Instalment orders

Applying for an instalment order

If the court has ordered that you owe money to a creditor, and you can afford to repay it, applying for an instalment order may have some advantages for you.

Once you apply for an instalment order, the creditor will not be able to enforce the judgement until the court makes a final decision.

If a court grants your application for an instalment order, and you keep making the payments, the creditor cannot take any other action.

Changes to the instalment order

The creditor can apply for the order to be changed or cancelled if:

• there is a substantial improvement in your ability to pay
• it can be proved that you gave inaccurate information to the court.

Creditor applications for an instalment order

A creditor who has a judgment for a debt can also apply for an order forcing you to repay a debt by instalments.

A creditor may do this because payment over time is better than no payment or irregular payment.

Make sure that you give the court enough information about what, if anything, you can afford to pay.

How to apply

You need to fill out two forms to apply for an instalment order. These can be picked up from the court that made the judgment. In most cases a financial counsellor or court registrar can help you with your application.

Form 61A – Application for instalment order

If the Magistrates' Court made the judgment, the first form you will need to fill in is Form 61A – Application for instalment order.

It asks you to:

• confirm how much you can pay and how often. If you make an offer you cannot meet you could end up back in court
• confirm that you are able to pay off the debt within a reasonable time. Ask the court what is reasonable
• include any extra penalty interest charged on the debt from the date of judgment to the date the instalment order is granted. Check with the court how penalty interest is calculated.

Form 61B – Statement of financial affairs – individual

The second form is Form 61B – Statement of financial affairs – individual, which asks details of your financial circumstances.

Costs of applying for an instalment order

It costs you nothing to apply for an instalment order, however, if the creditor makes the application they will add their costs to your debt.

Technically, you could pay penalty interest on the debt, but this interest is not added to the order.

For more information on penalty interest speak to a financial counsellor.

Lodging your forms and decision

Lodge your papers with the court registrar. You must also send a copy of the papers to the creditor’s lawyer.

The registrar then decides whether to accept or reject your application.

You and the creditor will be told about the final decision.

If your application for an instalment order is rejected, you have to wait three months before reapplying. Payment of the instalments should begin on the date ordered.

Challenging the registrar’s decision

You or the creditor can object to the decision of the registrar. This must be done within 14 days of getting the notice of order.

The objection is then scheduled for hearing. You and your creditor will be told of the hearing date.

This could involve more legal costs, so get advice quickly.

The objection hearing

The court may agree with, change or cancel the order. Take along information about your income, expenses and any other information that will help your case.

Centrelink income and changes to financial circumstances

If your only income is Centrelink you cannot be forced to pay an instalment order. Your Centrelink income is protected income.

You can still apply for an instalment order if you think you can afford it. However, you must be able to prove that you can afford the payments and will be able to repay the debts within a reasonable time. Remember, if you apply for an instalment order and your income is protected, you will lose that protection.

If your financial circumstances change, you or the creditor can go back to the court and change or cancel the original instalment order. If the creditor makes the application they must show that:

• there is an improvement in your circumstances
• the information on which the court based its order was wrong.

If you fail to pay

If you do not pay, the creditor can have you ordered to go to court to answer questions about why you have missed payments.

The court, at this stage, can decide to confirm (keep), change or cancel the instalment order.

When you might go to jail

The court has the power to jail a person if:

• the court has made an order that you owe the debt
• you have an instalment order in place
• you have the ability to pay, and
• you have failed to pay the instalment order more than once, and done this wilfully (on purpose) and without reasonable and honest excuse.

Many creditors threaten jail, but it is unlikely that this will happen.

The court will only order imprisonment in extreme circumstances. Do not agree to pay more than you can afford because of threats of jail. If you insist on an agreement that you can afford then you are more likely to be able to pay.

If a creditor threatens you, complain to the Australian Competition and Consumer Commission or Consumer Affairs Victoria. Visit the Debt collection page for information about how to make a complaint.

Explore our related pages

• Other support for debt and bankruptcy
• Disaster Legal Help – Judgment debt options
• Court orders and judgment
• Creditors' options to recover a debt
• Filing a defence against a creditor in the Magistrates' court
• Fines and infringements
• Notice of legal action – being sued for an unpaid debt
• Summons for oral examination
• Warrants to seize and sell property.

Support from other websites

Magistrates' Court of Victoria – Instalment order: Read about the process of applying for an instalment order and access the forms you need to fill in.