If you have exhausted all other debt collection options but have not yielded any results, then obtaining a garnishee order might be best solution for you. A garnishee order is a legal tool in Australia used by creditors to enforce a judgement debt and collect the money owed.
Read on to learn more about how a garnishee order works, their benefits, and the processes for obtaining them in various states including Victoria, New South Wales (NSW), and Queensland.
What is a Garnishee Order?
It is is one of the legal avenues that a creditor can use to enforce a judgement debt and collect the money owed. Essentially, it is a legal notice that directs a third party (called a garnishee) to pay the debt using funds from either the debtor’s salary, bank accounts, or people that owe money to the debtor.
Garnishees can be the debtor’s employer, bank, or other financial institution holding money for the debtor. They can also be contractors, trade debtors, and tenants.
In Victoria, a garnishee order is also known as an attachment order. So, one issued to a debtor’s employer is called an Attachment of Earnings Order. Meanwhile, one issued to the debtor’s bank or other people who owe them money is called an Attachment of Debt Order.
When is a Garnishee Order Issued?
You can apply to the court for a garnishee order if any or all of the following occur:
- when a debt has gone unpaid for a long time and you want to get paid faster
- when no agreement is reached regarding debt repayments
- when you are unable to recover money despite using all other debt collection avenues
When a garnishee order is issued, the debtor will not be notified. Instead, the order will be addressed directly to the garnishee and they are legally required to comply with it.
How Do Garnishee Orders Work?
There are three primary ways that a garnishee order works to get a debt paid.
1. Recovering debt from the debtor’s salary and wages
This is the most common kind of garnishee order and is served to the debtor’s employer. Payments in this case are usually done in instalments, depending on the size of the debt and the amount of salary the debtor receives.
These payments will continue until the judgement debt is paid in full or until the court stops the order. Payments may also stop if the debtor takes action to cease the garnishee order, such as filing for bankruptcy.
It’s important to note that in Victoria, the maximum amount that can be garnished from a debtor’s salary is 20% after taxes. This is because the debtor must be left with a certain amount to live on. Called a weekly compensation amount, this sum usually varies from state to state and is adjusted twice a year (in April and October).
Moreover, the employer is allowed to deduct a set amount from the employee’s salary for administration fees. Also, the debtor’s Centrelink benefits are protected from garnishee orders.
2. Recovering debt from the debtor’s bank accounts
In this case, the debtor’s bank or financial institution is required to repay the outstanding debt in a lump sum. Once the garnishee receives the order, they will usually freeze the debtor’s account for about two to three days to process the garnishment.
If the debtor has Centrelink payments in their bank account, all or a part of these funds may be protected from garnishee orders.
3. Recovering debt from individuals or companies that owe money to the debtor
Here, the payment is usually collected in lump sums, unless you agree with the garnishee on an instalment arrangement.
What are the benefits of a Garnishee Order?
Perhaps the biggest benefit of obtaining a garnishee order is that it ensures your judgement debt will be paid. This may take time, especially if the outstanding balance is sizeable, but at least there is an assurance that the wait will eventually lead to successful debt recovery.
Other advantages of issuing a garnish order include:
- No filing fees. Garnishee orders can be reissued if the initial order fails to recover all the funds owed.
- Garnishee orders can be reissued. If the initial order fails to recover all of the funds owed, you can have it reissued on the same garnishee again.
Garnishee Orders in New South Wales
Obtaining a garnishee order in New South Wales involves following the five-step process outlined below:
Step #1: Obtain the right forms
Step #2: Fill out the forms
Step #3: File the forms
Step #4: Serve the garnishee order
Step #5: Garnish wages or salary / debts
Take note that some details involved in this process (such as the forms and information needed) will differ slightly depending on the type of garnishee order you are applying for.
Here’s a more detailed guide on applying for a one for wages or salary. Here’s another guide for obtaining one for debts.
Some Points to Remember:
In New South Wales, creditors are required to send the garnishee a sealed (stamped) copy of the garnishee order. However, they do not have send a copy of the order to the judgement debtor.
Here are some other important points you need to keep in mind enforcing a garnishee order in NSW:
I. Garnishee Order for Wages or Salary
- The debtor must be left with a minimum amount for living expenses. As of October 2018, this amount is $504.60 per week.
- The garnishee is allowed to deduct a maximum of $13.00 from the debtor’s wages/salary for administration expenses. This amount will come out of the money owed to you.
- The debtor can apply to the court for instalment payments. If this approved, the garnishee will be paying you the instalment amount specified by the court.
II. Garnishee Order for Debts
- The debtor must be left with a minimum balance (currently at $504.60) plus $20.00 in their account before the garnishee can take money out of it.
- If the debtor’s account balance is less than this amount, the garnishee does not have to comply with the court order.
- The garnishee is entitled to deduct up to $13.00 from the debtor’s account as administration fee. This amount will not be taken out from the funds owed to you.
- Centrelink benefits may be protected from the garnishee order.
- For this type of garnishee order, the debtor can also apply to the court to pay by instalment.
Garnishee Orders in Queensland
In Queensland, a garnishee order for wages or salary is called a “warrant of redirection of earnings”, while one for debts is officially known as a “warrant for redirection from financial institutions”.
The process of obtaining a warrant for redirection in this state is similar to NSW in that creditors are required to fill out, sign, and file certain forms. Creditors must also provide enough information proving that the debtor can afford the redirection of funds. The registrar needs to be satisfied that the deductions will not cause unreasonable hardship on the debtor.
Key Differences:
In Queensland, creditors are required to provide a copy of the enforcement warrant to both the garnishee and the debtor.
Here are some other key differences you must remember:
I. Warrant of redirection of earnings:
- The warrant of redirection of earnings will only come into force seven days after the employer is served.
- You also need to serve the employer with Form 79 (Notice to employer for redirection of earnings) and Form 80 (Notice that debtor is not an employee).
- If the debtor’s employment is ceased after the warrant is served, the employer is required to complete Form 81 (Notice of cessation of employment) and provide you with a copy.
II. Warrant of redirection from financial institutions:
- If the debtor’s bank account contains Centrelink benefits and/or a government pension, you must include the following endorsement in the warrant:
“To the Manager:
If Social Security benefits are paid into this account, please ensure that the saved amount, as stated in the Social Security Act, is protected from this Enforcement Warrant for Regular Redirection.”
- You or the debtor can apply to the court to have the warrant set aside, suspended, or varied. You can do this by filing Form 9 with Form 46.
Slater Byrne Can Help!
A garnishee order can be a very effective debt recovery tool as it allows you to bypass the debtor and head straight to the source of their funds.
If you need assistance with obtaining one or exploring other effective debt recovery tools such as statement of claim or statutory demand, we are here to help! Call Slater Byrne Recoveries today on 1300 794 290.
