Are you in debt?

After a court order has been made and any further disputes have been resolved, a creditor will often take further court action to make the debtor pay the amount awarded on the order (called the ‘judgment debt’). This further action is called ‘enforcement’.

If you do not pay the amount of the judgment debt, the creditor can choose how the order is going to be enforced. These methods can be used in any order and any number of times until the debt is paid off or satisfied, and usually involve further legal costs being added to the amount of the judgment debt. In the long run, however, repeated attempts to enforce the debt may not benefit the creditor if the debtor has few assets or no income from wages.

Paying by instalments

If an order is made against you that you are unable to pay all at once you can apply for an instalment order under the Judgment Debt Recovery Act 1984 (Vic) (‘JDR Act’). Part II of the JDR Act sets up a means to pay debts by instalments of fixed amounts at fixed intervals. If an instalment order has been made and is being complied with, or if a copy of an application for an instalment order has been received by the judgment creditor, no other methods of enforcement of the original order can be carried out. Therefore, if you are concerned that the judgment creditor will take steps to attach your wages or to have your assets seized to enforce payment of the judgment debt, you should apply for an instalment order immediately.

If an application for an instalment order is filed prior to a bankruptcy notice being issued, or prior to a bankruptcy notice being served, the application will make the bankruptcy notice void. If a bankruptcy notice has already been served on the debtor when an application for an instalment order is made, however, the application will not make the notice void. It will only give the debtor the opportunity to argue for an adjournment of a creditor’s petition hearing or to attempt to negotiate with the creditor at the petition hearing (see Chapter 5.3: Understanding bankruptcy).

Social security recipients

Under section 12 of the JDR Act an instalment order cannot be made without your consent if your only income is a pension benefit, allowance or other regular payment under the Social Security Act 1991 (Cth) or section 24 of the Children, Youth and Families Act 2005 (Vic).

If you are receiving such a benefit, seek advice from a solicitor or financial counsellor (see Chapter 5.4: Financial counselling services) before consenting to an instalment order or if an order is made against you.

Applying for an instalment order

To apply for an instalment order, you must go to the court at which the order against you was made. You will be given form 61A and form 61B to fill out. The latter form, a statement of affairs, requests details of your income, expenses, property and assets, debts and liabilities and any other circumstances that affect your financial position (e.g. number and age of dependants, marital status, and health). Check all of this information with your partner if you have one, or get help from a financial counsellor, as it is very easy to underestimate expenditure.

These two forms must be completed and delivered to the registrar. Copies must also be served on the creditor by either delivering or posting them to the creditor or the creditor’s solicitors.

The application must specify the amount that is owing to the creditor and your proposed instalment plan, i.e. how much each instalment is to be and when they are to be paid. It is important that you establish that you can afford to meet any instalments that you propose, otherwise your application might be rejected by the court. If this happens, you may be able to object to the decision to refuse your application.

The court will not grant an instalment order where the amount of instalment offered is not enough to cover the interest that is accruing on the judgment debt. This means that the instalment offer must exceed the weekly interest accruing on the debt. 

The interest rate applicable to orders of the court is currently 10 per cent per annum (see ‘Interest and costs on judgment’ in ‘Defences if you are sued‘). 

Therefore, if your judgment debt is $1000, the interest that would accrue on this amount in one year, at 10 per cent, is $100. Any offer of instalments made would need to be sufficient to cover this amount.

While the Magistrates’ Court does not have any other formal policy about the amount the instalments should be before an instalment application is granted, anecdotal evidence from financial counsellors has suggested that if a judgment debt is less than $10 000, any instalment application made must result in the debt being paid off within two or three years. With judgment debts of more than $10 000, anecdotal evidence suggests that the instalments may run over five years. It must be stressed, however, that this information is only a guide and cannot be relied on as a guarantee that an application will be accepted.

