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INTRODUCTIONThis factsheet is divided into four parts:
- Part 1 will tell you what Payment Hearings are for and will also tell you about Payment Schedules.
- Part 2 tells how a Creditor can request a Payment Hearing.
- Part 3 tells what is likely to happen at a Payment Hearing.
- Part 4 tells how a Debtor can request a Payment Hearing and what should be done if a person can not attend a Payment Hearing.
SOME DEFINITIONSBut first there are some words that should be defined. A “PAYMENT ORDER” is a court order requiring money be paid. A Payment Order is sometimes called a Judgment. A Payment Order can be made because a Defendant failed to file a Reply, or attend a Settlement Conference or Trial. It can also be made after a Settlement Conference or Trial where a Judge has heard all the facts of the case. A Payment Order is effective for 10 years. If the amount owed has not been paid by then, there is a way of obtaining a new Payment Order and having an additional 10 years to collect. A “DEBT” is the amount required to be paid by the Payment Order. A “DEBTOR” under the Small Claims Rules is someone required to pay money because a Payment Order has been made against them. A “CREDITOR” is someone a Payment Order requires a Debtor to pay money to.
THE PURPOSE OF PAYMENT HEARINGSPayment Hearings can be held for a number of purposes. These include:
- To allow a Small Claims Court Judge or Registrar to determine whether a Debtor has the financial ability to pay the debt;
- To determine a date by which the debt must be paid;
- To make a Payment Schedule under which a Debtor must pay the debt by installments of specific amounts on certain dates;
- To allow a Debtor or Creditor to apply to vary a Payment Schedule;
- To allow a Creditor to obtain information that would be useful for other types of collection procedures, like garnishment, seizing assets or registering a Certificate of Judgment against land.
- The Debtor’s income and assets;
- Other debts owed by the Debtor;
- Money owed to the Debtor;
- The means the Debtor has or may have in the future to pay the debt; and
- Any assets the Debtor has disposed of since the claim arose.
- Order a Payment Schedule, or
- Refuse to make a Payment Schedule.
EFFECT OF A PAYMENT SCHEDULEIf a Judge orders a Payment Schedule, the Creditor can not use any other means of collection as long as the Debtor makes the required payments. If the Creditor learns that the debtor’s financial circumstances have changed so the debt could be paid more quickly, the Creditor could apply to vary the Payment Schedule or have it cancelled. If a Debtor defaults in making payments under a Payment Schedule by not paying the money due on an installment date, then all of the balance owing on the debt becomes due immediately. In addition, a Creditor is then free to garnish, seize assets, register a Certificate of Judgment against land owned by the Debtor, or enforce the Payment Order by any other legal means. Thus a Debtor whose circumstances change so they can’t make an installment payment when due should see if the Creditor would consent to a change in the Payment Order. If the Creditor agrees, an Application to the Registrar for a Consent Order can be made. If the Creditor will not consent, the Debtor should apply for a Payment Hearing to ask the court to vary the installment payments to reduce the amount to be paid, or lengthen the time between payments.
WHEN ARE PAYMENT HEARINGS HELDThe Small Claims Court Rules allow Payment Hearings to be held at a number of times. A Payment Hearing can be held if a Payment Schedule is not ordered at the time the Judge makes a Payment Order. This could happen when a Defendant (Debtor) fails to file a Reply or because the Defendant admitted the debt in a Reply and requested a Payment Schedule. When a Payment Order is made and the Debtor and Creditor are in front of a Judge (for example, at a Settlement Conference or Trial), the Judge may order a Payment Hearing be held. A Payment Hearing could be ordered when the Debtor requires time to pay the debt and the Creditor does not consent to a proposal from the Debtor as to how and when the debt should be paid. In this case a Payment Hearing could be held immediately, or the date of the Payment Hearing could be set by the Judge while the parties are still in court. A Payment Hearing can be held when requested by the Creditor. A Payment Hearing can also be requested by a Debtor.
HOW A CREDITOR CAN REQUEST A PAYMENT HEARINGTo apply for a Payment Hearing a Creditor should:
- obtain a copy of the Payment Order;
- complete a Summons;
- file the Summons at the Small Claims Court Registry;
- serve the Summons;
- prepare proof of service; and
- file proof of service.
OBTAIN A COPY OF THE PAYMENT ORDERThe first step is to obtain a copy of the Payment Order. A Payment Order should be in writing. The Court Registry staff or Creditor may fill out the form (which is available from the Registry). The Payment Order must be signed by the Registrar or a Judge.
