Financial Rights Legal Centre
Hotline
Call our National Debt Helpline
on 1800 007 007.
Making an Application to Pay by Instalments (factsheet)

This fact sheet is for information only. It is recommended that you get legal advice about your situation.

Download our printer friendly version here (PDF): Application to Pay by Instalments

CASE STUDY

Vince received a Statement of Claim in the mail. He knows he owes the debt that is being claimed by BIG TELCO. Vince has heard that if he does not do anything the Sheriff will come and take his stuff.

Vince goes to the Court and makes an Notice of Motion to pay by instalments. The Notice of Motion was accepted and Vince now makes sure he makes the agreed monthly repayment. Vince feels a lot better knowing that BIG TELCO cannot take his pay or take his property so long as he keeps making the repayments every month.

WARNING: Get legal advice  BEFORE you confess the debt and apply to pay by instalments.  You may have a defence or other options.

WHAT IS A NOTICE OF MOTION TO PAY BY INSTALMENTS?

A Notice of Motion to pay by instalments is when you apply to your local court to pay off your debt in small repayments over time. When the person/business you owe money to (the judgment creditor) gets judgment against you the whole debt becomes due. This means that you owe the whole debt and must pay it immediately. If a notice of motion to pay by instalments is granted by the court, you can then pay the debt by repayments.

WHEN SHOULD I MAKE A NOTICE OF MOTION TO PAY BY INSTALMENTS?

You should only make a Notice of Motion to pay by instalments if you:

  1. Owe the whole amount of the debt; and
  2. Do not have a defence.

You can make an application to pay the debt by instalments using a Court Form called a Notice of Motion to Pay by Instalments (Form 46). This Notice of Motion application needs to be supported by a document called “Financial Statement Form”. This is a form that includes details of your financial circumstances.

These forms can be obtained at any court or on the internet by searching for “UCPR Forms” Make sure the website is an official lawlink.nsw.gov.au website.

CONSUMER CREDIT DEBTS

If you receive a Statement of Claim for a consumer credit debt, such as a credit card, personal loan, home loan or goods rental agreement (consumer lease), DO NOT lodge an application to pay by instalments unless there is already a judgment against you. You can lodge a dispute with a free dispute resolution service instead, which will stop the legal proceedings. You can do this if you dispute the debt or if you simply cannot afford to pay the amount claimed in one lump sum and you need help to negotiate a repayment arrangement. See our Fact Sheet: Dispute Resolution (Financial).

IMPORTANT: DO NOT make a Notice of Motion to pay by instalments if you believe

  • You do not owe the debt
  • You owe only part of the debt
  • You have a defence to the debt

In the above situations MAKE SURE YOU GET LEGAL ADVICE FIRST!

WHAT HAPPENS IF I MAKE A NOTICE OF MOTION TO PAY BY INSTALMENTS?

You put in the Notice of Motion to pay by instalments and the court determines (without a hearing) whether it is accepted or not.

The first Notice of Motion to pay by instalments acts as a “stay of proceedings”. A stay of proceedings (after making a Notice of Motion to pay by instalments and it is being decided or if your Notice of Motion to pay by instalments is successful) means that the judgment creditor cannot:

  • Send the Sheriff to your home to take your personal property
  • Garnishee your wages or deposit account
  • Ask you to attend an Examination Summons
  • Force you to become bankrupt. Please note: if a bankruptcy notice was issued before the stay you should get legal advice immediately. See Getting help below.
  • Harass you about paying the debt

IF THE COURT ACCEPTS THE NOTICE OF MOTION TO PAY BY INSTALMENTS THEN:

  • Start making payments as you requested in your application.
  • The Registrar of the court will make an order that the judgment debtor can pay off the debt by instalments.
  • You must make sure you strictly keep to the repayment of the debt as stated in the order and make sure each instalment is paid on time.
  • If, however, you default on your order to pay by instalments and miss paying one of the instalments, YOUR ABILITY TO PAY BY INSTALMENTS WILL NO LONGER BE IN FORCE. This means that the judgment creditor (the person who you owe the money) can apply to the court to enforce the full amount of your judgment debt, that is the whole amount that you owe. See Fact Sheet: Enforcement of debts in the Local Court.

If you or the person you owe the money to are not satisfied with the outcome, then you both have 14 days to submit a Notice of Motion for the decision to be reviewed. If this is your situation seek legal advice.

IF THE COURT DOES NOT ACCEPT YOUR NOTICE OF MOTION TO PAY BY INSTALMENTS THEN:

The Court will give you written reasons as to why your Notice of Motion to Pay by Instalments was refused. Generally there are two reasons why your Notice of Motion to Pay by Instalments may be refused:

  • the debt will take too long to repay based on the amount you have proposed (as a guide over 3 years)
  • or you cannot afford the repayment you have offered based on the financial statement you gave to the Court.

YOU MUST GET LEGAL ADVICE if your Notice of Motion to Pay by Instalments has been refused. You have the following options:

  • Apply to have the Court review its decision to refuse your Notice of Motion to Pay by Instalments. You must do this within 14 days of the refusal.
  • Make a 2nd Notice of Motion to Pay by Instalments. It is recommended you carefully review the reasons given by the Court for the refusal, and seek advice before preparing and filing a 2nd Notice of Motion to Pay by Instalments.
  • Continue to try and negotiate a repayment arrangement with the creditor.

