January 8, 2015

By Mark Mikulasik

Christmas bills are coming due and heating costs are rising. Your creditors expect to get paid, so if somebody owes you money, chances are you would like to collect it.

The first step is to get a court order or judgment in your favour. If the amount is less than $25,000.00, this can be done in Small Claims Court. If you are owed over $25,000.00, you will need to proceed in Superior Court.

One thing in common regardless of how much you are owed is that getting judgment is just the start of the process – the government does not instantly collect the debt for you.

In Small Claims, the process is simplified and the friendly court staff will direct you to informative booklets on how to collect the judgment, because small claims has their own way of doing things. That said, hiring a lawyer might save you time and aggravation and increase your chances of collection.

In Superior Court, the process involves a series of steps, which may include issuing a Writ of Seizure and Sale, completing an Examination in Aid of Execution, Garnishment and/or Enforcing a Writ of Seizure and Sale.

WRIT OF SEIZURE AND SALE

Once the judgment is issued, you may request that the Superior Court issue a writ of seizure and sale which will direct the Sheriff to seize and sell the real and personal property of the debtor to satisfy the amount of the judgment. This does not mean that the property will be sold immediately, or at all- additional steps are required to do that, as described below. However, if the debtor tries to sell real estate or refinance, your judgment may have priority, and you may get paid. It also entitles you to share in funds that come into the court through other collection efforts. This is a low cost step that is advisable in every case, but does not do much to actually get you money now.

EXAMINATION IN AID OF EXECUTION

If you really want to get paid, you need to consider an examination of the debtor. You are entitled to examine the debtor once a year in relation to:

  • reason for non-payment or non-performance of the judgment;
  • the debtor’s income and property and debts owed to and by the debtor;
  • Any disposal the debtor has made of any property whether before or after the making of the judgment;
  • the debtor’s present, past and future means to satisfy the order;
  • whether the debtor intends to obey the judgment or has any reason for not doing so; and
  • any other matter pertinent to the enforcement of the judgment.

Once served with a Notice of Examination, the debtor must attend. If she does not, a motion can be brought, and an order obtained compelling the debtor to attend. If this still does not facilitate her attendance at an Examination in Aid of Execution, an order can be obtained from the Superior Court, holding the debtor in Contempt of Court (which order can include a fine or time in jail).

Examinations in Aid of Execution can help to establish how the debtor is able repay the outstanding debt, and provide information for use in enforcing the judgment.

Often, the examination results in a negotiated payment plan, if the debtor is not a deadbeat.

GARNISHMENT

The most common way to get your judgment paid is a garnishment of debts payable to the debtor by other persons.

Garnishment is the term used for a notice that somebody who owes your debtor money (for example, an employer or bank) must pay the Sheriff instead. We normally get that information from the examination, and then rush to serve the notice of garnishment before the debtor is paid.

Money received by the Sheriff from the garnishee would then be divided among all creditors of the debtor on a pro rata basis based on priority of other creditors, if any, who have also filed notices with the Sheriff. If the garnishee is an employer, for example, 80% of the debtor wages would be exempt from garnishment. In this type of situation, it may be that recovery of the debt owed by the debtor would be repaid over a lengthy period of time and only while the debtor continues employment with a particular employer. If the debtor changes employment, the garnishment process will have to be redone with respect to the new garnishee (employer).

ENFORCEMENT OF THE WRIT OF SEIZURE AND SALE

Once the Superior Court issues the writ of seizure and sale further steps must be taken to execute and enforce the writ.  Personal property such as jewelry, boats, campers, vehicles or motorbikes, if free of liens, can be seized and sold immediately. This is rarely done, but is a powerful threat.

No steps to seize and sell land can be taken by a creditor until four months after a writ of seizure and sale has been filed with the Sheriff. You can instruct the Sheriff to sell the land after the fourth month and the Sheriff can take steps to have the property sold, but the actual sale cannot be held until 6 months after the writ of seizure and sale has been filed with the Sheriff.

This process involves considerable paperwork, because it is a serious step. The Sheriff will require a deposit of the estimated costs of the sale in case no offers are received. In practice, most sales are not completed, but often that is because you get paid.