If a creditor gets judgment against a debtor, the amount which the court orders the debtor to pay is called the judgment debt and it is immediately payable. If the debtor cannot or does not pay the amount to the creditor straight away the creditor can use the court processes to enforce that judgment and recover the money from the debtor.
A person can be imprisoned for failing to pay a debt in Tasmania in some circumstances. These include:
- when there is a default by trustees or solicitors
- where a person is trying to avoid paying a judgment debt by leaving Tasmania, or
- where they have had the money to pay the debt or an instalment order and have not done so.
A creditor can enforce a judgment any time within 6 years of the date of judgment, or after that time with the permission of the court.
The laws governing enforcing a judgment in Tasmania are the Debtors Act and the Magistrates Court (Civil Division) Act and the Rules. There are fees for the issue and/or service of most enforcement actions.
Enforcing a judgment in Tasmania can be commenced through Oral Examination or a Judgment Summons. The processes for both are similar. Both are a summons to attend court where the debtor will be asked questions about their finances, including what goods that they own and their expenses. If a debtor does not obey a summons for an Oral Examination, a warrant may be issued for their arrest. After hearing an Oral Examination the court can make an order that the debt be paid by instalments.
For a Judgment Summons, if the debtor fails to appear the magistrate can deliver a judgment in their absence. If, after the hearing of a Judgment Summons, the court believes that the debtor has now or has had since the entry of the judgment, the means to pay the debt and has not done so, it may send the debtor to prison for 6 weeks, or until they pay the outstanding debt.
When enforcing a judgment in Tasmania, a creditor can apply for the issue of a warrant for the seizure and sale of a judgment debtor’s property. A warrant expires after 12 months, but a further warrant may then be issued. There are some items that cannot be seized, including any personal clothing and bedding or tools of trade up to a value of $3,000.00.
Any property seized can be sold by public auction or in a manner directed by the Court. The bailiff can take from the proceeds of a sale any necessary expenses incurred in executing the warrant, including any fees for towing or storage and any auctioneer and valuer fees.
If an agreement is reached for payment of the debt by instalments, or if a creditor accepts a consent judgment containing an instalment proposal, the court can order that a debt be paid by instalments.
A garnishee order is an order to a person who owes money to the debtor. It directs them to pay that money instead to the creditor, as payment towards the debt. There are two kinds of garnishee orders, a one-off or lump sum order and a periodic payment or wages order. The periodic order requires the debtor’s employer to make deductions from their wages each pay day to be paid to the creditor in reduction of the judgment debt. The amount to be deducted is generally 20% and is set by the registrar.
A Provisional Garnishee is served on the debtor and the garnishee. Within 21 days of receiving it, the debtor may make an application to set aside the default judgment if they dispute the money owed or the amount. They can also make an application to reduce garnishee, asking to reduce the amount of the deductions because of their family circumstances or financial situation. The application can also be made at a later time. The application is listed by the court and the debtor can be cross examined about their application. If neither document is filed, then a Final Garnishee Order is served on the garnishee. Any deductions made under the Provisional Garnishee Order can now be paid to the creditor.
If the debtor receives Centrelink payments, they cannot be attached as wages and there are rules that restrict who can attach them in a bank account and the amount that can be deducted. To garnishee the wages of a Tasmanian public servant, a certified copy of the judgment must be served on the relevant department, and deductions will be made at a rate set by the department.