Debt Recovery Approach – Councils

Key points:

  • Our aim is to recover debts in a timely, efficient and cost-effective manner.
  • We believe that any account over $500 in value and where council has not received payment after two consecutive instalments requires action.
  • We pay all expenses relating to postage, letters of demand, telephone calls, field calls etc.
  • Costs associated with court actions are the responsibility of council and are then added to the debtor’s outstanding amount.
  • We resolve cases initially through letters of demand and by talking to the ratepayer, offering alternative methods of payment
  • We commence legal action only after every other avenue has been exhausted and will only instigate court proceedings at your request.
  • After all attempts to recover the outstanding debt have failed and legal action is required, a summons is issued on the ratepayer.
  • After service of the summons, the ratepayer is allowed 28 days to make payment, enter into a suitable arrangement or file a defense.
  • If none of the above occurs, we obtain judgment. At this stage the ratepayer’s credit record can be affected. We then proceed to post-judgment actions.

Post judgment action

Once judgment has been obtained, in the majority of cases we will issue a garnishee notice over either the ratepayer’s bank account or work place.

This approach differs from other agencies and solicitors who would usually proceed with a writ of execution, which we feel is a costly and time-consuming exercise.

In selective cases we would use a writ, but generally we believe a garnishee is the most effective post-judgment procedure.

Why use a garnishee notice over a writ of execution?

All the councils we represent prefer to use a garnishee notice to a writ of execution. This is because a garnishee notice is quicker and more economical and has a higher success rate.

A writ of execution requires a sheriff to seize and sell property belonging to the debtor, and pay the proceeds to the creditor. This can have disadvantages.

The disadvantages of a writ of execution

  • Ratepayer has prior warning – debtor is required to get prior warning by mail. This means debtor can leave the property and go into hiding. If council wants the sheriff to return to the address there is a further charge to council and the same procedure has to be followed usually with the same outcome, i.e. no one home.
  • Sheriff does not have the powers of a police officer – if a sheriff is asked to leave a property he must do so otherwise he’d be trespassing.
  • Cannot seize assets unless ownership is proven – the sheriff cannot seize assets where there is no proof of ownership. This allows the debtor to simply deny ownership of goods on the property.
  • Difficulties in identifying debtor – debtors can deceive sheriff as to their true identity.

Advantages of a garnishee notice

Advantages of a garnishee notice include:

  • Lower legal costs – compared to a writ, a garnishee costs less to use and can resolve the debt situation faster and more efficiently.
  • Does not expire – a garnishee notice does not expire until the debt is paid.
  • Easy to use – a garnishee notice can easily be issued. You only need the debtor’s bank and branch details, which are readily obtainable from your bank if the debtor had previously paid monies to council via Bpay, direct debit, eftpos or cheque.
  • Issued over place of work – a garnishee notice can also be issued over a ratepayer’s place of work. If the ratepayer’s place of work is unknown we can obtain this information on council’s behalf.

 Flow chart of our general process of collecting debts

Our process for debt collection- councils