The Law Handbook 2024

Chapter 5.2: Are you in debt? 361 form of enforcement. If you own an interest in land, it might be more likely for a creditor to commence bankruptcy proceedings against you (see Chapter 5.3: Understanding bankruptcy). The sale If the property does not sell for the reserve price, the sheriff or the creditor may obtain an order from the Supreme Court to sell the property without a reserve price. However, the sheriff must obtain a fair price (even with such an order) and, if the sheriff breaches their duty and sells the property at an unfair price, the following consequences may follow: 1 the sale may be set aside; or 2 if the sale is not set aside and you have sustained loss and damage, the sheriff may be liable to pay you damages at common law (see Zhou v Kousal [2012] VSC 187). In Zhou v Kousal [2012] VSC 187, the Supreme Court of Victoria set aside the purported sale of a residential property by the sheriff for $1000 where the property had a market value of approximately $630000 and the debtor’s financial interest in the property was approximately $165000. A warrant of seizure and sale is only valid for three months. If the property has not been sold within that period, the creditor is required to re-register the warrant with the Titles Office. Getting help At any time up to the sale of the property, you can seek an instalment order, but you will be liable to pay the legal costs of the warrant. Therefore, these costs should be included in the amount payable under the proposed instalment order (see ‘Instalment orders’, above). Obtaining an instalment order stops any further action by the sheriff or the creditor in relation to that debt. Advice should be sought from a financial counsellor (see Chapter 5.4: Financial counselling services). After the sale The proceeds of the sale are paid to the creditor to pay off the judgment debt and any costs and interest that have accrued since the date of judgment. Any money remaining is paid to you. Attachment of earnings If you are earning a salary, an attachment of earnings can be used to enforce a judgment debt against you. The creditor can apply to the court for an order that your employer deduct instalments from your salary and pay them to the creditor. The procedure is detailed in the Magistrates’ Court General Rules (order 72). The procedure starts with the creditor applying to the court for a hearing date. Then, the debtor is served: • a copy of the application (in form 72A); • a blank judgment debtor’s statement of financial position (in form 72C); and • an affidavit (sworn statement) in support of the application (in form 72B). You must fill in the statement of financial position and return it to the creditor before the hearing. The court may ask your employer to confirm your income. Your employer must provide this information. If your employer does not do this, they can be summoned to court to be asked questions about your income. It is an offence under the MC Act (s 111(10)) for an employer to dismiss or alter an employee’s position to their prejudice due to an attachment of earnings order. An employer who does so may be required to reimburse the employee for any lost wages and to reinstate the employee in their former or a similar position. Action by a debtor When served with an application for an attachment of earnings order, if you dispute or are not sure that you owe the debt or that the amount is right, you should immediately ask the creditor to check the facts. If the creditor will not do this and you were not present at the court when the original judgment debt order was made, you should seek advice about making an application for a rehearing of the complaint (see ‘Applying for a rehearing’, above). If you accept that you owe the amount claimed, you may consider offering to pay by instalments. You should never offer to pay more than you can comfortably afford. If you can enter into a satisfactory arrangement with the creditor so that the application for an attachment of earnings is withdrawn, the costs associated with the attachment of earnings hearing should be saved. If you require assistance in negotiating with the creditor or their solicitor, contact