Guide on how to collect debts from a judgment debtor

You have a disagreement with a customer over money and/or property and you went to court to file a legal action. Eventually, the court ruled in your favor and ordered the other party to pay. Now you are called a “judgment creditor” and the other party a “judgment debtor.” The amount owing is called a “civil debt.”

In an ideal scenario, the judgment debtor will pay you the money. But we don’t live in an ideal world, and there are instances when, despite obtaining a court judgment, the judgment debtor still won’t pay.

How do you deal with this situation? In this article, we will guide you on how you can enforce the judgment order and collect the civil debt in New Zealand.

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When can you collect the civil debt?

You can only apply to the court for civil enforcement when, first, the court has ruled in your favor and has issued an order directing the person or company to pay you civil debt. You should take note that not all court judgments contain an order directing one party to pay a civil debt.

In addition, before you can apply for civil enforcement, you must also ensure that the 48-hour stand-down period has passed. The 48-hour stand-down period means that you need to wait for 48 hours after the date of the judgment order before you can go to court and apply for enforcement.

Steps on how to collect debts from a judgment debtor?

Here are the steps on how to apply for the enforcement of your judgment:

Step 1: File an application with the district court. You may have to pay civil enforcement fees but these fees can usually be added to the civil debt.

If the court order is over 6 years old, you will need to first ask permission from the court, known as “leave of court,” before you can proceed with the application for enforcement.

Step 2: Provide the court with up-to-date information about the debtor. The information should include the debtor’s financial statement as this would help the court assess the debtor’s capability to pay. Also, include the debtor’s address as they need to be served with court orders. If the debtor is a business, it is prudent to get their NZBN (or New Zealand Business Number).

Step 3: Apply for specific enforcement actions that you think can best help you collect the debt:

  • deductions from wages or benefits
  • ask the court to seize the debtor’s property
  • garnishee proceedings
  • stop the debtor’s sale until the debt is paid

The court will conduct a financial assessment hearing and can issue several orders including:

  • attachment or wage garnishment order
  • warrant to seize property
  • payment in full
  • a payment plan

What if the debtor does not follow the order or payment instructions?

Slater Byrne Recoveries’ New Zealand team had a debt collection case involving this exact situation. A Client engaged us because the other party refuses to pay the judgment amount. The judgment order, in that case, required the debtor to pay $400 per month. What our accounts manager did to recover the debt was engage in back-and-forth negotiations with the debtor until, after a little push from our accounts manager, the debtor finally paid the debt in full.

As in any debt collection issue, there is a need for you to follow up with the debtor because there is no assurance that the other party will comply with a judgment order. When recouping the debt becomes too burdensome for you, consider outsourcing the task to a professional debt collection agency in NZ for a more forceful and experienced follow through.

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