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. Read on to learn more about how a garnishee order works, what benefits it offers, and how you can obtain one.
A garnishee order 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, a garnishee order issued to a debtor’s employer is called an Attachment of Earnings Order. Meanwhile, a garnishee order issued to the debtor’s bank or other people who owe them money is called an Attachment of Debt Order.
You can apply to the court for a garnishee order if any or all of the following occur:
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.
There are three primary ways that a garnishee order works to get a debt paid.
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. These 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.
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, these may be protected from garnishee orders. However, this is highly depended on the context.
Here, the payment is usually collected in lump sums, unless you agree with the garnishee on an instalment arrangement.
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:
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 a garnishee order, we are here to help! Call Slater Byrne Recoveries today on 1300 794 290.
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.
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