Recovery of debts 

I sold something to a workmate on the understanding that he would pay me for it later, but now he says I gave it to him. What can I do?

In this situation, you have made a verbal contract with the person, and they are obliged to pay you if they said they would. If discussing the situation with the workmate is not successful then there is some other options you can take. 

If the debt in dispute is worth less than under $15,000 (or $20,000 if both you and the other party to the dispute agree to it), you can apply to the Disputes Tribunal to make a judgment about whether the debt is valid. The Tribunal will listen to evidence from both parties, and can instruct the other party to pay you what is owed, which they must pay within 28 days of the decision.

Note that the Disputes Tribunal can’t help if the buyer doesn’t dispute that they owe you money but simply refuses to pay it. In this case you would have to make an application to the District Court (see the next question).

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My client owes me money and won't pay up. Can I take him to Court?

It’s worth trying to discuss it with your client first, as it can be due to miscommunication (e.g. they were waiting for an invoice and you thought you’d already sent one), dissatisfaction with the goods or services you provided or one of many other reasons. If the client hasn’t paid because of their own financial difficulties, you may be able to agree to repayments in instalments.

The District Court has the power to order payment, and if they do this, the client will have to pay you what they owe. If the Court decides in your favour, they will make an order for payment, which you can ask the Court to enforce.

If you're making an application to the District Court, you should get a lawyer to help with your application as it can be a complex, costly, and time consuming procedure. There is a good explanation of the court processes to recover debt on the Ministry of Justice website and elsewhere on this page.

Another option is to use a debt collection agency. Their fees will vary between agencies (so it’s well worth shopping around), but you might for example pay an initial set fee, plus a commission calculated as a percentage of the debt amount they collect for you.

If you need help in figuring out what to do to recover money that someone owes you, your local Citizens Advice Bureau will be able to direct you to someone who can help.

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What is a garnishee order and how can it help me recover money owed to me?

If someone owes you money and you know that a third person owes them money, you can apply for a garnishee order so that the third party pays money directly to you instead. You can apply for a garnishee order if you believe you won't get your money otherwise, however garnishee orders are not very common because in order to apply for one you must know and be able to prove that the debtor is owed money from a third party.

Applying for a garnishee order is a complex process, so if you are considering this option you should get legal advice. Your local CAB will be able to help you find legal help if you need it. If you're on a low income you may be eligible for legal aid.  

There are other ways of collecting money that is owed to you through the courts, which are more commonly used (see the next question).

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What is an attachment order and how do I get one so that money owed to me is repaid?

An attachment order is a court order requiring the debtor’s employer to deduct a specific amount from the debtor’s salary, wages or benefit. The deduction is paid directly to the creditor (the person who is owed the money). There are two ways to obtain an attachment order:

1. Both you and the debtor agree (at the Disputes Tribunal, mediated tribunal hearing, Tenancy Tribunal hearing or District Court hearing) that the debt will be repaid to you this way. 

2. Either party applies to the court for an attachment order. If you (the creditor) apply, you’ll need to provide the other party’s (the debtor’s) employment details or benefit details, and their date of birth (and their benefit number if they have one and you know what it is). If the debtor applies, they have to provide their employment or benefit details. More about how to apply for an Attachment Order is on the Ministry of Justice website.

You might also apply for a warrant to seize and sell the debtor’s property in payment of a court-ordered debt.

The application and filing fees associated with these actions are listed on the Ministry of Justice website.

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What is the time limit for chasing someone up for an old debt?

In general, if the debt is more than 6 years old you can’t take the debtor to court about it – unless, within the last 6 years, they’ve paid some of the money back, admitted to the debt in writing, or been ordered by the Court to pay the money.

Read more about the time limit on claims on our Limitation law page.