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Struggling with debt? Ask a debt adviser a question

edited 24 July 2018 at 2:41PM in Debt-Free Wannabe
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  • First post but I need some help / advice on a debt issue with a family member. It's a long post and a tricky one as she isn't being transparent about the issue / her finances so apologies that i can't give absolute details but I'm trying to find out some generalities. Families, eh!

    It started ages ago when my BiL who has a decent job got himself 'into trouble' with a girl and ended up having to pay child support. As a result he got into debt. He came to me and asked me to be a guarantor for a loan with one of the 'can't get credit elsewhere' agencies and naturally I told him to get stretched - there's no way I was going to tie my rating to his!

    Instead, I took out a bank loan and gave him the money with him repaying me the repayments. May even have been against advice at the time - but there you are. It went well for a few months, with money coming in on the nail and then it started being a bit short and I'll pay you extra next month and ...... and then stopped. He still owes me £7.7K and I don't think I'll ever see it although his Mum (my MiL) has apparently made that provision in her will.

    But he then asked his Mum the same question and against my advice she agreed. You can imagine the rest - loan defaulted, and they are both jointly liable. But because he hasn't a bean and she has a house and a car and things, they are pursuing her for the money. Yes, I know that's what a guarantor's for. Loan is ca £4.5K

    Right, scene set - she came to me with the 'they won't pursue a 73 year old widow will they?' and I told her absolutely, they'll hound you. But she won't communicate with me properly about it, so I'm trying to help her without any facts or paperwork about what they're actually asking for. She (supposedly) went to the CAB and they gave advice on how to deal with them, but her offer to pay the loan company instalments was rejected because the son had already agreed that and defaulted on them - so according to her that is now off the table. So in the end it resulted in court papers. Which she (apparently) filled in and sent back to them. I say apparently because I haven't seen either of the CAB advice or the court papers because (facepalm) she didn't keep a copy. And now the court has issued judgement and a chance to pay promptly and have judgement set aside. I have seen this judgement (although she then took it off me again) and it says that it is issued against her +1 (which is obviously the son) but the order to pay and document is all then in her name and sent to her address, etc. She says she wrote to the court along with the papers explaining the situation and giving full contact details for him but again get this - no copy kept, and even better she sent it just via regular mail and the court says they received nothing. No Proof of Posting, certainly not signed for. Facepalm again - but I'm suspicious.

    Right - here's the issue.

    1/ Owing £4.5K to the loans people via the court. I know the loan company rejected that offer but is it too late to ask for a repayment schedule now or do the court still give that alternative?

    2/ If no alternative, what can the court allow to be done? eg: bailiffs, and if that happens what are her rights about access / what can and can't be taken. Example - car? She lives in a remote hamlet 120 miles from us so I can neither get there when the bailiffs come knocking nor can she really do without a car.

    3/ Do they have any financial rights to her house - in the grand scheme it's a small debt so forcing the sale of a house is probably impractical but could they. It's been equity released so she doesn't own it all anyway.

    4/ She claims to have no savings and lives off state and a widow's pension month to month. I don't know if this is true or not. She says she can get some more equity from the house to pay the debt but that then eats into her monthly money.

    5/ What would happen if she declares bankruptcy - from what i read I don't think it's an option while she clearly has property and assets?

    6/ Bottom line is that I could very easily get another loan and pay it off. Whether she pays it back slowly, or makes another will provision or what, I don't know. And while every sinew says 'once bitten' - as I said at the start it's family stuff and hence I can't just wash my hands of it.

    Like i said - it's sketchy on details, some bits don't stack up quite, hence not looking for judgement just practical advice on the technicalities.
  • StepChange_AllenStepChange_Allen Organisation Representatives - Private Messages may not be monitored
    274 posts
    Fourth Anniversary 100 Posts
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    izboo wrote: »
    Hi,

    Due to a combination of gambling addition and losing my job I am in a financial mess and have a couple of questions about setting up a DMP. In brief, my income (JSA) is less than my priority outgoings (mortgage, council tax etc), I have considerable credit card debt but do have some equity in my house. Up until now I was looking to get a new job and then re-mortgage to consolidate all debts. With this target in mind my family had been giving (gifting) me money to keep the mortgage up to date and up until last month I had also been up to date with credit card payments but have subsequently failed to make the minimum on two of them. Unfortunately my circumstances have now changed and with little likelihood of me getting and keeping a (well paid) job in the near future I have to reconsider my position. As of now I will not be able to afford the minimum payments to all the cc debt and my family will not be able to help me out with the mortgage indefinitely.