When to apply for an instalment order

You, or the creditor, can apply for an instalment order after a judgment is made if: 

1. no instalment order was made with the original judgment; or 
2. an instalment order was made with the judgment and you, or the creditor, wish to have a different instalment order made. However, there would need to be a significant change in your financial circumstances to obtain a variation. 

Who may grant an instalment order?

A magistrate, when giving the original judgment, may order that the debt be paid off by instalments. This usually happens after hearing an application from either the creditor or the debtor.

The registrar of the Magistrates’ Court can grant or refuse an application, with or without the presence of the two parties. The registrar cannot change the terms of the proposed instalment order; they must be accepted as they are or the application must be refused. The registrar must also inform all parties of the decision to grant or refuse an application.

If your instalment order application is refused, you must wait three months before another application can be made. However, you can object to that refusal if a registrar made the decision.

Objection to granting or refusing an instalment order

If an instalment order application is refused or granted by a registrar, either you or the creditor may object to the decision by filing a Notice of Objection, on form 61D, with the registrar of the Magistrates’ Court within 14 days of being notified of the outcome of the application.

The court will then hear the objection and the magistrate will decide to confirm, change or cancel the registrar’s instalment order decision. The magistrate is required to question the debtor in person at the hearing before making an order, or be otherwise satisfied that an order should be made against the debtor.

Instalment agreements

At any time after the original judgment is made, you or the creditor may lodge an instalment agreement in form 61E with the registrar. Both you and the creditor must agree to this action.

An instalment agreement sanctioned by the Magistrates’ Court must:

1. specify the amount of the judgment debt still owing to the creditor;
2. set out the details of the agreement (i.e. the amount of each instalment, the timing of payments);
3. be accompanied by a statement of your financial situation (form 61B); and
4. include your promise to pay the amount as proposed in the instalment agreement.

Failure to pay an instalment agreement can result in the creditor summonsing you to an oral examina­tion, which usually results in additional legal costs being added to the judgment debt (see ‘Summons for oral examination’, below). Be aware that some creditors have attempted to misuse the procedure by pressuring debtors into consenting to a further instalment agreement with extra legal costs added to the judgment debt. Before consenting to a further instalment agreement, seek advice.

Changing or cancelling an instalment order or agreement

Either the creditor or you can apply for a variation or cancellation of an instalment order or agreement (s 8 JDR Act). You can apply to vary or cancel an instalment order or agreement if your financial situation changes and you are no longer able to comply with the original order or agreement. Your application should be accompanied by as much supporting evidence as possible.

A creditor can only make an application to vary or cancel the instalment order if:

1. there has been a substantial increase in your property or means; or 
2. any information given in support of the instalment order application or in the instalment agreement was inaccurate. 

If the creditor makes the application, it must be accompanied by a supporting affidavit (a written document sworn on oath) giving the reasons for the application. The court must be satisfied that there is evidence supporting the reason to vary or cancel the instalment order. A hearing of the application by oral examination will be arranged.

At the oral examination 

At the oral examination, the court may question you about your income, assets, debts and liabilities, and about anything related to your financial circumstances and means and ability to pay off the debt (s 15 JDR Act). Consider taking supporting evidence about your financial situation to the hearing (e.g. bills, receipts, bank statements and proof of income).

The court may require you to answer questions under oath, and can allow the creditor or the creditor’s lawyer to question you about your financial situation and means and ability to pay the debt. Neither the creditor nor the creditor’s lawyer is allowed to directly cross-examine you, and the court may forbid any questions from the creditor or the creditor’s lawyer that, in the circumstances, are oppressive or unfair. You are entitled to be represented at the hearing.

Summons to attend court 

If you are not at the court hearing, and the court is not satisfied that the application should be granted, the court will issue a summons for you to attend the court for questioning. This summons may also require you to produce documents detailing your financial situation.

If you do not attend the court as required by the summons, you cannot be fined, but the court can issue a warrant for the police to arrest you and take you to court at a later date (r 61.07, form 61H, Magistrates’ Court General Rules). The police officer who makes the arrest has the power to release you if you undertake or promise to appear at court on that date (s 14(2)–(4) JDR Act).

