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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

5. Gas, electricity and phone bills

6. Water bills

7. Loan and credit problems

8. What creditors can do to get their money

If you don't apply for a time order (or the court won't grant you one), the creditor's main legal option to get their money is through a 'money-only' claim in the county court.

If a creditor succeeds in a 'money-only' claim, you will have a county court judgment (CCJ) registered against you. This will go on your credit file and will affect your credit rating - probably making it more difficult for you to get, for example, a loan or credit card in future. It will also increase the amount you owe, because you will have to pay the creditor's costs if the court rules that you should pay them. You must pay what the court orders or the creditor can use bailiffs and other measures to make you pay. If you own your own home, the debt could be secured against it through a charging order (see 'Charging order' for more about how this works).

However, there are advantages to a CCJ, if you really can't come to an agreement with the creditor to pay back the money. In most cases it should mean that they stop adding interest to what you owe and the court will generally set out a repayment plan that you should be able to afford. As long as you keep up to the plan ordered by the court, the creditor can't use enforcement measures, like bailiffs, against you.

The 'money-only' claims procedure
The 'money-only' claims procedure starts when the creditor (the 'claimant') asks the court to send a 'claim form' to you (the 'defendant').

At this stage, you can choose to either defend the claim or admit the claim.

Defending the claim
You can choose to defend the claim if either:

  • you don't agree you owe the amount claimed; or
  • you didn't sign a written credit agreement; or
  • the creditor has made a mistake (for example, in the amount you owe) on the agreement.

See 'Other legal protection if you are in debt' for more information.

However, you shouldn't defend a claim without getting expert advice first. If you lose your case, you may have to pay the creditor's court costs, which could mean that your debt becomes even bigger.

If the creditor has not acted resonably in trying to come to a payment arrangement with you, you can defend (argue that you should not have to pay) the part of their claim that covers the court fee and the court costs .

Admitting the claim
If you admit the claim, you should come up with an offer of payment, based on what you think you can realistically afford. If the creditor accepts this offer, the court will record it and you will have to stick to it. But if the creditor turns down your offer, then a court official will normally decide how much you should pay. This is done without having a hearing in court.

If you or the creditor don't agree with the court's order for payment, you have 14 days to ask for the decision to be 're-determined' by a district judge. If the court then decides to have a hearing, the case will be transferred to your nearest court. You and the creditor will both be able to have your say before the court decides whether to change the order for payment set out in the original judgment.

If you don't respond to a claim
If you don't respond to a claim the creditor will ask for judgment to entered 'by default', and the court will make an order for payment at the rate the creditor asks for. If you don't make these payments, the creditor can use bailiffs or other measures to try to get the money you owe.

In some cases, you may not have been able to respond to the claim (for example, because it was sent to the wrong address, or you were away when it was sent). If you are in this position, you may be able to get the judgment 'set aside'. To do so, though, you will usually have to show that you have a good chance of defending the claim or you have another good reason for it to be set aside. If you want to get a claim set aside, you should get expert advice first.

If you can no longer afford the payments
If you can no longer afford the payments set out in the court order, you can apply to court to reduce them. This is called 'varying an order'.

When you won't have to pay
If your financial situation means that you really can't repay the debt, or you are in a genuine crisis (for example, you have a serious illness), the court may be able to suspend the payments so that you don't have to pay for a set period.

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: October 2019

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