a man writing garnishee ordera man writing garnishee order

What is a Garnishee Order and How Does It Work? (Updated 2021)

  • January 19th, 2021
  • Domenic Calabretta

A garnishee order is a serious matter as it means a court order has been implemented to allow creditors to recover debt from third parties. They can do this in a number of ways, including taking money from the debtor’s bank account and/or from their salary. If you are issued with a garnishee order you should act quickly to explore your options and make an informed decision about your next step forward – otherwise, the situation will only get worse.

If you have received a personal garnishee order (and not a business-related garnishee order) it’s recommended that you visit this article on the Legal Vision website to explore what actions are available to you.

Australian Debt Solvers is an expert in business-related debt management only. If you have a business-related garnishee order you would like assistance with, please Contact Us.

How does it work?

A party owed debt (known as the judgement creditor) can apply for a garnishee order to be made to retrieve their debt. The court can then make a garnishee order which is served by the applying party to the garnishee. The garnishee is not the debtor or the person owing the debt, but usually their bank, employer, or a third party that owes the debtor money.

Essentially, the order compels the garnishee to pay the judgement creditor money to cover the debt owed to them by the judgement debtor. There are three main ways that garnishee orders work.

1. Recovering debt from wages and salary

A garnishee order can allow the judgement creditor to recover debt from the debtor’s wages and salary. This is the most common type of garnishee order. Once the court makes its judgement, the creditor serves the order to the debtor’s employer. The employer then takes a sum of money from the creditor’s wage to pay to the creditor. This wage withdrawal may continue until the entire debt has been repaid, or until the court otherwise stops the order.

The employer is required to leave the debtor with an amount of money to live on. This amount is called the weekly compensation amount. This amount is adjusted twice a year, in April and October. As at October 1 2020, this is currently fixed at $527.40 a week in New South Wales. In this state, the employer is also allowed to deduct an additional $13 for administration expenses. Updated amounts can be found here.

Debtors with employers subject to a garnishee order can apply to the court to repay their debt in other small instalments, or to have smaller sums deducted from their wages each week.

2. Recovering debt from bank accounts

The court can also make a garnishee order to recover debt from your bank account. Unlike garnishee orders for wages, this type of order usually directs the garnishee (your bank or financial institution) to repay the debt outstanding in a single sum.

The bank will usually put a freeze on the bank account as it processes the garnishee order, which means the debtor will be unable to access their account for a period of time (usually two to three working days).

The garnishee in this case is also allowed to deduct $13 for processing and administration. Centrelink payments sitting in the debtor’s bank account may be protected in whole or in part from garnishee orders, however sometimes they are also garnished; this will vary, depending on context.

3. Recovering debt from people who owe money to the debtor

A garnishee order for debt can be made against any third parties who owe money to the debtor. Like when the garnishee is a bank or other financial institution, the order issued is usually for a lump sum of money, rather than ongoing payments. These third parties might be contractors, tenants, or any other party that owes the debtor money.

What about ATO garnishee notices?

ATO garnishee notices work in a similar way to court-ordered garnishee orders. The ATO is empowered under the Taxation Administration Act 1953 to recover outstanding tax debt from third parties by issuing a garnishee notice directly, without an order from a court. Like court issued garnishee orders, these notices are issued against parties (businesses and individuals) who hold money for tax debtors, or may hold money for tax debtors in the future.

These notices require the garnishee to pay the ATO directly for the debtor’s tax debt, and the debtor will also receive a copy of the notice. Possible third parties or garnishees include employers, contractors, and banks and financial institutions at which the debtor has accounts.

If the debtor is part of a business, the notice could be issued to garnishees such as banks, trade debtors, and those that supply the debtor with merchant card facilities.

What can I do to stop a garnishee order?

Garnishee orders compel banks, employers and other third parties to fulfil the requirements of the notice, and therefore cannot be stopped. The only possible exception to this is when the debtor can pay the amount in full, or make arrangements to have the outstanding amount paid in instalments.

Self Representation

Debtors should be aware that self representation is common with respect to garnishee orders, as in many instances, they involve small claims. Those seeking to recover debt can find all of the relevant information and forms from the Law Access website. It is useful for debtors to be well aware of the process as it provides details with respect to negotiations and payment methods.

Negotiating with the creditor

One possible option for debtors and garnishees who are unable to meet the garnishee orders demands is to negotiate with the judgement creditor on the terms of payment. This could help debtors avoid more drastic outcomes such as property being seized for sale, or enforcement costs being added to the judgement debt. Debtors that successfully negotiate with creditors should have their agreement made out in writing.

Apply to court

If unsuccessful in their negotiations, debtors have the option to apply to court to pay the debt in instalments. Debtors who find themselves in this situation should consult a debt or insolvency specialist for advice.

Financial hardship and disadvantage

Those that are experiencing financial hardship and/or disadvantage might be able to have the relevant enforcing authority (such as the State Debt Recovery Office for New South Wales) approve partial or full refunds of the money that has been taken by the creditor. These circumstances may be related to serious medical problems, or some other extenuating circumstance. The debtor in this case would need to provide relevant evidence of their hardship to the enforcing authority.


Those you have been served a garnishee order should do the following:

  • Do not ignore it. A garnishee order is an order from the court and a failure to deal with it appropriately will limit any opportunities to receive a favourable outcome.
  • ​​Apply to the court for a stay of enforcement
  • Pay the judgment debt or negotiate
  • Apply to the court to pay by instalments
  • Apply to the court to set aside a default judgment. For more information, see Setting Aside a Default Judgement.

Australian Debt Solvers helps businesses to manage financial hardship and insolvency through a number of strategies, including Voluntary Administration, Business Liquidation, Business Restructure and Turnaround, and more. Contact Us today for expert advice if your business is in financial difficulties.

We care about our customers

At Australian Debt solvers we take feedback seriously and pride ourselves on providing the best customer services possible
Google Review

Rated 5 out of 5