The Law Handbook 2024

362 Section 5: Managing your money a financial counsellor (see Chapter 5.4: Financial counselling services). If the creditor will not accept a reasonable offer to pay by instalments and refuses to discontinue the attachment of earnings proceedings, you should strongly consider making an immediate application under the JDRAct to pay the debt by instalments. This action, whether heard before or after the attachment of earnings application, will take precedence as the only enforceable order for payment (see ‘Instalment orders’, above). Any income you receive under the Social Security Act 1991 (Cth) or the Veterans’ Entitlements Act 1986 (Cth) cannot be subject to an attachment of earnings order because these are excluded by the definition of earnings (r 72.01 Magistrates’ Court General Rules). If the hearing of the application for an attachment of earnings is going to go ahead, it is important that you fill in the statement of financial position and return it to the creditor. It is strongly recommended that you seek advice from a financial counsellor before doing so (see Chapter 5.4: Financial counselling services). Hearing of an attachment of earnings application At the hearing of the application, the creditor must satisfy the court that there is an outstanding court order against you and that you earn, or are likely to earn, money from an employer. If you have not returned the statement of financial position, or do not appear at the hearing, the court, if it has sufficient evidence about your finances, must determine a ‘protected earnings rate’, that is, the minimum wage level required by you to keep yourself and any dependants. Except in rare circumstances, the protected earnings rate cannot be less than 80 per cent of your net earnings (r 72.05 Magistrates’ Court General Rules). Usually, the protected earnings rate is set at 80 per cent of your net earnings. This means that any order made generally states that 20 per cent or less of your net income be paid direct to the creditor. Therefore, generally, for an attachment of earnings order to be made, there must be a 20 per cent gap between your income and expenditure. If you have completed your statement of financial position and it shows that more than 80 per cent of your income is used to pay justifiable expenses, a court might only make an order concerning that amount of your income that is not paid to expenses. If 100 per cent of your income is paid to justifiable expenses, the court may choose to refuse the creditor’s application for an attachment of earnings order. However, these figures are only a guide and the court has discretion to make an order regardless. Attachment of earnings order Subject to the paragraph below, if the court makes an attachment of earnings order, the court order must specify: 1 the protected earnings rate; and 2 the normal deduction rate – that is, the normal amount to be taken from your wages each pay day to pay off the debt. However, if you do not attend the hearing or return a statement of financial position and the court does not have sufficient evidence about your finances, it will make an order that will not specify these rates. Such an order is likely to be less favourable to your position than if the court was provided with information about your financial position. A copy of the order must be served on you and your employer. Seven days after the employer receives the order, the employer should start making deductions from your pay and send them to the creditor. Variation or suspension You can apply to the court to have an attachment of earnings order varied or suspended at any time (r 72.10 Magistrates’ Court General Rules). This is important for any debtor whose financial circumstances change – perhaps because of accident or sickness of the debtor or other members of their family. Attachment of debt An attachment of debt procedure is available where the debtor is owed a debt (not wages) by another person, called a ‘garnishee’. The creditor can make an application to the court for an order that the debt owed be paid direct to the creditor, to pay off the judgment debt (r 71.04 Magistrates’ Court General Rules). Money held in a savings account with a bank or a co-operative (r 71.03) and rent owed to a debtor, are examples of money that could be attached to pay