The Law Handbook 2024

356 Section 5: Managing your money Instalment orders Paying by instalments If an order is made against you that you are unable to pay all at once you can apply for an instalment order under the Judgment Debt Recovery Act 1984 (Vic) (‘ JDR Act ’). Part II of the JDR Act sets up a means to pay debts by instalments of fixed amounts at fixed intervals. If an instalment order has been made and is being complied with, or if a copy of an application for an instalment order has been received by the judgment creditor, no other methods of enforcement of the original order can be carried out. Therefore, if you are concerned that the judgment creditor will take steps to attach your wages or to have your assets seized to enforce payment of the judgment debt, you should apply for an instalment order immediately. If an application for an instalment order is filed prior to a bankruptcy notice being issued, or prior to a bankruptcy notice being served, the application will make the bankruptcy notice void. If a bankruptcy notice has already been served on the debtor when an application for an instalment order is made, however, the application will not make the notice void. It will only give the debtor the opportunity to argue for an adjournment of a creditor’s petition hearing or to attempt to negotiate with the creditor at the petition hearing (see Chapter 5.3: Understanding bankruptcy). Social security recipients Under section 12 of the JDR Act an instalment order cannot be made without your consent if your only income is a pension benefit, allowance or other regular payment under the Social Security Act 1991 (Cth) or section 24 of the Children, Youth and Families Act 2005 (Vic). If you are receiving such a benefit, seek advice from a solicitor or financial counsellor (see Chapter 5.4: Financial counselling services) before consenting to an instalment order or if an order is made against you. Applying for an instalment order To apply for an instalment order, you must go to the court at which the order against you was made. You will be given form 61A and form 61B to fill out. The latter form, a statement of affairs, requests details of your income, expenses, property and assets, debts and liabilities and any other circumstances that affect your financial position (e.g. number and age of dependants, marital status, and health). Check all of this information with your partner if you have one, or get help from a financial counsellor, as it is very easy to underestimate expenditure. These two forms must be completed and delivered to the registrar. Copies must also be served on the creditor by either delivering or posting them to the creditor or the creditor’s solicitors. The application must specify the amount that is owing to the creditor and your proposed instalment plan, i.e. how much each instalment is to be and when they are to be paid. It is important that you establish that you can afford to meet any instalments that you propose, otherwise your application might be rejected by the court. If this happens, you may be able to object to the decision to refuse your application. The court will not grant an instalment order where the amount of instalment offered is not enough to cover the interest that is accruing on the judgment debt. This means that the instalment offer must exceed the weekly interest accruing on the debt. The interest rate applicable to orders of the court is currently 10 per cent per annum (see ‘Interest and costs on judgment’, above). Therefore, if your judgment debt is $1000, the interest that would accrue on this amount in one year, at 10 per cent, is $100. Any offer of instalments made would need to be sufficient to cover this amount. While the Magistrates’ Court does not have any other formal policy about the amount the instalments should be before an instalment application is granted, anecdotal evidence from financial counsellors has suggested that if a judgment debt is less than $10000, any instalment application made must result in the debt being paid off within two or three years. With judgment debts of more than $10000, anecdotal evidence suggests that the instalments may run over five years. It must be stressed, however, that this information is only a guide and cannot be relied on as a guarantee that an application will be accepted. When to apply for an instalment order You, or the creditor, can apply for an instalment order after a judgment is made if: 1 no instalment order was made with the original judgment; or 2 an instalment order was made with the judgment and you, or the creditor, wish to have a different