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Debt Recovery and Enforcement

Debt Recovery and Enforcement

Written by:
James Turner

This article serves to inform the procedural and legal methods and issues related to debt recovery.


  • A debt is anytime you owe another party money. It can range from falling behind on loan or mortgage repayment, where you agree to but fail to pay a person or a company for products or services provided by them, failure to pay a supplier or your employees for a business or trade.
  • In debt collection, the borrower are referred to as the debtor and the lender are referred to as the creditor.

Consequences of Unpaid Debt

  • Where there is an unpaid debt, the creditor can either sell the debt to a debt collecting agency where the debt collecting agency legally become the creditor.
  • Alternatively, the creditor can take the debtor to court.
  • The Fair Trading Act 1986 makes it unlawful to make false or misleading representations when collecting debt, the creditor must not harass or coerce the debtor into repaying a debt.

How Much is Owed?


Most debts under $30,000.00 will go to the Disputes Tribunal, as long as the amount is not in dispute.  Disputed but unpaid debt must be claimed through the District Court. The Disputes Tribunal claim can be submitted online and legal representatives are not allowed to attend the hearing. However, we can assist creditors with preparation of the claim and their legal argument.


Any claim for debt under $350,000 will be heard in the District Court.

The creditor must file a statement of claim with the court and also serve this to the debtor. We can assist with drafting of a creditor's statement of claim. The statement of claim must include the amount of the debt and how it came about with all the relevant documents attached.  


Any claim for debt over $350,000 will be heard in the High Court. Similar procedure to the one in the District Court applies.

What happens after the commencement of the court proceeding?

In the Disputes Tribunal the debtor will have a chance to respond to the claim in a fairly informal manner. In the District and High Court the debtor has 25 working days to dispute the claim by filing a statement of defence with the court and serving a copy to the creditor. The statement of defence must either admit or deny the allegations in the statement of claim and where denied provide further information (i.e. the debtor's side of the story).

In the absence of a statement of defence, the court may make a judgment by default and will  order the debtor to pay the money.

If the debtor does not obey the judgment, the creditor can enforce the judgment by application made to the same court.

How to Enforce a Judgment?

1. Attachment order

Specified amounts are deducted from the debtor's salary or wages or benefit or even ACC payment.

2. Charging order

Prevents the debtor from selling any real property that the order identifies until the creditor has the opportunity to seize or sell the property, or until the debt is paid.

3. Community work (up to 200 hours)

This is usually as a last resort, and the court will only make such an order if the court has decided that all other enforcement methods are inappropriate or unsuccessful.

4. Garnishee order

 If a third party owes the debtor money, the court can make an order for this money to be paid to the creditor instead.

5. Warrant to seize property (aka distress warrant)

 A court appointed personnel may enter the debtor's premise and seize money or goods. The goods may then be sold to pay off the debt.

Please direct any enquiries to:

Albany Office

James Turner (Partner) on (09) 966 3603 ( or

George Steyn (Associate) on (09) 950 5982 (

Auckland Office

Craig Andrews (Partner) on (09) 306 6745 (

See our Expertise pages

Construction and Property Disputes

Commercial and Contract Disputes

Dispute Resolution

Contract Law

Money Claims

© McVeagh Fleming 2021

This article is published for general information purposes only.  Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.  If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.

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