Enforcing Debts During COVID-19

Disputes and Insolvency

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DATE PUBLISHED: April 30, 2020

The Federal Government’s coronavirus economic response package has introduced changes to the timeframes and thresholds of common debt enforcement mechanisms.

Statutory demands and bankruptcy notices served after 25 March 2020 expire after 6 months, rather than the usual 21 day period.

The changes effectively prevent creditors from forcing debtors into bankruptcy or liquidation until after September 2020. These changes aim to allow businesses to continue operating and ‘return to business as normal’ once the economic impact of the coronavirus shutdown measures subsides.

It is important to be aware that, despite these changes, creditors can still take steps to enforce their debts through other mechanisms that presently remain unaffected.


In Queensland creditors are still able to enforce debts against companies or individuals through the Courts, by obtaining a judgment and thereafter obtaining an enforcement warrant.

Obtaining a judgment through litigation in the Queensland State Courts can be a lengthy process if the claim is defended. Where no defence is filed however, Plaintiffs may apply for judgment in default after 28 days have expired from the date the claim was served.

In these circumstances creditors can obtain a Court judgment in as little as a month after commencing the Court proceeding. Once a judgment has been obtained, creditors have a range of options available to them to enforce the judgment against property of the debtor.

These mechanisms include the following:

  1. Enforcement warrant for seizure and sale of property: This warrant allows judgment creditors to have a Court bailiff seize and sell land, vehicles and other property. The sale proceeds are then available to satisfy the judgment creditor, after payment of the sale costs and amounts required to discharge securities over the property (such as mortgages).
  2. Enforcement warrant for redirection of a debt: In circumstances where a third party owes a debt to the judgment debtor, this warrant authorises the redirection of payment of that debt to the judgment creditor instead.
  3. Enforcement warrant for redirection of a debt from a financial institution: In circumstances where a judgment debtor has an account with a financial institution (a bank) and receives regular deposits into their account by a third party (such as an employer), a judgment creditor can apply for a warrant authorising the regular redirection of the deposits from the account to them. This warrant requires the financial institution to deduct the redirection amounts from the judgment debtor’s account. No other enforcement action may be taken by the judgment creditor while this warrant is in force, unless the Court orders otherwise.
  4. Enforcement warrant for redirection of earnings: This warrant allows for the redirection of a judgment debtor’s earnings directly from a third party (such as an employer) to a judgment creditor. The court may issue this warrant in circumstances where it considers the judgment debtor has the financial means to pay the warrant without suffering unreasonable hardship. No other enforcement action may be taken by the judgment creditor while this warrant is in force, unless the Court orders otherwise.
  5. Payment of an order debt by instalments: Either the judgment creditor or judgment debtor may apply for an instalment order, which requires payment of instalments at regular intervals. In making the order, the Court will determine the amount and regularity of the instalments, having regard to whether the judgment debtor is employed, has the means to satisfy the order and has any other necessary living expenses or liabilities.
  6. Charging order: A judgment creditor may apply to the Supreme Court for a warrant imposing a charge over all or part of the judgment debtor’s legal or equitable interests in (amongst other things) debentures, stocks, bonds and/or shares. The judgment creditor may enforce this warrant after 3 months have lapsed from the date of service of the warrant. Judgment debtors cannot deal with the property affected by the order during this time.
  7. Stop order: In circumstances where a judgment creditor claims an interest in money or a security held in Court to which the judgment debtor is entitled, an application can be made to prevent the payment, delivery or transfer of the money or security without notice to the judgement creditor.

Enforcement warrants, debt instalment payment orders and charging orders may be obtained upon application by the judgment creditor to the Court.

Where the claim and enforcement actions are not defended, it is possible to obtain an enforcement warrant in 2 to 3 months, depending on the Court’s availability to process the applications.


It is important to remember that creditors can still take effective action to recover debts notwithstanding the changes made to some of the procedures relating to bankruptcy and liquidation, which are in place until at least the end of September 2020.

Those unchanged enforcement measures could see creditors recovering specific assets of debtors in satisfaction of debts within 2 to 3 months of commencing recovery action.

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