HOW DO I MAKE A NOTICE OF MOTION TO PAY BY INSTALMENTS?

STEP 1

Get the following form: Notice of Motion to Pay by Instalments (Form 46) available at www.lawlink.nsw.gov.au (or searching the web for ‘UCPR Forms”)

STEP 2

Complete and sign the forms. See below for more information on this.

HOW DO I WORK OUT THE REPAYMENTS/INSTALMENTS I WANT TO OFFER?

  • The amount you offer should be an amount you can afford to pay. If you are unable to meet an instalment order you will be back where you started. If you cannot decide what would be affordable for you make an appointment to see a financial counsellor (see Getting Help for details).
  • If possible, the instalment offered should repay the debt in a reasonable time. As a guide the instalment offered should be more than the interest to be charged on the debt. If you offer an instalment that is less than the interest payable, it is likely to be rejected by the Registrar, as the debt will not get repaid with that offer.
  • Whether you wish to make instalments fortnightly or monthly, you should offer to make instalments monthly even if you plan to pay more often. This is so you remember it is very important not to miss a payment.
  • Do not forget to write the date on which you will make your payments on the form. You must also make sure that the Judgment Creditor receives the payment by this date, even if the Court has not replied to your instalment application.

HELP, THE AMOUNT I CAN AFFORD IS LESS THAN THE INTEREST ON THE DEBT!

Make an appointment with a financial counsellor to consider your options. Financial counsellors are a free service and contact details are below in Getting Help.

One option you may discuss with the financial counsellor is bankruptcy. For example, if you are on Centrelink benefits and likely to stay that way you may want to consider bankruptcy. Another option is to negotiate directly with the judgment creditor after explaining your position. Make sure any agreement is in writing, dated and signed by the judgment creditor. Always get receipts for any payments made.

NOTE:  If you negotiate, which means to make an offer, you should write at the top of any letter containing an offer “without prejudice” and keep a copy of this letter. This is important because you do not want to admit you owe the debt without first getting LEGAL ADVICE. See Factsheet: Getting Help

COMPLETING THE FINANCIAL STATEMENT

  • This form is attached to the Notice of Motion To Pay By Instalments.
  • If you need help completing the form you can contact a financial counsellor. See Getting Help below for details.
  • Be careful completing this form. The form is supposed to give the Court an accurate picture of your financial situation. Take your time in completing the form and make sure all expenses, income and assets are listed.
  • Remember the form needs to show you have enough money spare to make the instalments you are offering. If the form shows you cannot make the instalments offered, your offer is likely to be rejected by the Court.

NOTE:  The form asks for your income and expenses weekly. If your income is fortnightly or monthly you can change this on the form. Just cross out “pw” and “pf” (per fortnight) or “pm” per month).

STEP 3

Lodge all of the above forms at the Local Court.

STEP 4

The Registrar at the Court will then decide whether your offer of instalments is accepted. You will be notified in writing.

STEP 5

If the Registrar allows the offer then the Judgment Creditor has 14 days to object to the instalment offer. If the Judgment Creditor does not object, then your offer has been accepted and you need to make the agreed instalments. If the Judgment Creditor objects to your offer, the matter will go to hearing. Make the agreed repayments anyway – do not wait for an objection by the Judgment Creditor.

STEP 6

If the Registrar refuses the instalment offer, then the Judgment Creditor is free to continue further enforcement against you unless you apply for this decision to be reviewed within 14 days of the refusal. If this is your 1st Notice of Motion to Pay by Instalments then a stay of enforcement will be automatically granted until the review is heard by the Court.

STEP 7

Instalment application hearings

If you apply for the refusal to be reviewed, you will need to attend an instalment application hearing at the Local Court.

At the hearing you will be questioned about your offer and your means ( that is your income and expenses). The Registrar can make an order that you pay a certain amount each month.

You also have the option of making a deal directly with the Judgment Creditor before the hearing. If you make an agreement with the Judgment Creditor you should lodge a form Agreement as to Payment of Judgment Debt by Instalments.

WHAT IF I MISS AN INSTALMENT?

If you do not pay an agreed instalment the Judgment Creditor can take enforcement action against you. See Fact Sheet: Enforcement of Debts in the Local Court for details on what can happen.

To avoid this you should immediately apply for another varied instalment order as soon as you know you will not be able to make the agreed instalment. Remember that the second notice of motion for an instalment order does not act as a stay of proceedings until it has been accepted.

Once your Notice of Motion to Pay by Instalments has been approved a stay of proceedings will come into effect.

If the Registrar rejects the Notice of Motion to Pay by Instalments then there is no stay of proceedings. You must file a Notice of Motion (available at the Local Court) seeking a stay and give reasons why a stay should be granted.

IMPORTANT:  GET LEGAL ADVICE IMMEDIATELY IF YOU ARE UNSURE WHAT YOU SHOULD DO.

NEED SOME MORE HELP?

See Fact Sheet: Getting Help for a list of additional resources.

Last Updated: February 2017