PREPARE A SUMMONS TO A PAYMENT HEARINGThen a Summons must be prepared. Click here to obtain a blank Summons form which you can use. To complete the Summons you should:
- Fill in the file number and the registry location as they appear on the Payment Order
- Fill in the name and address and telephone number of the person being summoned. If the Debtor is an individual, put down that individual’s name. If the Debtor is a company or partnership, put down the name of an officer, director or employee of the company you want summoned. If you do not know the name of any officer, director or employee, you may have to do a company search in person, by letter or by fax at the B.C. Corporate Registry office, 940 Blanshard Street, Victoria, B.C. V8W 3E6. A search could also be done by way of the computer system which is available at Government Agents’ offices throughout B.C.
- Insert the Creditor’s name and Debtor’s name as they appear on the Payment Order or Default Order.
- List what you want the Debtor to bring to court. Under the Small Claims Rules a Debtor can be required to bring any records or other things that relate to:
- The income and assets of the Debtor;
- Debts owed by, and to, the Debtor;
- The means the Debtor has of paying the debt; and
- Any assets the Debtor disposed of since the claim arose.
- A general statement consisting of the above plus a specific request for income tax records, recent employment pay stubs, business records, vehicle registrations and a list of assets might be helpful.
FILE THE SUMMONSAfter completing the Summons it should be filed at the Small Claims Court Registry. At the time the Summons is filed, the Registry staff will insert on the Summons the date, time and location of the Payment Hearing. Be sure the time of the Payment Hearing is far enough in advance to allow the Summons to be served properly.
SERVE THE SUMMONSThe Creditor or someone on the Creditor’s behalf must serve the Summons. The Summons must be left with the person summoned. The Summons can not be mailed to the Defendant. In extraordinary circumstances, a Judge can allow service of a Summons by way of substitutional service. For general information about substitutional service, see Factsheet 6.
PREPARE AND FILE AN AFFIDAVIT OF SERVICEAn Affidavit of Service should be completed by the person who serves the Summons. Click here to view a sample of a completed Affidavit of Service. Click here to obtain a copy of a blank Affidavit of Service form you can use. Filing the Affidavit of Service is necessary if the person summoned does not show up at the Payment Hearing. This is because a Judge can then issue a Warrant to arrest the person.
WHAT HAPPENS AT A PAYMENT HEARINGPayment Hearings are usually conducted by a Judge, who is referred to as “Your Honour.” However, in some locations in British Columbia, Payment Hearings are conducted by a Justice of the Peace, who is referred to as “Your Worship”. When you arrive, you can ask the clerk whether a Judge or a Justice of the Peace is conducting the hearing, so you know how to refer to them. Payment Hearings are usually held in a courtroom. On the day of the Payment Hearing both the Creditor and Debtor should be sure to attend court. While it is possible for the court to proceed in the absence of the Creditor, it is also possible that it will be cancelled or adjourned. If a Debtor does not attend, a Warrant can be issued for the arrest of the Debtor. When the case is called, the parties should stand and tell the court that they are present and are ready to proceed with a Payment Hearing. The Judge will then direct you as to the procedure the Judge wishes to follow. Sometimes the Judge will start by asking the Debtor and Creditor if they have been able to come to an agreement as to a Payment Schedule. If not, the Debtor may be sworn or required to affirm to tell the truth. The Debtor will then be asked questions. Sometimes the Judge will ask most of the questions. Other times a Judge will allow the Creditor to ask the questions. Note: A Debtor should prepare for a Payment Hearing by reading Part 4 of this factsheet and following the instructions set out there.
TYPICAL QUESTIONS FOR A DEBTOR AT A PAYMENT HEARING
- How do you earn your living?
- What is the name of your present employer?
- How frequently are you paid?
- On what dates of the month are you paid?
- How long have you worked at your present location?
- Are you working full time?
- Are there any other places where you are employed at the present time?
- Are there any monies owing to you by your employers at the present time?
- Do you have a share in the ownership of any businesses? How big a share?
- Does anyone owe you money? Where can they be found?
- Do you have any other sources of income?
- What were your earnings last year?
- Did you receive any gifts of money in the last year?
- Did you receive any gifts worth more than $_____ since ___________?
- At the time this debt was incurred, who did you work for?
- How were you paid?
- Do you have any other debts to be paid?
- What is the amount of those debts?
- Since you incurred the debt that was the subject matter of this lawsuit, have you made payments on the other debts?
- How many payments have you made on the other debts?
