This fact sheet is for information only, and applies to NSW. It is recommended that you get legal advice about your situation.
Karen had an outstanding credit card debt to BIG BANK. As Karen had other debts and only worked part time she had been unable to repay the credit card debt to BIG BANK. Karen had tried to make repayment arrangements to repay BIG BANK but could never keep up. Eventually BIG BANK sent Karen a Local Court summons (Statement of Claim). Karen knew she could not pay the debt claimed so she just put the summons away.
A few months later, the Sheriff turned up at Karen’s door and wanted to “tag” her car (worth $10,000) and her brother’s motorbike. Karen tried to explain she would pay the debt but the Sheriff told her to contact the Local Court. The Sheriff finally left stating that he would come back the next week to collect the tagged goods. Karen needs her car for work and her brother would go “berserk” if his beloved motorbike was taken.
This fact sheet only applies to debts being enforced in the Local Court in NSW.
CAN THE SHERIFF COME AND TAKE MY PROPERTY?
The Sheriff cannot come and take your property until there is court judgment against you!
A court judgment is when the Court has decided you owe the money (this may have happened because you did not attend court; did not file the appropriate documents; or because the court found against you and entered judgment for the plaintiff ). If you are unsure if there is a court judgment against you, ring the relevant Local Court. You can search the numbers online here.
If there is no court judgment against you, get legal advice immediately.
Once the Local Court has decided you owe money to someone (“the judgment creditor”), that debt can be enforced. The judgment creditor can apply to the court to:
- Take and sell certain assets to cover your debt (this is called a “Writ for the Levy of Property”). Some items are protected – see the sheriff and seizure of goods fact sheet.
- Garnishee your wages or bank account. This means they can take money from your bank account or out of your pay to cover your debt (called a garnishee order, for wages or salary);
- Examine you in court as to your income, assets and liabilities;
- Force you to become bankrupt.
WHAT IF I HAVE A LOCAL COURT JUDGMENT AGAINST ME BUT I BELIEVE I HAVE A DEFENCE?
If you have:
- A good reason why you did not respond to the Statement of Claim sent or served on you by the Court or judgment creditor within 28 days. (A Statement of Claim is the official document which must be filed in a court to commence court proceedings. A good reason that you did not respond would be that you you did not receive it for example); and
- You believe you have a defense.
You may be able to have the Judgment set aside/removed by the Court and your defense heard. See Fact Sheet: Making an application to set aside a judgment.
WHAT CAN I DO IF I HAVE A JUDGMENT AGAINST ME AND I DO NOT HAVE A DEFENCE (THAT IS, I AGREE I OWE THE MONEY)?
- Pay the debt in full.
- Make an agreed arrangement to pay instalments with the judgment creditor. This should be in writing and a copy sent to the courts.
- Make a Notice of Motion to pay the debt by instalments. This means that you will repay the debt over time, usually in monthly repayments.
The FIRST Notice of Motion to Pay by Instalments will STOP all action by the judgment creditor to collect the debt from you (until the Court makes a decision about the application). If the application is accepted, all action is stayed so long as you keep to the arrangement.
You may want to consider your other options, such as bankruptcy. For more information see Fact Sheet: Should I Consider Bankruptcy?
HOW LONG DOES THE JUDGMENT CREDITOR HAVE TO CHASE ME FOR THE DEBT AFTER JUDGMENT?
The judgment creditor has 12 years to chase you (enforce) the debt after the date of judgment. This time can be extended with the permission of the Court.
WHAT ARE THE WAYS THE JUDGMENT CREDITOR CAN ENFORCE THE DEBT?
There are four ways that a judgment creditor can enforce a debt:
SEIZE YOUR GOODS (A WRIT OF LEVY OF PROPERTY)
In this situation the Sheriff will come to your home to seize your goods to pay the debt you owe. The Sheriff will not seize the goods on the first visit. Instead on the first visit to your home the Sheriff will hand you a Writ of a Levy of Property. This is a document issued by the Court stating that the Sheriff can take your personal goods to pay the judgment debt. The Sheriff will identify the goods to be seized. If you do nothing more about it, the Sheriff may seize your goods on the next visit.
For more information on the Seizure of Goods by the sheriff see Fact sheet: The sheriff and seizure of goods. This fact sheet also includes information on what items the sheriff cannot seize, and what to do if the sheriff is trying to seize goods that are owned by you but you are NOT the judgment debtor.
GARNISHEE OF YOUR WAGES OR BANK ACCOUNT
There are only two types of garnishee orders. The court can order a single deduction from an account, for example if you have an account with a financial institution. Alternatively a continuous deduction order can be made. An example of this is when the judgment creditor will take money from your wages/salary or bank account to pay the judgment debt.
The amount that can be taken from your salary/wage is limited to a maximum amount. The deductions cannot reduce your net weekly amount to less than 100% of the standard weekly benefit. An amount of $527.40 per week (as at 1 October 2020, amounts are adjusted every April and October) must be left out of your pay each week for you. The remainder will be given to the Judgment Creditor. Garnishees are continuous until the debt is paid or there is no longer any salary/wage to withdraw from. That is, they generally do not expire. The employer may deduct $13 to cover its costs of arranging each deduction. This fee will be deducted if you are making the payments as part of an instalment order.
If your deposit account is being garnisheed it will be for a one off amount of any money in your account above $527.40 (as of 1 October 2020). If you have less than $527.40 in your account, nothing can be garnisheed. If you are in receipt of Centrelink benefits, a certain amount of the balance cannot be taken.
If you want to try to reduce the amount taken by a garnishee you can make an application to pay by instalments. See Fact sheet: making an application to pay by instalments.
An examination is where the judgment creditor can ask you to attend court and give information about your assets and income. The person you owe money to may serve you with an “Examination Notice” requiring to outline your assets and income. If you do not reply to the notice within 28 days, the person you owe money to may then file a motion seeking an “Examination Order”. This means you have to go to court on the date stated in the summons. You should take all relevant financial records. If you do not attend you may be arrested and forced to attend court and be examined on your financial situation.
FORCED (INVOLUNTARY) BANKRUPTCY
The judgment creditor can apply for a bankruptcy notice from the Australian Financial Security Authority to force you into bankruptcy. You must get legal advice urgently if you receive a bankruptcy notice or creditor’s petition.
For more information about bankruptcy generally see Fact sheet: Should I consider bankruptcy?
NEED SOME MORE HELP?
See Fact sheet: Getting help for a list of additional resources.
Last updated: October 2020.