Otago Property Investors Association Inc

Phone: 03 477 6220

Email: otago@nzpif.org.nz

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16-04-2009

Collecting your debts

Most members have been through the tribunal process and know how to get a money order. But then often the trail goes cold and large numbers of debtors never pay the court awarded debt. Up until this point the friendly staff at DBH are there to help new and inexperienced landlords through the process of dealing with a tenant that does not pay. However from this point onwards you are on your own. It is really important for both your own bank balance and for the wider investing community to do these enforcements. Otherwise the court process gets to be held in contempt encouraging more tenants to never pay their debts. I have a reputation amongst many bad tenants that I will always bring home my man. This helps the process of managing many of the high risk tenancies that I handle.
 
If you have a termination order and money order from the Tribunal the best practice is to apply at the District Court for both a Distress Warrant (eviction) and the Order for Examination (OE). The OE is the process for enforcing the debt. The court bailiff serves a summons on the debtor that requires them to come to the court to organise the payment of the debt. If the debtor ignores the summons then an arrest warrant is issued and the bailiff can forcibly bring the debtor into the court. Sometimes they get the police to assist with this process. The best time to catch the tenant in order to serve this summons is when they are still in your house. Sometimes you can even get the OE served before you evict the tenant. After they have departed from your house it gets harder.
 
The first step is to find out an address where the debtor lives to permit the bailiff to serve the summons. Often the summons can be served at their work address. Very occasionally the bailiff will serve the summons at court if the debtor is appearing for some other case or doing community service. Landlords need to collect up as much information as possible about parent's addresses, vehicle registration and employment at the application time during the tenancy and at the end of the tenancy. Often when cleaning up after the eviction you find payslips and other correspondence that might be of help.
 
The other major source of new addresses is the Veda monitor hit service. If you have done a credit check initially go to the saved file on the Veda site, bring up the old saved report and click on the “Load Monitor” button at the bottom of the page. Then when the debtor gets a new credit check done on them for a new tenancy you will be emailed their new address. There are two choices under monitor loading. One is for changes of address and the other is any activity. If
you get a hit on 'any activity” it supplies the name of the enquirer. You can then contact that enquirer. Often the enquirer will be pleased to hear from you because this will give them some more information about the person of interest. You can ask for an address and a phone number off the enquirer. Sometime this hit process can take several years before you get a hit so patience and tenacity is required. It can be a bit of a hit and miss, process too, so do not get too excited when you get one. I must admit I get an adrenaline rush every time I get one just like you do when a decent bite comes on your fishing line.
 
Another major source of addresses is the free data matching service offered by the DBH / Justice
Department. You are permitted to apply for the address to be released confidentially from WINZ to the court for enforcement purposes. The hardest part of this process is getting the forms to make your application. You can either get them down loaded from DBH web site or order them from their central office. For what ever reason the local DBH offices do not seem to have them available. Sometimes you need to make several attempts to get these addresses as people move in and out of jail or in and out of being on a benefit.
 
There are several commercial operators who will find addresses for you in return for a reasonable fee. These fees are not recoverable yet. The RTA amendments are supposed to allow for this but how it will work is still a mystery. If the OE hearing is taking place in another city you will need to employ the services of a specialist lawyer to appear for you at the OE hearing. The courts will not longer let you use a friend or family member to appear for you. If a lawyer is used then the courts will let you add another $120 to the debt so eventually the debtor will pay for the lawyer's fee. You of course are responsible for paying the lawyer regardless of the outcome. Most landlords hate paying for something they can do for themselves. So they will often travel to the OE hearing in remote courts. This is an expensive soul destroying process if the debtor does not show. You are
not permitted to add your costs for attending so the use of a lawyer is a smart way to go.
 
When there are two people on a tenancy agreement / court order you are permitted to do an OE on both of them at the same time. Just do not forget to add the second $90 application fee to each separate application. I find going for the women is best because they are more likely to be beneficiaries. The court will award you an attachment order of say $20 against wages or a benefit. The benefit is best because even if the debtor comes and goes off a benefit you will generally get all of your debt paid. If the debtor is in paid employment then the debt can often be paid off quickly at say $50 per week. Your debt is court awarded so comes before finance company debts and other unsecured debts. Normally other court awarded debts will come first.
 
Often employees will resign from a job rather than let you get your money. When this happens you are permitted to apply to the District court for a contempt proceeding. The cost of these hearings can be added to the debt. However they cost $350 so it is more cost effective to just apply for another OE at $90. Again do not forget to add the previous application fees and lawyers costs to the second OE application. I have had good success on second strikes. I guess the debtors get the message when their debts keep increasing.
 
Remember the bigger picture when collecting. We all have a civic duty to enforce our debts. Readers are permitted to reproduce this article at no cost providing they give me a credit for it. (Used with permission by Glenn's Vacancies Property Management Nelson.)
Glenn Morris
 
 
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