Payment Terms – After you are sued but before you have filed a defence

This article deals only with Ontario Small Claims court matters.

There are several occasions where you may want to arrange payment terms with a creditor.

These times would be at various stages of a debt owing:


For the purpose of this article, I will deal with:

After you are sued but before you have filed a defence

For the purpose of this article, you have just been served with a Plaintiff’s Claim, the Claim has merit, and you do not have a valid defence to the Claim that has been issued against you.  You owe the money but you don’t have all the funds available to pay the debt in full.  You now have a narrow window of opportunity to try to negotiate a settlement and arrange a payment plan.  You will want to put the negotiated settlement and payment plan in writing and have it signed by all parties before the expiration of the 20 day period for filing a defence so that the other side will not ‘note you in default’ and then obtain a judgment against you.  If the parties cannot agree on a settlement, you can put a proposed payment plan into the defence itself.

The best time to have gotten a legal professional involved was at the outset before a Plaintiff’s Claim was issued and served on you.  Now that you have been served, it is even more critical to have a legal professional working for you to settle your matter, if settlement is possible.  An experience paralegal may be able to negotiate a settlement whereby you would pay less than the amount owing and/or arrange a payment plan.  The settlement and payment plan must be put in writing and signed by all parties in order to protect both you and the creditor.

The benefit of acting promptly, and by promptly, I mean immediately, is that you may be able to prevent the creditor from taking steps to obtain a judgment against you without you having to go to the trouble of filing a defence.  But as I stated above, you will want to put the negotiated settlement and payment plan in writing and have it signed by all parties before the expiration of the 20 day period for filing a defence so that the other side will not ‘note you in default’ and then obtain a judgment against you. 

Settling a matter requires skill and experience which should always include written Terms of Settlement in order to protect you from a creditor coming back after you again for more money.  I recommend that you consult with an experience paralegal or lawyer before doing your own settlement.

Later articles on payment terms will deal with the issue:

  • after you are sued and after you have filed a defence
  • after judgment has been obtained against you

 

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