How to Deal with Debt
Summary Instalment Orders for people who are in debt
One solution could be to ask a Registrar at a District Court whether a Summary Instalment Order could work for you. Summary Instalment Orders are provided for under the Insolvency Act 1967.
What is a Summary Instalment Order?
A Summary Instalment Order is a court order, made by a District Court Judge, that allows people in debt to pay back the money they owe in regular instalments over a period of up to three years. The threat of further action to collect the debt is lifted while the Summary Instalment Order is in force.
When a Summary Instalment Order is made, a supervisor is appointed to help the person in debt (the debtor) manage their payments due under the Summary Instalment Order.
Who can apply?
You can apply if you are:
- A Debtor - anyone who is in debt - providing your total unsecured debts (debt which is not guaranteed or 'secured' against an asset e.g. a house) are not more than $12,000; or
- A Creditor - anyone who is unable to obtain payment from a debtor where a court judgment or tribunal order has been made, or anyone who is owed money and has the permission of the debtor to apply.
How do I apply?
You can apply at your local District Court. The Court can provide you with the application forms and you will need to pay a filing fee of $12.
If you are the debtor, you will need to state:
1) information about yourself and your financial commitments;
- what you own (house, car, furniture etc);
- how much you earn (bring a pay slip with you, if possible); and
- the name and address of your employer.
2) information about your debt:
- the names and addresses of everyone you owe money to (your creditors);
- how much you owe to each creditor, and for what (e.g. furniture, repairs, cash loans etc);
- whether each debt is guaranteed (someone else has agreed to ensure payment) or secured (an asset/possession has been used to guarantee payment);
- how much you think you can pay back; and
- how long you think you need to do this.
If you need help to fill in the application forms ask at the Court, or go to your local Budget Advisory Service or Citizen's Advice Bureau.
Bring all documents relating to your debt with you (e.g. payslips, bills, hire purchase agreements etc).
NOTE: Only one SIO application for the same debtor can be made within a six-month period.
If you are the creditor, you will need to:
- state the name of the debtor, how much is owed, and for what; and
- either produce proof of judgment or the written consent of the debtor.
Before applying, you need to be sure that you are prepared to be bound as a creditor by a Summary Instalment Order, which may last up to three years.
A date will then be set for the hearing and everyone concerned will be informed.
What happens at the Court hearing?
If there are no objections, the hearing is held in the Judge's chambers. If there are objections, it will be held in an open District Court.
If you are the debtor and an open court hearing is to take place, you must attend and bring all documents relating to your debts with you. Your creditors may be there to state their views.
The District Court Judge will consider your income and total debts and may make an order that allows you to repay the debts over a period of time. The order will take into account sufficient money for normal living expenses.
What happens if the Judge grants the Order?
- The Judge decides the amount to be repaid, usually the whole amount owing.
- The Judge will fix a weekly amount to be paid.
- Fixed deductions from your wages or benefit may be required to make payments.
- You may be allowed up to three years to make all the payments.
- The Judge will appoint a supervisor for your Summary Instalment Order.
What if I can't make the payments?
If you are sick or you have been laid off work, for example, and you know you cannot make the payments required, contact your supervisor or the District Court immediately.
Unless you can show that you are short of money for a good reason, your supervisor will assume you are refusing to make payments and may notify your creditors.
If you don't make payments as directed, the supervisor may notify your creditors who may start actions to enforce payment of the debts. This could result in further costs to you.
What is the supervisor's role?
The supervisor will:
- notify all creditors of the Summary Instalment Order;
- open and manage a bank account into which you will pay money as the Judge has directed;
- distribute the money to your creditors;
- file accounts in the Court at six-monthly intervals; and
- help you to manage your debt payments so you will have enough money for your normal living expenses.
The supervisor will be concerned only with the payment of your outstanding debts and budgeting to meet these payments and your living expenses, not with your personal life.
There is provision in the Act for a change of supervisor. Any party—the current supervisor, the debtor, the creditor or the registrar of the District Court—may apply to the Court for the current supervisor to be discharged.
How does a Summary Instalment Order help?
If you are the debtor, a Summary Instalment Order protects you from further court action relating to any debts that form part of the Order, while the Order is in place.
If you are the creditor, you are ensured regular payments according to the provisions of the Summary Instalment Order.
How much does it cost?
- An applicant for a Summary Instalment Order must pay a filing fee of $12; and
- The appointed supervisor may charge a supervision fee to compensate for the costs they incur by helping you. The fee may be up to $100 or 7.5 percent of the money that is paid out to the creditors, whichever is greater. The most you could pay is $900 (7.5% of $12,000). This fee is offset by the interest on your debts that you would normally have to pay.
What else do I need to know?
- If you are notified by the Court that a creditor has applied for a Summary Instalment Order, you must provide the Court with a statement of your affairs within 14 days. A form will be provided.
- While the Summary Instalment Order is in force you will not be able to obtain credit (individually or jointly with others) of $100 or more, unless you can prove that before providing the credit, the creditor knew that you were affected by a Summary Instalment Order.
- While the Summary Instalment Order is in place, you will not be able to guarantee a sum of $100 or more in order to help someone else gain credit.
Help and Advice
Assistance and guidance is available from:
- Citizens Advice Bureau, Community Law Centres, Budget Advisory Services, or other community aid organisations;
- District Court Registrars.
A Summary Instalment Order is designed to help you pay off your debt quickly and easily, and then be in a position to manage your finances well in the future. Act now to deal with your debt.
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