MAKING AN APPLICATION TO PAY BY INSTALMENTS
This fact sheet is for information only. It is recommended that you
get legal advice about your situation.
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.
FACT SHEET
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.
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NATIONAL DEBT
HELPLINE ON
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Financial Rights Legal Centre
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Fact sheets are information
only and should not be relied
upon as legal advice. This
information only applies to
NSW.
©2017 Financial Rights
All rights reserved.
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 Py 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.
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | PAY BY INSTALMENTS
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
FACT SHEET
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 s ituations 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
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | PAY BY INSTALMENTS
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.
FACT SHEET
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:
●●
Proceedings are not stayed and
●●
The whole amount is due and the judgment creditor can use
several ways of enforcing the debt against you. See Fact Sheet:
Enforcement of Debts in the Local Court.
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.
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | PAY BY INSTALMENTS
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.
FACT SHEET
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.
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | PAY BY INSTALMENTS
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
FACT SHEET
●●
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
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | PAY BY INSTALMENTS
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.
FACT SHEET
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
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FINANCIAL RIGHTS LEGAL CENTRE | FACT SHEET | PAY BY INSTALMENTS