Credit and Debt

Credit and Debt

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Your client's options

Rehearing or appeal

As set out in What Stage is the Matter At, your client may have the option to apply for a rehearing if they did not attend the original hearing or to appeal to the Supreme Court if there was an error of law in the original judgment. 

If you are considering pursuing one of these options, please contact Homeless Law first as counsel may need to be briefed to advise on the merits of the matter; prepare submissions; and / or do the appearance.   You should also advise your client that these options carry a risk that increased enforcement costs will be added to the client's debt.

Negotiation

Even once judgment has been entered, you can negotiate with the creditor, including, where appropriate, on the basis that the client is judgment proof.  If your client is judgment proof, the creditor cannot enforce the judgment to reclaim the money owing so, keeping in mind the consequences of relying on being judgment proof, the client does not have to do anything. 

Alternatively (and depending on the client's instructions, including on whether payment of any amount is possible), you might request an arrangement where the creditor accepts repayment by instalments but with a waiver of any enforcement costs and late payment fees on the basis of your client's hardship.

In Case Study 5, the mortgagee was still willing to negotiate even after judgment for repossession of the property had been obtained.     

Apply for an instalment order

It is also an option for your client to apply to the court for an instalment order (rather than wait for the creditor to do this - see the creditor's options).  The client can apply to the court if he or she thinks they can afford to pay a certain amount of money (even if the creditor rejects an instalment offer in the course of negotiations, the Court may still order one). Applying for an instalment order stops other enforcement action (except where a bankruptcy notice has been served) by the creditor until the application has been determined.

If the Magistrates' Court of Victoria made the judgment, you can use Form 61A  to apply for an instalment order. You will need to show the Court how much the client can pay and how often (including by submitting a Statement of Affairs), as well as that the debt can be repaid within a "reasonable" time (including any penalty interest which will be charged on the debt from the date of judgment to the date the instalment order is granted). Anecdotally, it appears that in order for an instalment order application to succeed a debtor would need to be able to prove that they could repay the judgment debt within approximately 2-3 years for debts of less than $10,000 or within 5 years for debts of more than $10,000.

These forms must be lodged with the court registrar and provided to the creditor's lawyer.

Once the instalment order application is filed with the court, the registrar will consider the application and advise the parties of the outcome in writing.

If either party has an objection to the registrar's decision, they may file a Notice of Objection (Magistrates' Court of Victoria Form 61D) within 14 days. The matter will be referred to a Magistrate in open court for review.

If your client's application for an instalment order is rejected, you have to wait three months before reapplying. 

Further information in relation to instalment orders (including options if the application is rejected, applying to have the order varied and default) is set out under the creditor's options.

Apply for bankruptcy

If the creditor is threatening to bankrupt your client, depending on your client's situation, he or she might apply for bankruptcy themselves.  Refer to Bankruptcy and book the client into a financial counsellor before this option is taken.