'This is no good to my clients, Judge. They have a court order and they want their money IN FULL and NOW!!!'
There's just been a major ruling from the Court of Appeal * on how county courts should approach a debtor's plea for time to pay. Normally, a county court judgment will be payable within a fortnight. You can ask the court to give you longer or to allow you to pay by instalments. This you can do when admitting the debt having received the court claim form. Or if there is a court hearing which ends with you being ordered to pay, you can ask the judge there and then to give you longer than a fortnight or to allow instalments, although the probability is that the judge will not have time to go into the detail of your finances at that stage and will leave you to seek more time or instalments by a written application. Or you can make that written application at any time after judgment, whether or not there has been a hearing.
How should the court approach your plea, whenever you may make it? In the recent case, the debtor was offering £50 per month towards an £8,000 debt which arose out of a disputed traffic penalty ticket! But she was on the verge of bankruptcy and the £50 would not even have settled the 8% interest due on the judgement. A county court judgment generally attracts interest if it is for at least £5,000. In rejecting this debtor's instalment offer, the Court of Appeal said that when a debtor cannot really afford to pay anything and the creditor wants to get the debt paid off NOW!!! and to bring enforcement action to achieve this then the court should let the creditor do as they wish and not allow instalments.
This guidance will almost certainly be trotted out by your creditor or their lawyer when you make a plea for time. But the guidance did not stop there and so make sure the judge hears more of what the Court of Appeal said. The circumstances did not have to be exceptional for instalments to be ordered and there could be instalments even when the debtor is insolvent (they owe more than they are worth). However, the debtor has to put forward a realistic payment schedule backed up by evidence that the creditor can be expected to receive their money and any interest on the judgment within a reasonable period of time. There might be a case for refusing time to pay where the creditor has their own cash-flow problems. Equally, there will be other cases where a limited period of time will enable the debt to be paid without significant prejudice to the creditor, particularly where interest on a £5,000 plus debt is payable.
So don't be put off by asking for instalments if you need to. And remind the court that your creditor cannot now seek to bankrupt you unless you owe them at least £5000. Also, interest on the judgement would come to an end if the creditor put in the bailiff and that produced some payment.
There's much, much more on how to handle debt and court proceedings about debt in my book Breaking Law. But hopefully the bailiff won't seize it!
* The case is Loson v Brett Stack and Newlyn PLC [2-18] EWCA Civ 803