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1 Dealing with Debt

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1. Introduction

2. Rent or mortgage payment problems

3. Council Tax bill problems

4. Hire Purchase (HP) problems

If you buy goods such as a car or furniture under hire purchase (HP) or a similar scheme, known as a 'conditional sale agreement', you don't own it until you have made the final payment. Until then, it belongs to the creditor (the finance company).

If you miss payments before you've paid a third of the total amount you owe, the creditor can repossess (take back) the item. This amount will be on the front of your agreement. However, the creditor can repossess the item only if it is in a public place, so they may be able to repossess a car, but they cannot come into your home and take furniture.

If you have paid a third or more of the total amount you owe, the creditor must start court action to get the goods back, or to get you to pay.

In this case, the court will send you a hearing date, when it will decide whether you must return the item or whether it can accept an offer by you to make payment.

You can ask the court for a 'time order', under which it can reduce the payments to a level you can afford (see 'Time Order' for more about how this works). The court can also make a 'suspended order', which means that the finance company can get the goods back only if you miss payments in the future.

If you want to avoid court action, you can write to the creditor to end your contract and return the goods.

You will then be liable for:

  • half of the total amount you originally owed (this figure will be on the front of your HP agreement); plus
  • any arrears and the cost of repairing any damage to the goods, minus the payments you have already made.

5. Gas, electricity and phone bills

6. Water bills

7. Loan and credit problems

8. What creditors can do to get their money

9. Going to court

10. Dealing with many debts

11. Dealing with bailiffs

12. Other legal protection if you are in debt

13. When you can be sent to prison for your debts

14. Terms used when dealing with debt

15. Further help

16. About this leaflet

This leaflet is published by the Legal Services Commission (LSC). It was written in association with Birmingham Settlement.

The leaflets are regularly updated but the law may have changed since they were printed so the information in them may be incorrect or out of date.

Leaflet Version: April 2019

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