    My new plan is to prepare and market my house for sale which would (in theory) release enough money to pay all current debt (mortgage and credit cards) but it will probably be a couple of months before I am in a position to market the house and therefore a minimum of four months before any sale completes.

    Having used the online Stepway assessment tool it seems to me that all I can currently offer the unsecured creditors is a token payment.

    My question is what should I tell my creditors? I intend to set up a self regulated DMP and obviously will send them a copy of my income/expenditure statement to prove I cannot currently pay anything other than a token but:

    1) Should I let them that I am intending to sell the house in order to honour the full outstanding balances or should I simply say that I intend to resume normal payments when my circumstances improve?

    2) If I do tell them I am planning to sell the house will it make them less likely to suspend interest and other charges?

    Any thoughts on these two points would be most welcome.

    Izboo


    Hi Izboo

    Thanks for your post.

    I'm sorry to hear that things have been tough for you recently. If you're looking to offer token payments to your creditors until your property sells, you could let them know it's on the market, it's really up to you. I can't say whether they'll be more or less likely to freeze interest and charges, in fact it may make no difference at all. Different creditors may act slightly different hence it's difficult to predict.

    Your credit agreements will be broken once you're around three months in arrears, so if this happens before you can pay them off, it won't be possible to go back to paying the original repayments - at least not as a formal agreement. The fact your house is on the market (by the time they default) won't change this and so telling them this is unlikely to change anything.

    If you do let them know you're selling your house, it might lead to more frequent contact wanting updates on the sale (at least when the original agreement has been terminated), hence one could argue it's best not to say anything. No-one can guarantee for certain that the house will sell either, so you can't promise to pay them off in a certain timeframe.

    I hope everything works out for you. Please get in touch if we can assist you in any other way.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • StepChange_AllenStepChange_Allen Organisation Representatives - Private Messages may not be monitored
    274 posts
    Fourth Anniversary 100 Posts
    ✭✭
    tojv wrote: »
    First post but I need some help / advice on a debt issue with a family member. It's a long post and a tricky one as she isn't being transparent about the issue / her finances so apologies that i can't give absolute details but I'm trying to find out some generalities. Families, eh!

    It started ages ago when my BiL who has a decent job got himself 'into trouble' with a girl and ended up having to pay child support. As a result he got into debt. He came to me and asked me to be a guarantor for a loan with one of the 'can't get credit elsewhere' agencies and naturally I told him to get stretched - there's no way I was going to tie my rating to his!

    Instead, I took out a bank loan and gave him the money with him repaying me the repayments. May even have been against advice at the time - but there you are. It went well for a few months, with money coming in on the nail and then it started being a bit short and I'll pay you extra next month and ...... and then stopped. He still owes me £7.7K and I don't think I'll ever see it although his Mum (my MiL) has apparently made that provision in her will.

    But he then asked his Mum the same question and against my advice she agreed. You can imagine the rest - loan defaulted, and they are both jointly liable. But because he hasn't a bean and she has a house and a car and things, they are pursuing her for the money. Yes, I know that's what a guarantor's for. Loan is ca £4.5K

    Right, scene set - she came to me with the 'they won't pursue a 73 year old widow will they?' and I told her absolutely, they'll hound you. But she won't communicate with me properly about it, so I'm trying to help her without any facts or paperwork about what they're actually asking for. She (supposedly) went to the CAB and they gave advice on how to deal with them, but her offer to pay the loan company instalments was rejected because the son had already agreed that and defaulted on them - so according to her that is now off the table. So in the end it resulted in court papers. Which she (apparently) filled in and sent back to them. I say apparently because I haven't seen either of the CAB advice or the court papers because (facepalm) she didn't keep a copy. And now the court has issued judgement and a chance to pay promptly and have judgement set aside. I have seen this judgement (although she then took it off me again) and it says that it is issued against her +1 (which is obviously the son) but the order to pay and document is all then in her name and sent to her address, etc. She says she wrote to the court along with the papers explaining the situation and giving full contact details for him but again get this - no copy kept, and even better she sent it just via regular mail and the court says they received nothing. No Proof of Posting, certainly not signed for. Facepalm again - but I'm suspicious.

