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Your legal rights: Loan and Credit Card problems

 

The vast majority of loans you have that are not on a hire purchase agreement and are not secured are referred to as “regulated credit agreements.” In the event that you have several debts, loans are considered to be “non priority” debts. That is because an arrangement can be readily made through the court to pay back those loans at a rate that is affordable to you. As long as you continue to pay the amount you have agreed to and your payments are on time, then the creditor cannot employ such harsh methods as bailiffs to take your belongings away. In the event that you receive a “default notice” from one of your creditors, make sure you get expert advice – it may entail going to court eventually, which is something you want to avoid.

Time Order

 

A time order is a court order that a debtor applies for in order to make changes to the terms and conditions of a credit repayment agreement with a particular lender. Time orders can be utilized as a means of reducing payment and the interest rates on a credit agreement. Time orders are usually temporary measures. If, for instance, you are likely going to be able to continue making full payments at some point in the near future or are in the process of setting up an IVA, then a time order may be the right move for you.

If you are interested in taking out a time order, we recommend you contacting us directly for advice. Alternately, fill out the form on the left of this page, and we will get in touch with you right away. The benefit of working with Betterway is that we can help make an offer that is affordable to you and conforms perfectly with your current financial situation. As we have an excellent working relationship with most of the lenders in the UK, we have experience in helping folks from all walks of life.

What the creditor can do to get their money

In the event that you do not apply for a time order – or the court refuses to grant you one – then the creditor can get its money through a “money only” claim in the county court.

In the event that the creditor is successful in getting their “money only” claim, you will have a CCJ (county court judgment) registered against you. CCJs go in to your credit file, and can have a detrimental effect on your credit rating, making it difficult to get credit cards and loans. Not only that, but it will increase the amount of money that is owed, because you will have to pay the creditor’s costs that have been awarded against you. You are required by law to pay what the court orders. If you happen to own your own home, then the debt could be secured against by means of a charging order.

There are, however, advantages to a CCJ – especially in those instances when you are unable to come to an agreement with your creditor as to when you will be able to pay the money back. In the vast majority of cases, it means that they will stop adding interest to what you owe. The court will then set out a repayment plan that you should be able to afford. As long as you keep up to the plan that has been ordered by the court, then the creditor is not allowed to use enforcement (such as bailiffs) against you.

The “Money Only” Claims Procedure

 

This procedure begins with the creditor asks the court to send you a “claim form.” You then have two choices – you either defend the claim or ask the county court to excuse you from paying any court costs. If you decide to the former, you should first seek out expert advice. In the case of the latter, it is ultimately up to the judge. The judge will take in to account how you are being treated by the creditor. He will also take in to consideration whether the proper procedure for attaining the money has been followed by the creditor.

Admitting the Claim

 

Should you choose to admit the claim, then you should have a payment plan in store, based on what you believe you can reasonably afford. If the offer is accepted by the creditor, the court will record this acceptance. You will then be expected to stick to it. If the creditor turns down your offer, however, then a court official will take in to consideration your offer and what the creditor is asking for, and then decide how much you have to pay. In the event that you do not agree with this decision – or the creditor does not agree – then either one of you has fourteen days to ask for the decision to be re-determined by a district judge. In the event that the court then decides to have a hearing, then the case shall be transferred to the nearest court. Both you and the creditor have a right to have your say before the court decides whether to change the payment plan that was set out in the original document.

If you don't respond to a claim
A claim will not just go away should you neglect to respond to it. The procedure will continue and the court with come up with a judgment as to how much they think you should pay. In the event that you do not make those payments, then the creditor is legally entitled to make use of a bailiff or other means to make sure you pay what they are owed.

There are events, however, wherein you may not be able to respond to a claim – you were away when it arrived, for example, or it was sent to the wrong address. In this event, you may be able to have the judgment “set aside.” In order to do this, however, you must show that you have a good chance of defending the claim. In the event that you wish to have a claim set aside, you should first seek out expert legal advice.

If you can no longer afford the payments
If you are in a position where you can no longer afford the payment plan, as it has been set out in the CCJ, then you can request that it be broken down in to smaller installments by the court. This process is known as “varying the judgment.”

When you won't have to pay
If you are in such a dire financial situation that you are unable to repay a debt, or you are having a genuine crisis – such as a serious illness – then the court may be able to suspend the judgment so that you will not have to pay for a delineated period of time.

Going to court

 

Once you have gotten a judgment, a creditor may ask for you to be questioned in court about your circumstances so that they can find out how to get the money they are owed. In court, you may be asked to answer questions about your income, what you spend your money on, and what you own. If you do not attend the hearing, then the court may issue a warrant for your arrest. If the creditor is provided with the information they want, however, then the court case may be canceled.

If you don't make the payments
In the event that you do not pay what has been ordered in a judgment, a creditor may do any of the following:

• Warrant of execution, wherein the creditor uses bailiffs
• Attachment of earnings, wherein the court arranges to take money directly from your wages
• Charging order, wherein the creditor may take away your home
• High Court enforcement

 

Warrant of execution
This is when the county court involves bailiffs.
Attachment of earnings
The court can make an order to take regular payments from your wages. They will send you a form in which they will ask you to give certain details so they can take the payments. If you don't co-operate with the court in this, you could be arrested, or sent to prison for up to 14 days.
If there is an attachment of earnings, the court will set a 'protected earnings rate' (PER). This is a level below which they can't make deductions. It is based on Income Support rates, and takes account of other earnings (like your partner's wages) and things you must pay for. The court will then set a normal deduction rate (NDR), which is normally between half and two-thirds of the difference between the PER and your wages or salary.
Charging order
This is when the creditor asks the court to secure the debt to your home. If you don't make payments, the creditor could sell your home to get the money you owe. The court will not normally allow your home to be sold, though you will need expert advice if the creditor asks the court to do this.
High Court enforcement
For some types of debt (for more than £600, and debt on unregulated agreements), your creditor could use High Court Sheriffs' Officers acting as bailiffs to collect what you owe. If you cannot come to an agreement on how much you should pay, you will need to get advice on:

• Applying to court to stop bailiff action; and
• Arranging a way to pay what you can afford.