Debt
What if my creditors take court action?
Many people are frightened of going to Court but often the Court is there to help you. Even if Court action is taken against you, the need to appear in Court is rare, as most Court work is done through post. Also the judge is not there to pass judgement but to negotiate between you and your creditors to come to some arrangement to pay your debt to an amount you can afford.
If your creditor decides to take you to court the first thing you will receive is a Court Claim Form for a County Court Judgement. Usually you are only concerned with the part that says ‘admission’. You fill in this part if you owe the money claimed. This simply asks what money you have coming in and what you are spending on essentials.
It is important to reply to the Claim as soon as possible – you have 14 days from the date of service (this is two days after posting) to return the form.
If you do not owe the money or disagree with how much they say you owe, seek further advice i.e. from a Citizens Advice Bureau. You also need to complete details about your other debts and any other County Court Judgements you may have.
Fill in the form, make your offer of payment – what you can afford to pay each month – not what you think the creditor wants you to pay and send it back to the claimant or their legal representative. If you do not reply the court will set a figure or ask you to repay the debt in full immediately.
If the creditor accepts the offer you will receive an order from the Court to pay each month. If you make payments as ordered nothing else will happen. If you do not, further action can be taken.
If the creditor does not agree with your offer they must let the Court decide what it to happen.
Reducing payments on Court Orders
If you have already been ordered to pay a certain amount but your circumstances change and you can no longer make payments, you can apply to the Court to reduce payments (form N245 from your local County Court).
You will have to pay a fee to do this unless you are on Income Support or claim on special hardship grounds.
Advantages of being taken to Court
- Interest will stop being added to the debt on most credit arrangements.
- The Court will let you pay an amount you can afford.
- Your actual attendance is not always necessary.
- The Court offers you some protection from your creditors as long as you keep to the Court Order.
- You may be able to take out an Administration Order (see below).
Disadvantages of being taken to Court
- Court costs will be added to the debt.
- Your ‘blacklist’ details are passed to credit reference agencies.
- If you do not pay the amount ordered the creditor will take further action against you
Administration Order
This is an Order made in the County Court, which puts all your debts together. Your total debt must not exceed £5,000.
You make one payment each month to the Court. The Court will take 10% of any payments you make as court fees.
To apply you must have one or more County Court or High Court Judgements against you.
Your creditors can take no further action against you once the Administration Order has been granted.
To apply you need form N92 from a County Court.