Enforcement of an instalment order

If you fail to make a payment required by the instalment order, the creditor can apply to the registrar to issue a summons requiring you to attend court. The application for the summons must be accompanied by an affidavit explaining the circumstances of the default (r 61.06 Magistrates’ Court General Rules). If you fail to attend court as required by the summons, you cannot be fined, but a warrant for your arrest can be issued (s 17 JDR Act).

At the court hearing

The court (not a court officer in this case) is required to question you about your financial situation and consider the circumstances of your failure to make the payment. The court may confirm, vary or cancel the instalment order. It is absolutely essential that you are represented at this hearing.

This procedure is sometimes misused by creditors or their representatives to pressure debtors to make further instalment agreements and incur extra legal costs. If you are served with this summons, seek advice from a financial counsellor.

Imprisonment

If the court is satisfied that you are able to pay the instalments as required under the instalment order and that you have ‘persistently and wilfully and without an honest and reasonable excuse’ failed to make payment, it can sentence you to up to 40 days imprisonment (s 19 JDR Act).

Appeal against imprisonment

An order to imprison you cannot be made unless you are present at the hearing. If you are sentenced to imprisonment by the Magistrates’ Court, you have a right to appeal to the County Court. If you make the payments owing under the instalment order you will be let out of prison.

If the creditor thinks that you may have personal property that can be seized and sold to pay the judg­ment debt, they will issue a warrant to seize property.

A warrant to seize property is an order to the sheriff to seize and sell goods belonging to the debtor (the person named in the warrant) unless the debtor pays the amount stated in the warrant.

Warrants to seize property are usually issued on the request of the creditor’s solicitors by the registrar of the Magistrates’ Court where the order was made. The creditor’s solicitors then send the warrant to the Sheriff’s Office to be administered. The sheriff’s costs, plus the creditor’s solicitors’ costs, which vary depending on the amount involved, are added to the judgment debt. It is arguable that if the execution of the warrant does not result in any goods being sold, the judgment creditor must pay the sheriff’s costs (see Montague v Davies, Benachi & Co [1911] 2 KB 595).

A sheriff’s officer will arrive at your house, show you the warrant and explain that if you don’t pay the amount on the warrant, goods will be seized and auctioned to pay off the debt. Generally, the sheriff ‘s officer will allow you time to get the money, negotiate with the creditor or enter into an instalment order (see ‘Instalment orders’, above).

You are entitled to refuse to let the sheriff’s officer enter your property. A sheriff’s officer may enter a house to carry out a warrant to seize property only if they believe on reasonable grounds that in the house there is the personal property of the person named/described on the warrant. That is, property that may be lawfully seized under the warrant. The sheriff’s officer is required to ask you for consent to enter the house. The sheriff’s officer may use force to enter your property if you unreasonably withhold your consent (s 22 Sheriff Act 2009 (Vic)).

Any officer in breach of section 22 of the Sheriff Act 2009 (Vic) may be liable to pay you the sum of $400 plus damages for resultant loss suffered (s 123(1)(e) Supreme Court Act 1986 (Vic) (‘SC Act’)). Of course, if you have no money, or only have protected goods (see below), the sheriff can do nothing, so letting a sheriff’s officer in may not leave you worse off.

Seek advice from a financial counsellor (see Chapter 5.4: Financial counselling services) or Consumer Affairs Victoria, if you are not sure what to do when a sheriff’s officer comes to your house.

Despite the requirement for the sheriff’s officer to ask you for consent to enter the house, the officer may use force and assistance to enter if:

1. the sheriff’s officer, after reasonable attempts to do so, cannot contact you; or
2. the sheriff’s officer reasonably believes that you are avoiding being contacted by the sheriff (s 22(4A) Sheriff Act 2009 (Vic)).