    Right - here's the issue.

    1/ Owing £4.5K to the loans people via the court. I know the loan company rejected that offer but is it too late to ask for a repayment schedule now or do the court still give that alternative?

    2/ If no alternative, what can the court allow to be done? eg: bailiffs, and if that happens what are her rights about access / what can and can't be taken. Example - car? She lives in a remote hamlet 120 miles from us so I can neither get there when the bailiffs come knocking nor can she really do without a car.

    3/ Do they have any financial rights to her house - in the grand scheme it's a small debt so forcing the sale of a house is probably impractical but could they. It's been equity released so she doesn't own it all anyway.

    4/ She claims to have no savings and lives off state and a widow's pension month to month. I don't know if this is true or not. She says she can get some more equity from the house to pay the debt but that then eats into her monthly money.

    5/ What would happen if she declares bankruptcy - from what i read I don't think it's an option while she clearly has property and assets?

    6/ Bottom line is that I could very easily get another loan and pay it off. Whether she pays it back slowly, or makes another will provision or what, I don't know. And while every sinew says 'once bitten' - as I said at the start it's family stuff and hence I can't just wash my hands of it.

    Like i said - it's sketchy on details, some bits don't stack up quite, hence not looking for judgement just practical advice on the technicalities.

    Hello

    Welcome to the forum and thanks for posting.

    I appreciate all the information you’ve given and I’ll try and simplify the answers as much as possible, and also refer you to certain pages on our website for further in depth information.

    A key point to make is that with a guarantor debt like this, it’s now as if your mother-in-law borrowed the debt, so any action taken can be the same as that scenario.

    To answer your points in order:

    1. When a creditor is going for a county court judgment (CCJ) a claim pack is sent out to the debtor (person liable for the debt) and includes a form (N9a) to show a copy of your budget and make an affordable offer of payment. I’m not sure whether this was filled in or not, and what judgment was made. A court will either set an instalment order (x amount/month due by x date) or judgment forthwith which means the full balance is due by a certain date).

    If whatever has been set is not affordable, your mother-in-law would need to fill in an N245 form to try and vary the judgment, meaning to set an affordable instalment up. If she doesn’t, and the original order is broken, this is when the creditor can use further enforcement options like using enforcement agents (previously called bailiffs). The creditor could already put a charging order on her property, but this is extremely unlikely to result in an order for sale application.

    There’s more details on dealing with CCJs on this article on our website, including a copy of an N245 form.

    2. The article highlighted above talks about possible enforcement action. It is quite possible that a vehicle could end up being taken if an enforcement agent visits. However, getting an affordable judgment in place using the N245 form would prevent enforcement agents being instructed assuming the payments are stuck to.

    There’s more information on dealing with enforcement agents (bailiffs) here.

    3. As mentioned, a charging order is a possibility, but for this type of debt, the fact the house is partly owned by someone else, and her age means it’s highly unlikely to result in an order for sale.

    4. When she completes a budget, or the N245 form in this case, she must fill it in truthfully and accurately, so that will be up to her to do.

    5. I can’t advise on whether she should go bankrupt. However it could mean she loses her home, and if there’s more equity in it than the debt, it’s unlikely to be necessary or the right thing to do.

    6. That’s completely up to you – I can’t say whether you should do that or not.

    I hope this information is helpful. When you click on any of the links I’ve added on here for you, you’ll see a search function on our website. Should you need more information on anything mentioned there are more specific pages on there, simply type in ‘CCJs’, ‘bailiffs’ etc.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • Thanks Allen. In answer to your points (as i understand them to be)

    1. When a creditor is going for a county court judgment (CCJ) a claim pack is sent out to the debtor (person liable for the debt) and includes a form (N9a) to show a copy of your budget and make an affordable offer of payment. I’m not sure whether this was filled in or not, and what judgment was made. A court will either set an instalment order (x amount/month due by x date) or judgment forthwith which means the full balance is due by a certain date).

    she says that she took this to the CAB who helped her to fill them out and sent them back, but this is the tricky bit, she didn't keep copies (would the CAB routinely?) and didn't send them back registered / recorded. And the court says they didn't receive anything hence the judgement was forthwith

    2. If whatever has been set is not affordable, your mother-in-law would need to fill in an N245 form to try and vary the judgment, meaning to set an affordable instalment up. If she doesn’t, and the original order is broken, this is when the creditor can use further enforcement options like using enforcement agents (previously called bailiffs). The creditor could already put a charging order on her property, but this is extremely unlikely to result in an order for sale application.

