If a judgment debt has been entered against you, you must act quickly if you want to avoid the judgment creditor commencing an enforcement action against you. You should be aware that if enforcement proceedings are commenced against you, the judgment creditor will almost certainly claim their additional costs of that enforcement from you.
If you are unable to pay the judgment debt as a lump sum, and your negotiations with the judgment creditor have failed, you may want to consider making an application to the Court to pay the judgment debt by instalments.
Making the Judgment Debt Application
In New South Wales a judgment debtor can make an application to the Court to pay their judgment debt by instalments. This is done by way of filing a notice of motion to pay by instalments (UCPR Form 46 for an individual and Form 47 for a corporation). The notice of motion requires you to set out the amount and frequency of each payment as well as the date the first payment will be made.
The notice of motion contains an affidavit which must be sworn or affirmed as well as a financial statement as to the judgment debtor’s assets and liabilities. The financial statement requires the judgment debtor to disclose:
- Income, which includes details relating to wages, Centrelink payments, rental income and gross annual income of business.
- Assets, including money in bank accounts, home, cars, investment properties, boats, caravans and tools and equipment.
- Expenses, including rent, mortgage, credit cards, food, household expenses and child care costs. A corporation judgment debtor will also need to include details such as employee wages, superannuation and workers compensation and the like.
What will the Court Consider?
Once the application has been filed with the Court, the Registrar will consider the application and the information that you have provided. The Registrar will then make a determination based on a number of factors including:
- whether you can realistically afford to pay the instalments as proposed;
- whether you can afford to pay more than the amount you have offered; and
- whether the payment plan will have the judgment debt paid off within a reasonable time.
Once a determination has been made, the Court will send you a letter advising you of its decision. If your application has been rejected, you have 14 days to file an objection. The matter will then be listed for a brief hearing. Alternatively, you can file a new application with a different instalment plan.
Can the Judgment Creditor Object to the Instalment Order?
If your application is successful and your payment plan has been accepted by the Court, the Registrar will also notify the judgment creditor advising them on the terms of the instalment order. If the judgment creditor wishes to object to the instalment order, they have 14 days in which to file their objection. The Court will then hold a brief hearing about the instalment application.
If the judgment creditor does not file an objection, the instalment order will be in force, and the judgment creditor will be unable to take any other enforcement action against you.
If you would like to make an application to pay a judgment debt by instalments, we can help. We understand your finances may be limited, and we are happy to provide you with either advice or assistance with drafting your application on a fixed fee basis.