The sheriff cannot seize any property that could not be taken from a bankrupt (s 42(1) SC Act). The protected goods the sheriff cannot seize are:

• property used by you primarily as a means of transport (e.g. a registered car) up to the value of $8550 (as at 1 July 2022; indexed annually). This amount refers to the equity in the vehicle (i.e. the value of the vehicle less the sum owing under finance) (s 116(2)(ca) Bankruptcy Act; reg 30 Bankruptcy Regulations 2021 (Cth) (‘Bankruptcy Regulations’));
• property used by you in earning income by physical exertion (e.g. tools of trade) up to a total value of $3950 (as at 1 July 2022; indexed annually) (s 116(2)(c) Bankruptcy Act; reg 29 Bankruptcy Regulations;
• certain awards that may have been awarded to you personally (reg 28 Bankruptcy Regulations);
• household property (including recreational and sports equipment) reasonably necessary for dom­estic use in your household. Regulation 27 of the Bankruptcy Regulations specifically lists certain household goods that cannot be seized, including: 
  • kitchen equipment, cutlery, crockery, foodstuffs, heating equipment, cooling equipment, telephone equipment, fire detectors and extinguishers, anti-burglar devices, bedding, linen, towels, and other household effects which are reasonably appropriate for the household;
  • sufficient household furniture;
  • sufficient beds for members of your household;
  • educational, sporting or recreational items (including books) used by the children or students of the household;
  • one television set;
  • one set of stereo equipment;
  • one radio;
  • one generator, if it is required to supply electricity to the household;
  • one washing machine and one clothes drier;
  • one refrigerator and one freezer; and
  • one telephone.

Despite the specific exemption for certain household goods, antique items may still be seized by the sheriff. If you have any queries about what goods can and cannot be seized, contact a financial counsellor.

If you own goods that are not protected and you will not or cannot pay, the sheriff will leave a notice (a Walking Possession Notice) indicating which goods have been impounded. This notice also informs you that you are not entitled to dispose of any of these goods without the sheriff’s written permission; this process is called ‘distraining’ the goods. The sheriff then informs the creditor (or the creditor’s solicitor) that goods have been distrained and that the sheriff will proceed to sell those goods if instructed to do so.

It is a serious offence to dispose of goods that have been distrained but not removed, or to refuse to let the sheriff collect property that has been distrained.

Goods not owned by the debtor

The sheriff cannot seize goods that do not belong solely to the debtor. If the sheriff tries to distrain or seize goods owned by another person, including your partner, that person should try to provide the sheriff with proof of ownership.

If this does not prevent the goods from being seized, the owner or joint owner of the goods should immediately request the sheriff to issue an ‘interpleader summons’ in the Magistrates’ Court. The purpose of the summons is to bring the parties to a court hearing to allow a magistrate to decide whether the person claiming ownership is in fact the owner of the goods in dispute (r 12.07 Magistrates’ Court General Rules).

Return of warrant

The sheriff can return the warrant to the creditor or the creditor’s solicitor in a number of ways.

1. If you have no goods, or money or property ‘insufficient in quantity to be distrained’, the sheriff will report this and ask for further instructions.
2. ‘Part executed’: where the sheriff has obtained part, but not all, of the amount of the warrant.
3. ‘Executed’: if you pay the amount on the warrant. 
4. ‘Unexecuted’: if for any reason the sheriff cannot contact you or determine whether or not you have enough goods to satisfy the warrant. 

Goods sold at auction

If the creditor instructs the sheriff to sell those goods listed in Walking Possession Notices, the sheriff will seize the goods and sell them at auction. The sheriff sells property, including vehicles, through commercial auctioneers, including:

1. ebay;
2. Manheim in Altona North (predominantly vehicles, trucks and machinery); and
3. Autorola (a vehicle auction business).

These auctions are held regularly. The amount obtained for your goods at auction is usually much less than the value or convenience of the goods to you. You should try to avoid having your goods sold at auction; perhaps by negotiating payment with the creditor or taking out an instalment order, or selling the goods yourself prior to the sheriff distraining them. Seek advice from a financial counsellor (see Chapter 5.4: Financial counselling services).

