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If your debt comes to court you will have to pay the creditor’s costs of enforcing the judgment, as well as the original debt and the legal and court costs the creditor incurred in getting judgment. In a Minor Civil matter, costs do not apply except in special circumstances: see section 31AF of the Magistrates Court (Civil Division) Act 1992 (Tas) in contrast to Schedules 1 and 3 of the Magistrates Court (Civil Division) Rules 1998 (Tas). Interest on the judgment debt also runs from the date of judgment (s26, Magistrates Court (Civil Division) Act). Therefore, generally, it is to the debtor’s advantage that they pay the judgment debt as soon as possible. If the debtor is unable to pay the full amount of the judgment debt at once, a private agreement with the creditor to pay by installments will save costs and is usually the best method of repayment.

The advantages of paying by installment are as follows:

  • The debtor can work out how much he or she can afford to pay each week or fortnight from his or her weekly or fortnightly income and make a realistic offer to the creditor. If agreement can be reached the debt can be paid off steadily without forcing the debtor into further debt.
  • It does not have the disadvantages of other forms of court enforcement. Attending an examination hearing or judgment summons can cause the debtor inconvenience and loss of a day’s pay. Garnishment (see below) can cause a financial hardship to the debtor and can be embarrassing as the debtor’s employer will know that they are in debt. Seizure of goods under a warrant of execution can result in hardship and force the debtor into further debt to replace the goods seized.

A private agreement to pay by installments is no guarantee that the creditor will not take court proceedings to enforce the debt. It may, however, found an action for a stay of those proceedings. A ‘stay’ is an order that no more action take place on a particular matter until there is a change of circumstances.

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