If you have obtained a judgment against someone who owes you money (called a “debtor”), you can sometimes run into trouble enforcing that judgment if the debtor applies for an instalment order to pay the debt. Whilst the instalment order is in place, and the debtor is abiding by it, you won’t be able to enforce your judgment in other ways (such as bankruptcy proceedings, garnishees or writs).
What is an Instalment Order?
A debtor may apply to the court to pay their judgment debt by instalments, instead of by one lump sum. This is known as an ‘instalment order’.
Although it may not be ideal to receive payment of your debt in smaller instalments, if the debtor is suffering financial hardship or is not able to pay the debt in full, an instalment order will be your best bet of getting paid.
If the debtor fails to abide by the instalment order, it ceases to have any effect, and you can continue to enforce the judgment in other ways. Or, if the debtor comes into a windfall or gains better employment at a later date, you can apply to the Court to vary or rescind the instalment order on this basis.
Can You Object to an Instalment Order?
Initially the debtor will typically apply to pay very small amounts by instalments, which may mean a significant period of time before you can recover your money from them in full. In this situation, if you think that the debtor can afford to pay more than they are claiming, you may wish to object to the instalment order and try to have it set aside or varied.
In order to be successful in obtaining an instalment order, a debtor will have to prove to the Court that that their financial circumstances are such that they cannot afford to pay the debt in full, and can only afford to pay the debt in instalments over a certain period.
To do this, they will have had to provide their financial details to the Court, such as their income and liabilities.
Nevertheless, although the financial hardship of the debtor is an important consideration in the Court’s decision to make the instalment order, the Court understand that the debtor’s financial circumstances should not be the only consideration. After all, you have a judgment against the debtor for a reason, and you should be entitled to the benefit of that judgment.
How Do You Object to an Instalment Order?
You can object to an instalment order within 14 days of receiving notice that it has been made.
There are a number of grounds on which you may be able to object to the making of an Instalment Order, including:
- If the debtor’s financial position is such they can pay the debt immediately
- If it is obvious the debtor will not be able to comply with the instalment order
- If the time it would take to pay the debt by instalment is unreasonably long (for example, dependent on the specific circumstances, 12 to 24 months is usually considered to be a “reasonable time” to repay a debt)
- If there would be no real reduction of the debt because of the amount of interest that will accrue
- If you, as the Judgment Creditor, will suffer hardship if the debt is paid by instalments.
Once you file an objection, the Court will set a time and date for the matter to be heard and you will be able to state your reasons as to why the instalment order should not be made. The Court will consider your objections and weigh them up against the financial hardship that may be suffered by the debtor if the order is not made (such as the potential for bankruptcy).
Even if the Court does not dismiss the order completely, they may decide to vary it so that the debtor needs to make larger payments towards the debt to help address your objections.