Rehearing

If you either do not owe the money or believe that the amount is wrong, you should ask the sheriff to hold action for a few days while you contact the creditor’s solicitor to establish the situation. If the sheriff or the creditor’s solicitor is unwilling to give time or to re-examine the position, and you were not present when the original judgment debt order was made, seek advice immediately about making an application for a rehearing (see ‘Applying for a rehearing’).

Instalments

If you do owe the amount, it may be possible to hold off seizure by negotiating with the creditor to repay the debt by instalments. The sheriff cannot take payments by instalments, but when this is referred to the creditor’s solicitor, it is possible that an acceptable arrangement may be reached. 

Seek advice from a financial counsellor (see Chapter 5.4: Financial counselling services) if you require assistance in negotiating with the creditor’s solicitor. If the solicitor will not negotiate, you should consider making an application under the JDR Act to pay the debt by instalments (see ‘Instalment orders’, above).

If the creditor knows that you own land, they might issue a warrant of seizure and sale to try and force the sale of this land to pay the judgment debt. A creditor who has obtained a judgment for a debt can apply to the Supreme Court or County Court for a Warrant of Seizure and Sale, which directs the sheriff to seize and sell the debtor’s real estate (land or house) so that the debt can be paid. Real estate can be taken only if the warrant has been issued by the Supreme Court or County Court. If the warrant was issued by the Magistrates’ Court, it must be transferred to the Supreme Court before real estate can be seized.

It is important that you get advice quickly if you are threatened with a warrant of seizure and sale for your house or land.

The sheriff

The sheriff will serve you with a warrant to seize and sell your real estate, and advise you of the time line for the sale of your property if you do not pay the debt. This time line will be the same as detailed at ‘Home loan default’, above. The sheriff will then put the real estate up for sale by auction with a reserve price, based on a valuation of the property.

The sheriff can sell only the debtor’s interest in the property. If the property is jointly owned, the sheriff can only sell the share owned by the debtor. The interest of the debtor is the value of the land less any mortgages and outstanding rates. Because of this, a warrant of seizure and sale is not a common form of enforcement.

If you own an interest in land, it might be more likely for a creditor to commence bankruptcy proceedings against you (see Chapter 5.3: Understanding bankruptcy).

The sale

If the property does not sell for the reserve price, the sheriff or the creditor may obtain an order from the Supreme Court to sell the property without a reserve price. However, the sheriff must obtain a fair price (even with such an order) and, if the sheriff breaches their duty and sells the property at an unfair price, the following consequences may follow:

1. the sale may be set aside; or
2. if the sale is not set aside and you have sustained loss and damage, the sheriff may be liable to pay you damages at common law (see Zhou v Kousal [2012] VSC 187).

In Zhou v Kousal [2012] VSC 187, the Supreme Court of Victoria set aside the purported sale of a residential property by the sheriff for $1000 where the property had a market value of approximately $630 000 and the debtor’s financial interest in the property was approximately $165 000.

A warrant of seizure and sale is only valid for three months. If the property has not been sold within that period, the creditor is required to re-register the warrant with the Titles Office.

Getting help

At any time up to the sale of the property, you can seek an instalment order, but you will be liable to pay the legal costs of the warrant. Therefore, these costs should be included in the amount payable under the proposed instalment order (see ‘Instalment orders’, above). Obtaining an instalment order stops any further action by the sheriff or the creditor in relation to that debt. Advice should be sought from a financial counsellor (see Chapter 5.4: Financial counselling services).

After the sale

The proceeds of the sale are paid to the creditor to pay off the judgment debt and any costs and interest that have accrued since the date of judgment. Any money remaining is paid to you.

If you are earning a salary, an attachment of earnings can be used to enforce a judgment debt against you. The creditor can apply to the court for an order that your employer deduct instalments from your salary and pay them to the creditor. The procedure is detailed in the Magistrates’ Court General Rules (order 72). The procedure starts with the creditor applying to the court for a hearing date.

