You now need to list all your debts, payments you make and balances of each debt on your budget planner. If you have letters or contracts, get all your paperwork together. Some people find opening letters from creditors frightening, but it is important that you do keep and read your letters. If you are struggling ask someone you trust to open your letters with you or contact the Debt Advice Team or an advice organisation.
Some of your debts will be more important than others because of what can happen to you if you don’t pay them. These are called your Priority Debts. You must deal with priority debts first to avoid serious penalties.
List all your priority debts in your budget planner, remember to include the balance owed.
|Rent and/or service charge||Eviction|
|Council Tax||A visit from enforcement agents (bailiffs), money taken from wages, money taken from benefits, bankruptcy or imprisonment|
|Gas or electric||Disconnection, money taken from benefits|
|Unpaid magistrates court fines||A visit from enforcement agents (bailiffs), money taken from wages, money taken from benefits, imprisonment|
|Child maintenance||A visit from enforcement agents (bailiffs), money taken from wages, money taken from benefits, imprisonment|
|Income Tax arrears||Imprisonment|
|TV licence||A fine, imprisonment|
|County court judgment||A visit from enforcement agents (bailiffs), a charging order, money taken from wages, money or assets frozen|
|Tax, VAT or National Insurance||A visit from enforcement agents (bailiffs), money taken from wages, bankruptcy, county court judgement (CCJ)|
|Hire purchase or logbook loan||Repossession, county court judgment (CCJ)|
If you have rent arrears you should always deal with this debt first to avoid losing your home.
After this you must decide what order you deal with other priority debts based on how you think the consequences of not paying will affect you and your family.
Contact your most important priority creditor and:
Once your first priority creditor has agreed a repayment plan:
If your creditors won’t agree a repayment plan with you, or you don’t have enough disposable income to deal with all your Priority Debts, get advice from one of the organisations at the back of this handbook.
If you do not pay your rent or do not keep to an agreement to pay off your arrears, your landlord can apply to the county court for a possession order to evict you.
Always seek advice and attend any court hearing.
A possession order doesn’t necessarily mean automatic eviction. The court will consider your circumstances and might give a suspended possession order. This is where possession is granted but suspended on the basis you make regular payments towards your rent arrears.
If you don’t keep to the court ordered payment, your landlord can go back to the court and you could be evicted.
If you are finding it difficult to keep to your court ordered payments get advice from an organisation at the back of this handbook.
If you do not pay your rent your landlord may evict you. The process of eviction depends on the type of tenancy you hold. If you are unsure of what type of tenancy you hold, you must seek help straight away.
The sooner you get help the more likely it is that you avoid losing your home.
Always attend any court hearings.
If you don’t pay your Council Tax the Council will apply for a liability order at the Magistrates Court.
The court must issue the liability order unless:
If you think one of these applies to you, contact the Council immediately.
The Liability Order will order you to pay the amount outstanding plus Court costs. The Council offer an arrangement for you to pay, or you can suggest your own.
If you don’t make an arrangement or you don’t stick to your agreement the Council can:
A County Court Judgement (CCJ) is a court order a creditor can apply for to order you to repay a debt owed to them. Having a CCJ is not a criminal offence and you cannot be sent to prison.
A CCJ is normally recorded on the public ‘Register of Judgments, Orders and Fines’, and on your credit file. The information will stay on your credit reference file and the Register of Judgments, Orders and Fines for six years from the date the CCJ was made (unless it is paid in full within one month).
Having a CCJ can reduce your credit score and make it more difficult and expensive to get credit.
Most non-priority debts are regulated by the Consumer Credit Act. Where this applies the creditor must send you a valid ‘default notice’ and ‘letter of claim’ before applying for a CCJ. If you agree a repayment plan with the creditor and make payments, you can avoid court action. If the creditor wants to take court action at a later date, they will need to send a new ‘letter of claim’.
If a creditor takes court action against you, a ‘claim pack’ will be sent. You must:
Get help straight away from one of the organisations that offer free advice if you do not understand letters from the court.
There are two types of order that the County Court can make:
If you’ve admitted the claim previously and made an offer of payment, it’s likely that you will receive an Instalment Order. The amount you repay each month should be set using information you will have given about your income when you completed your admission form. If the court does not know your income or financial situation, you will probably receive a Forthwith Order to pay in full straight away.
If you cannot afford to pay the full debt or the instalments, you can ask for the decision to be looked at again. This is called a redetermination. Get help to do this from one of the advice organisations.
If you receive a CCJ and do not pay as ordered, the creditor can ask the court to enforce the court order by:
If you already have a CCJ, include this debt with other non-priority debts on your financial statement and work out the offer of repayment in the same way for each. More information on debt options.
If you need to change the amount you are paying to a CCJ, try negotiating directly with your creditor. If they agree you do not need to go back to court. If this doesn’t work you will need to apply to the court for a redetermination by completing court form N245 to try and change the court order.