- Do you live with anyone?
- What is your marital status?
- Does the person you live with work?
- How much does that person earn?
- How many people do you have to support?
- Are there any other sources of income coming into your family unit?
- Do you have a bank account?
- Where is that bank account located?
- Is it a joint bank account?
- What other bank accounts do you have?
- Do you have any children who live with you?
- Do your children work?
- How much do your children earn?
- Do you have any cash elsewhere than in a bank account?
- Do you have money in any other form such as traveller’s cheques?
- Do you have any expectation of inheriting any money or property?
- Do you own land? Where is it located?
- When did you last own land?
- Who owns the house in which you live?
- When was it bought? Who provided the money to buy it?
- Do you own a motor vehicle? (If applicable, when did you last own a motor vehicle?) What kind of motor vehicle is it? What is its licence number?
- Does your spouse own a motor vehicle? What kind of a motor vehicle? What is its licence number?
- Is there any money owing on your or your spouse’s motor vehicle? How much? Who is the money owed to?
- Do you own any stocks or bonds?
- What is the value of the furniture and other household effects which you own?
- Do you own a boat? Where is it kept? Is there any money owing on it? To whom?
- Do you own any jewelry?
- Do you own any livestock?
- Did you own any car or house or other property of value prior to a Payment Order being obtained against you? What has happened to those things?
- Were you paid for those things, and if so, by whom?
- How do you plan to pay the debt owed in this action?
HOW A DEBTOR CAN REQUEST A PAYMENT HEARINGThe procedure a Debtor follows to schedule a Payment Hearing is similar (but not identical) to that of a Creditor. A Debtor should:
- Prepare a Notice of Payment Hearing;
- Serve the Notice on the Creditor; and
- Prepare and file Proof of Service.
PREPARE A NOTICE OF PAYMENT HEARINGClick here to obtain ablank Notice of Payment Hearing form. The form is very simple to complete. In the spaces provided merely fill in the Registry file number, the location of the Small Claims Court Registry, the name, address and telephone number of the Creditor as it appears on the Notice of Claim or Payment Order, and the name, address and telephone number of the Debtor.
FILE THE NOTICE OF HEARINGMake four photocopies of the Notice of Payment Hearing and then file the Notice at the Small Claims Court Registry. At the time of filing the Clerk will fill in on the form the date, time and location of the Payment Hearing. Be sure enough time is allowed for service because a Creditor must receive the Notice of Hearing at least seven days before the Payment Hearing.
SERVE THE NOTICE OF HEARINGYou can serve the Notice of Hearing in three ways:
- Leave a copy with the Creditor.
- Mail it by ordinary mail to the Creditor’s address.
- Mail it by registered mail. If it is mailed, it is presumed to have been delivered fourteen days after being sent, unless there is evidence of earlier delivery.
PREPARE FOR THE HEARINGThe reason a Debtor will request a Payment Hearing is to have a Payment Schedule ordered or varied. The legitimate goal of a Debtor then should be to advise the Court of the Debtor’s financial circumstances so that an appropriate order for payment can be made by the Judge. Listed above are the typical questions which a Creditor might ask at a Payment Hearing. A Debtor should prepare the information needed to answer these and similar questions. In addition, the Debtor should prepare a Financial Statement. Click here to obtain a blank form that can be used for that purpose. The form will show the Judge the Debtor’s ability to pay the debt owed to the Creditor. It is vital for a Debtor with little money to be sure not to get saddled with a Payment Order to make payments that can not be met. Failure to comply with a Payment Order may lead to a Default Hearing, and if the Debtor’s explanation for not paying is found to be in contempt of court, the Debtor could be jailed. So it is vital that the Judge be presented with an accurate budget showing all of the expenses which the Debtor has. In addition, a Debtor who is on welfare may wish to bring to the Judge’s attention the following information:
- The Debt Collection Act governs debt collection practices of debt collectors in British Columbia.
- The Director of Debt Collection on September 11, 1989, issued a report which stated that, “It is the opinion of the director that the demand for payment of a debt from a welfare recipient who clearly has welfare as his/her sole income, is contrary to the public interest. Money diverted from the necessities of life to the Creditor reduces the Debtor’s standard of living from a level which is already at a minimum and is a use of the welfare money that is not intended or approved by the Minister of Social Services.”
- The Debtor may suggest to the Judge that the policy which applies to debt collectors should also apply to others seeking to enforce a Payment Order against someone on welfare. The Debtor who is on welfare should ask the Court to make a very low order or no order for payment.