Then, the debtor is served:

• a copy of the application (in form 72A);
• a blank judgment debtor’s statement of financial position (in form 72C); and
• an affidavit (sworn statement) in support of the application (in form 72B).

You will be asked to fill in the statement of financial position and return it to the creditor before the hearing. The court may ask your employer to provide details of your income. Your employer must provide this information. If your employer does not supply this information, they can be summoned to court to be asked questions about your income. It is an offence under the MC Act (s 111(10)) for an employer to dismiss or alter an employee’s position to their prejudice due to an attachment of earnings order. An employer who does so may be required to reimburse the employee for any lost wages and to reinstate the employee in their former or a similar position.

Action by a debtor

When served with an application for an attachment of earnings order, if you dispute or are not sure that you owe the debt or that the amount is right, you should immediately ask the creditor to check the facts. If the creditor will not do this and you were not present at the court when the original judgment debt order was made, you should seek advice about making an application for a rehearing of the complaint (see ‘Applying for a rehearing’).

If you accept that you owe the amount claimed, you may consider offering to pay by instalments. You should never offer to pay more than you can comfortably afford. If you can enter into a satisfactory arrangement with the creditor so that the application for an attachment of earnings is withdrawn, the costs associated with the attachment of earnings hearing should be saved. If you require assistance in negotiating with the creditor or their solicitor, contact a financial counsellor (see Chapter 5.4: Financial counselling services).

If the creditor will not accept a reasonable offer to pay by instalments and refuses to discontinue the attachment of earnings proceedings, you should strongly consider making an immediate application under the JDR Act to pay the debt by instalments. This action, whether heard before or after the attachment of earnings application, will take precedence as the only enforceable order for payment (see ‘Instalment orders’, above).

Any income you receive under the Social Security Act 1991 (Cth) or the Veterans’ Entitlements Act 1986 (Cth) cannot be subject to an attachment of earnings order because these are excluded by the definition of earnings (r 72.01 Magistrates’ Court General Rules).

If the hearing of the application for an attachment of earnings is going to go ahead, it is important that you fill in the statement of financial position and return it to the creditor. It is strongly recommended that you seek advice from a financial counsellor before doing so (see Chapter 5.4: Financial counselling services).

Hearing of an attachment of earnings application

At the hearing of the application, the creditor must satisfy the court that there is an outstanding court order against you and that you earn, or are likely to earn, money from an employer. If you have not returned the statement of financial position, or do not appear at the hearing, the court, if it has sufficient evidence about your finances, must determine a ‘protected earnings rate’, that is, the minimum wage level required by you to keep yourself and any dependants.

Except in rare circumstances, the protected earnings rate cannot be less than 80 per cent of your net earnings (r 72.05 Magistrates’ Court General Rules). Usually the protected earnings rate will be set at 80 per cent of your net earnings. This means that any order made is generally that 20 per cent or less of your net income be paid direct to the creditor.

Therefore, generally, for an attachment of earnings order to be made, there must be a 20 per cent gap between your income and expenditure. If you have completed your statement of financial position and it shows that more than 80 per cent of your income is used to pay justifiable expenses, a court might only make an order concerning that amount of your income that is not paid to expenses.

If 100 per cent of your income is paid to justifiable expenses, the court may choose to refuse the creditor’s application for an attachment of earnings order. However, these figures are only a guide and the court has the discretion to make an order regardless.

Attachment of earnings order

Subject to the paragraph below, if the court makes an attachment of earnings order, the order must specify:

1. the protected earnings rate; and 
2. the normal deduction rate – that is, the normal amount to be taken from your wages each pay day to pay off the debt. 

However, if you do not attend the hearing or return a statement of financial position and the court does not have sufficient evidence about your finances, it will make an order that will not specify these rates. Such an order is likely to be less favourable to your position than if the court was provided with information about your financial position.

A copy of the order must be served on you and your employer. Seven days after the employer receives the order, the employer should start making deductions from your pay and send them to the creditor.

