Do you know about Garnishee order:
What is a garnishee order?
- A garnishee order is typically issued when a creditor you owe money to has obtained a default judgement from a court or other authority against you. The judgement then allows the creditor to issue a court order that instructs a third party such as your employer, bank or financial institution to redirect your wages or holdings to the creditor you owe money to. Once a garnishee order has been issued, your employer, bank or financial institution is legally obligated to comply with it.
How a garnishee order works
- A default judgement is usually obtained by a creditor either when a debt has gone unpaid, you haven’t been able to come to any agreement with the creditor about repaying the debt, or other alternative debt collection avenues have been exhausted.
- If a garnishee order is made against you, then your bank, financial institution, or employer will likely be notified rather than you. Garnishee orders can be served to anyone that owes you money, such as tenants or contractors.
A garnishee order made to your employer
- If your employer receives a garnishee order, they are required to pay the ordered amount to your creditor out of your wage or salary. The payments will be taken regularly until your debt is paid in full, the court orders the payments to stop or you deploy a formal remedy that will cease the order – such as filing for bankruptcy.
A garnishee order made on your bank accounts
- Garnishee orders can be made on banks and financial institutions, compelling them to put a freeze on your accounts. If this happens, your creditor can typically take the full amount owing from your account, if you have the funds available.
A garnishee order made against others who owe you money
- A court can serve a garnishee order against anyone who owes you money, so tenants, contractors or anyone else with an outstanding debt to you can be garnished without your involvement. They will usually be ordered to pay a lump sum rather than make ongoing payments.
How you may be able to stop a garnishee order
Pay the debt in full
- True, if you were in a position to pay your debt in full, you likely wouldn’t be in this situation to begin with; but if you can find a way to do so, your problem may be resolved and the order could be stopped.
Make alternative repayment arrangements
- Here’s where you might have some wiggle room to negotiate. If you get in touch with your creditor you may be able to discuss other arrangements to pay back the debt in a way that works for both of you. Your creditor may be open to decreasing the repayment amount and giving you more time to repay.
- Apply to pay by instalments through the court
- If you’ve tried to negotiate with your creditor but they have declined your proposed alternative arrangements, you can also apply to the court to pay by instalments. You can start this process by lodging a statement of your financial position to support your application and, if the court accepts your application, the garnishee order will be stopped.
- Use the Bankruptcy Act
- Generally, if you call on the Bankruptcy Act, it is likely your garnishee order will be stopped. If you have any other unsecured debts, this action will also likely resolve those as well.