccls.org.au 35