What is a Garnishee Order? (2022 Update)
A garnishee order is a significant concern since it implies that a court order has now been carried out so that creditors may recover debt from third parties. To accomplish this, they may deduct funds from the debtor’s bank account and/or salary, among other options. If a garnishee order is filed, you should take immediate action to weigh your choices and choose your next course of action. If not, things will only become worse.
How do garnishee orders work?
To collect their debt, a creditor can request that a garnishee order be issued to manage their debt. The court might issue a garnishee order, served on the garnishee by the party who applied. The garnishee is usually not the debtor or the person who owes the debt. Instead, the debtor’s bank, employer, or another entity owes the debtor money. There are several types of garnishee orders.
- Recovering wage and salary debt
With the help of a garnishee order, a creditor may be able to collect money owed from the debtor’s income and salary. This kind of garnishee order is the most common. When the court issues its ruling, the creditor notifies the debtor’s employer and serves them with the order. Then, the employer deducts a specific amount from the creditor’s pay to be paid to the creditor. This salary withdrawal may remain until the total debt is settled unless the court terminates the order.
- Debt recovery from bank accounts
The court could also issue a garnishee order to collect the debt from your bank account. This order typically instructs the garnishee (your bank or financial institution) to pay the outstanding debt in one lump sum, unlike garnishee orders for salaries. As the bank works on the garnishee order, it will usually put a hold on the account, making it so that the debtor can’t use it for a while.
- Recovering debt from those who owe the debtor money
Any third party that owes money to the debtor can be served with a garnishee order. These third parties could be vendors, occupants, or any other person or organisation that owes the debtor money. The order issued is typically for a flat sum of money rather than regular payments, much like when the garnishee is a bank or other financial institution.
What can I do to stop a garnishee order?
Garnishee orders compel financial institutions, employers, and other parties to comply with the terms of the notice and cannot be reversed. The only situation in which this wouldn’t apply is if the debtor could pay the amount owed or arrange for it to be paid in instalments.
- Negotiating with the creditor
Debtors and garnishees who cannot comply with the garnishee orders’ requirements may wish to discuss payment terms with the judgement creditor. Debtors who successfully negotiate with creditors should put their arrangement in writing.
- Make a court application.
If negotiations don’t work, the person who owes the money can ask a judge to let them pay it off in instalments.
- Financial hardship and disadvantage
People who are having trouble with money or are being mistreated may be able to ask the proper authorities to let the creditor return some or all of the money they have taken.
If you have any questions about company liquidation and voluntary administration, or if you foresee receiving a garnishee order, please contact AIS. AIS will evaluate your financial condition and provide advice based on expert knowledge and expertise. Our free hotline is available around-the-clock at 1800 210 073.