Unfortunately once the small claims trial is over, the winning party is often under the misguided belief that their debt will automatically be paid by the losing party. In reality this is not always the case.
The Certificate of Judgment is not a guarantee of payment and in some cases further action needs to be taken to recover the debt and the creditor is responsible for collecting the debt not the Small Claims Court.
The best course of action to recover your debt once a Certificate of Judgment has been filed with the court is to write to the debtor and ask for payment. In the letter you should inform the debtor how to pay you, give them your address for further correspondence and provide a reasonable deadline for payment. If you do start to receive payments keep proper records of what you have received backed up with bank statements or receipts.
Examination Hearing
If the debtor fails to make your payment deadline, you should apply for an examination hearing. Debtors have to report on their financial circumstances in advance of the examination hearing by serving a Financial Information Form on the creditor. This will help you ascertain information on the debtor’s assets, where he/she has bank accounts and whether or not he/she has a job. The judge presiding over the hearing may agree a payment schedule with the debtor that suits the debtor’s finances. It is important to determine that the debtor has the means to pay you either through an income or assets that can be taken then sold. If they do not have the means to pay you can wait until for example they have a job and you can collect the money through a notice of garnishment. This means that the debt will be taken in agreed amounts at source from their salary.
If the debtor fails to produce information about their assets and income at the examination hearing the judge may order a contempt hearing. It is up to the creditor to serve notice of the contempt hearing to the debtor. The debtor can produce their financial statement at the contempt hearing or explain why they didn’t attend the examination hearing. The judge may decide to schedule a new examination hearing or to make a schedule of payments if the debtor has produced the financial information required to assess the debtor’s finances. Debtors who fail to attend a contempt hearing or who refuse to produce the financial statement can be sent to jail for up to 40 days for contempt of court or have a warrant issued for their arrest.
Garnishment
If you establish that your debtor has sufficient finances to pay you, you can apply for a Notice of Garnishment and have the money taken directly from the debtor’s salary or bank account. You will need the exact name of the debtor’s employer if you intend to garnish from the debtor’s wages. You also need to file an Affidavit Enforcement Request Form and a Notice of Garnishment with the Small Claims Court. Once filed, you must serve these documents along with a Garnishee’s Statement on the debtor and the garnishee, which could be the debtor’s bank or employer. If any party has issues about the garnishment, they may request a garnishment hearing before a Small Claims Court judge.
Writ of Seizure
If your debtor has assets sufficient to pay all or some of the debt, you can take out a Writ of Seizure so that the debtor’s personal possessions can be taken and sold. Taking out a Writ of Seizure can prove to be a costly exercise where the creditor gets little money for their efforts. Creditors will have to pay for the storage of the items, any advertising for the public auction, locksmiths etc. Certain items are exempt from seizure such as clothing, household furniture, fuel and food, items used in the debtor’s business like tools and books and one motor vehicle, which is worth less than the debt. To enforce a Writ of Seizure, the creditor should fill out an Affidavit of Enforcement Request Form and a Writ if Seizure and Sale of Personal Property Form. You need to be specific about the description of the items you want seized and their whereabouts.
Creditors can apply for a Writ of Seizure for the sale of land and property. A separate writ must be issued for each piece of land being seized. The sale of the land or property cannot take place until six months after the Writ of Seizure was issued. If taking this course of action, debtors should check first whether the debtor has any equity in the land or property that has not been eaten away by other liens or mortgage debt. The creditor should also be aware that the expenses associated with seizing land are extremely high.
Interest on the Debt
The outstanding debt will accrue interest from the day the court passes judgment. It is calculated as follows:
(total judgment amount) x (post-judgment interest rate %) ÷ (365 days per year) x (number of days from date of judgment to date payment received) = post-judgment interest owing
If you are going to claim interest on your outstanding debt then you need to recalculate the amount of interest owed after every payment is received.
Once the debt has been paid to you in full it is your responsibility to notify the enforcement office.