Recovering a Debt from an individual:
_____________________________________________________________________________
In some cases, where the initial collection process has not prompted payment from the debtor, legal action can be a useful tool to aid the recovery process (Optional). Starting proceedings in the court consists of (standard procedure) filing a notice of proceeding and Statement of Claim. If the debtor responds once being served the document the claim can go to hearing. If the debtor fails to respond within 30 days of service, then judgment can be obtained by default wever it will show your debtor that you are serious about recovering money which is rightfully yours.
Whilst costs are involved in taking legal action (payable by the client) some costs (ie, if you are legally entitled to recover collection costs and legal costs) may be tagged onto the debtors account at the time of judgment. It is important to note that it is the judges decision whether these costs are awarded or not.
How do I enforce the judgment if the debtor still doesn’t pay?
If the debtor still does not pay after the court has given you a judgment for the debt, there are several methods in which can enforce payment of the debt. The most common methods of enforcement are:
- Order for Examination - This is a court order to have the debtor brought before the court Registrar and examined about his or her financial situation. If the Registrar decides the debtor can pay the debt, the Registrar will make an order for payment, ie $30pw, $80pf etc. Usually the Registrar will try to negotiate an arrangement for payment that suits both parties. The Registrar can also make a number of other enforcement orders (including the ones listed below).
- Attachment Order - This instructs the debtor's employer to make regular deductions from the debtor's wages or salary (including bonuses and incentive payments). It can also order ACC or Work and Income to make deductions from ACC payments or welfare benefits. An Attachment Order can also be made against commissions and payments received as an independent contractor. An Attachment Order can't be made unless there has first been an Order for Examination
- Distress Warrant (for personal property) - This authorises a Collections Officer from the court (a "bailiff") to seize goods from the debtor to the value of the debt. The seized goods are held for five days and then sold, usually by public auction.
- Charging Order and Writ of Sale (for land) - The registration of a charging order puts a stay on the debtor’s property, preventing him or her from selling the property until the debt is satisfied; the property can be sold to satisfy the debt by a writ of sale.
|
| Individual Debt | >$4,500 | $4,500 - $20K | <$20,000 |
| Notice of Proceedings | $250.00 $250.00 | $450.00 | $600.00 | $90.00 | $90.00 | $90.00 | $30.00 | $30.00 | $30.00 | $115.00 | $190.00 | $240.00 | $150.00 $150.00 | $165.00 $180.00 | $165.00 $200.00 | $150.00 | $165.00 | $165.00 | $130.00 | $130.00 | $130.00 | $250.00 | $250.00 | $250.00 |
| $450.00 | $600.00 |
| Document Service | $80.00 | $80.00 | $80.00 |
| Affidavit | $20.00 | $20.00 | $20.00 |
| Judgment | $115.00 | $190.00 | $240.00 |
Examination Order Solicitor Costs | $150.00 $160.00 | $165.00 $180.00 | $165.00 $200.00 |
Attachment Order | $150.00 | $165.00 | $165.00 |
| Distress Warrant | $130.00 | $130.00 | $130.00 |
Periodic Detention | $250.00 | $250.00 | $250.00 |
* (prices are exclusive of gst)
RECOVERING A DEBT FROM A COMPANY
(Related Legislation)
The COMPANIES ACT 1993 provides a quick procedure for ensuring payment, or at least of knowing if the payment is possible.
Serve a "Statutory Demand" on the company
To recover money from a company you must serve a "statutory demand" for the debt. This demand must be in writing and should be served on the debtor company’s registered office. The demand must require the company to pay the debt, or to secure the debt or settle it in some way.
The company has 15 working days after being served to comply with the notice.
What if the company disputes the debt?
If the company disputes the debt it has 10 days after being served with the statutory demand to apply to the court to have the demand set aside.
If the company does apply to have it set aside, the Court can decide at that hearing if the company should be liquidated.
What if the company still hasn’t paid after the 15 days?
If the company hasn’t paid the debt after 15 days, and it has not disputed the debt, then it is deemed unable to pay its debts, and you can therefore apply to the court for the company to be placed in liquidation.
If the company wishes to defend the liquidation, it has 14 days to file and serve a Statement of Defence.
You must advertise in the local newspaper and in the New Zealand Gazette that liquidation proceedings have been started, including the place, date and time set for the hearing. The advertisement must be published at least seven clear days before the hearing date.
The company can pay the debt any time up until the court hearing. However, costs would be paid to the party applying to place the company in liquidation.
Appointment of a Liquidator
If the company’s defence of your liquidation application is unsuccessful, or if it does not file a Statement of Defence, the court will appoint a liquidator to take control of the company and to try to satisfy its creditors. The liquidator must ensure that all moneys that are recoverable are in fact recovered and that the payments are made in order of preference.
The order of preference for creditors should the company be liquidated is as follows:
- those owed wages, including holiday pay
- certain payments to the Inland Revenue Department (for example, PAYE)
- secured creditors
- unsecured creditors
PROCEDURE FOR WINDING UP A COMPANY ACTION DESCRIPTION FEES GST |
| STATUTORY DEMAND | A Statutory Demand is a formal demand which gives notice to the debtor company of the debt owing to the creditor and outline | $250.00 | GST |
| DOCUMENT SERVICE | The Statutory Demand must be served on the Companies Registered Office. The service agent must swear an affidavit which outlines the date, time etc in which the Statutory Demand was served. | $80.00 | GST |
| | The Debtor Company will have 15 days to defend the application or pay the account. | | |
WINDING UP | This includes: Preperation of documents, Court Filing Fees, Advertising Costs, Solicitors Appearance Fee and filing Order. A liquidator will be appointed and the companies assets will be distributed to creditors accordingly. The debtor comany will have up until to date of HIgh Court hearing to pay the principle debt. | $2000.00 | GST |