Variation or suspension

You can apply to the court to have an attachment of earnings order varied or suspended at any time (r 72.10 Magistrates’ Court General Rules). This is important for any debtor whose financial circumstances change, perhaps because of accident or sickness of the debtor or other members of their family.

This procedure is available where the debtor is owed a debt (not wages) by another person, called a ‘garnishee’. The creditor can make an application to the court for an order that the debt owed to you be paid direct to the creditor, to pay off the judgment debt (r 71.04 Magistrates’ Court General Rules).

Money held in a savings account with a bank or a co-operative (r 71.03) and rent owed to a debtor, are examples of money that could be attached to pay the debt. An order for attachment of debt is known as a ‘garnishee order’.

A garnishee can only be subject to a garnishee order made by a Victorian Magistrates’ Court if they are within Victoria or, if the garnishee is a partnership, one partner or some person apparently having the control or management of the partnership business, is within Victoria.

The order may not be made if it is worthless or vexatious on account of the smallness of the amount to be recovered or of the debt sought to be attached or otherwise. If the garnishee disputes liability they must apply to the court within 14 days of being served with the garnishee order (r 71.05 Magistrates’ Court General Rules).

If there is a court order for a debt against you, the creditor or the creditor’s solicitor can have a summons issued by the registrar requiring you to appear in court with any relevant documents to be questioned on oath about your financial position (r 67.01.(1) Magistrates’ Court General Rules). You will be served with a summons to attend for oral examination (form 67A), together with enough money to pay for your public transport to the court (‘conduct money’).

The summons requires you to attend at the Magistrates’ Court on a particular day to be questioned. This questioning usually takes place at the Magistrates’ Court nearest or most convenient to your place of business or residence, although some creditors will summon you to appear at the Magistrates’ Court located nearest to them. Nobody except you, the creditor and legal representatives can be present without the consent of both parties.

The questioning is conducted by the registrar, who is required to ask a number of set questions about your financial situation (see below) and can ask any other relevant questions about your ability to pay the debt.

The creditor or their solicitors may also question you, although they often do not attend the examination at all. Some creditors may try to question you without the registrar being present. It is recommended that you insist on the registrar being present for the oral examination to ensure that you avoid being pressured by a creditor to make an arrangement to pay that you later find you cannot afford.

The registrar records your answers to the questions and sends a copy of the answers to the creditor or the creditor’s solicitor (see r 67.01(8), form 67B Magistrates’ Court General Rules).

For the questions the registrar is required to ask, as set out in form 67B, search for ‘form 67B’ on the Magistrates’ Court of Victoria’s website.

All that the creditor obtains from the questioning is information that could assist in determining what (if any) is the best way of enforcing the judgment debt. No court order can be made at the questioning requiring you to pay the creditor (by instalments or otherwise), even if the questioning reveals that you can pay the debt. However, an order for the costs of the examination, including the conduct money, is usually made against you.

If you do not attend the court on the date set for the questioning, it is likely that a warrant of apprehension will be issued, which could lead to a police arrest. If this occurs, you will very likely be bailed to attend on a new date, and failure to attend will be an offence under section 30 of the Bail Act 1977 (Vic).

Action by a debtor

If the debt has been paid, or you think the amount the creditor is claiming is wrong, you should immediately contact the creditor’s solicitor to check the facts.

If the creditor will not re-examine the matter and you were not at court when the original order was made, you should seek advice about applying for a rehearing (see ‘Applying for a rehearing’, above).

If the amount of the debt is correct, you should consider negotiating and, if practicable, make an offer to pay by instalments in advance of the hearing date. If the creditor’s solicitor insists that the questioning by the registrar must go ahead, you should prepare careful answers to the questions that you will be asked. For this purpose, it is generally advisable to seek assistance from a financial counsellor (see Chapter 5.4: Financial counselling services).

As a general rule, immediate action will cut down court costs. Not communicating with the creditor and not attending court is generally the worst policy.