An effective way to enforce a debt is through bankruptcy. Bankruptcy requires you to serve notice on the debtor. But what happens if you can’t serve notice on the debtor? Does that mean you can’t proceed with enforcement? Where it is impractical to serve documents to the debtor, one available option to creditors is substituted service. We explore this below including how you can apply for substituted service and some alternative methods of delivering notice.

Enforcing Debts Through Bankruptcy

Bankruptcy is the process where a trustee in bankruptcy is appointed to manage a debtor’s property and assets. The trustee then sells the assets and pays creditors. To appoint a trustee in bankruptcy, you must first serve a bankruptcy notice on the debtor who has 21 days following this notice to pay the debt. If they fail to do so, you can proceed to issue and serve a creditor’s petition.

You must serve a bankruptcy notice or creditor’s petition by:

  • leaving a copy of the document with the debtor; or
  • if the debtor refuses to accept service of the documents, putting the document down in his or her presence and telling him/her what the document is.

What is Substituted Service?

Substituted service as the name suggests is a way of substituting personal service of documents in a way that will bring the document to the debtor’s attention. This method of delivery could be through mail, providing it to another person who will bring the document to the debtor’s attention or a combination of multiple service methods.

How Do I Apply for Substituted Service?

Substituted service is made via an application to the court and is accompanied by an affidavit. Typically, you would obtain a report from a process server who has made attempts to locate the debtor. An additional affidavit from the lawyer may also accompany the report. You should include the following information in the affidavit (if possible):

  • what the debtor’s last known address is;
  • if you know the occupation of the debtor and any business address or last known place of employment;
  • any previous addresses where you have served the debtor;
  • details of any enquiries you have made to locate the debtor (e.g. searches of databases, searches of electoral rolls, telephone directories, social media footprints);
  • details of your attempts to serve the debtor; and
  • details of any conversations with anyone at the debtor’s home or work address;

The person who made the attempts at service should swear or affirm the affidavit. The evidence in support of the application (i.e. the affidavit) should be current at the time of the hearing (no more than about 4 to 6 weeks old).

What Are Some Alternative Methods of Service?

You must be able to show the court through the evidence that the proposed alternative service method will bring the document and proceedings to the attention and knowledge of the debtor. The method will depend on the individual circumstances of each case.

Modes of substituted service include:

  • posting the documents to the defendant’s address;
  • leaving the documents at an address known to be the address of the defendant;
  • emailing the documents to the defendant (it must be shown that the defendant uses the email account);
  • using the defendant’s social media account (such as Facebook); and
  • serving someone who the debtor is closely connected with – this can include a spouse, family member or solicitor.

Key Takeaways

It is not uncommon for debtors to avoid the service of documents – in fact, they get pretty good at it! The court does provide alternative ways other than personal service of documents. If you have any further questions or need assistance, LegalVision has experienced insolvency lawyers who can assist you with the debtor recovery process including enforcement via bankruptcy and substituted service. Get in touch on 1300 544 755 or fill out the form on this page.

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