    I don't think this is an option now because she didn't return the forms on time acc. to the court - the lost in the post matter above. Hence she doesn't meet criteria 1 in your 'as long as' requirements on the website.

    There might be an option to ask for a variation? But can you ask for a variation against a forthwith judgement?


    Option 2. Setting aside for £255

    again not sure if this is even an option; as per your point 1. on the link, she was aware of the CCJ but hadn't expected it to be in the form it was because she'd sent her forms back and expected to be offered a repayment schedule. Would 'lost in the post' be a suitable reason for a setting aside and rehearing when she has no proof she sent forms back (if I'm honest I wouldn't allow it!) and even then it only increases the bill by £255

    Advice on the other points is very useful, thanks!
  • CISCIS Forumite
    11.8K posts
    Part of the Furniture 10,000 Posts
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    she says that she took this to the CAB who helped her to fill them out and sent them back, but this is the tricky bit, she didn't keep copies (would the CAB routinely?) and didn't send them back registered / recorded. And the court says they didn't receive anything hence the judgement was forthwith
    Worth pointing out to them that under the civil procedure rules, part 6, that service of documents can be effected by posting documents by first class post. (date of postage is the date of service).

    again not sure if this is even an option; as per your point 1. on the link, she was aware of the CCJ but hadn't expected it to be in the form it was because she'd sent her forms back and expected to be offered a repayment schedule. Would 'lost in the post' be a suitable reason for a setting aside and rehearing when she has no proof she sent forms back (if I'm honest I wouldn't allow it!) and even then it only increases the bill by £255
    A set-aside is an option under part 13 of the Civil Procedure Rules - effectively the judge decides whether or not the reason is appropriate so in some ways it's down to their individual discretion as to whether or not it's reasonable to do so.

    Craig
    I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.
  • I have read that bailiffs are not allowed to harass you for their own fee, which is all that I now apparently owe. I will contact and complain to the council but would like to know if this is true.
    thank you
  • CISCIS Forumite
    11.8K posts
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    lulublulub wrote: »
    I have read that bailiffs are not allowed to harass you for their own fee, which is all that I now apparently owe. I will contact and complain to the council but would like to know if this is true.
    thank you

    Who has confirmed to you that there's only the fee outstanding ?

    Craig
    I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.
  • edited 22 November 2016 at 9:15PM
    SystemSystem
    177.7K posts
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    edited 22 November 2016 at 9:15PM
    Hello

    I hope you can give me some advice.

    A debt linking to EE has surpassed at £319 since my contract account was suspended in January of this year, am making regular payment of £40 a week to help settle the debt for a brighter future ahead, to obtain credit from other lenders. I should be debt free by December - I am currently on £159!! :)

    The debt has been passed forward to debt collection agencies and then back to my mobile phone provider, EE again. What's going to happen on my credit report, will this shown up as XX amount of missed payments after many promises of wanting to make payment previously when it was with the debt collection agency and therefore be defaulted from the date the debt had been settled for six years?
  • Hi

    Thanks for your post.

    I’m not too sure if CAB do keep copies of any forms they post on someone else’s behalf, the best thing to do is get in touch and ask them directly.

    Our website explains the two different ways a CCJ can be varied. This first way is called redetermination. This option isn’t available to your mother-in-law because the court didn’t receive the initial claim form in time and because the judgement was forthwith.

    However, your mother-in-law can still use the N245 to vary the judgement. The N245 form can be used even if the judgement was forthwith.

    If your mother-in-law agrees she owes the debt and because she doesn't have proof she returned the claim form I don't think applying to set the judgement aside would be the best option. It's unlikely the court would feel that the paperwork getting lost in the post would be an acceptable reason on its own, even though this was out of your mother-in-law’s control.

    Setting a judgement aside is usually used if you plan to defend a claim or if the debt was paid in full before the creditor entered the judgment.

    If your mother-in-law agrees she owes the debt but can't afford to repay it in one go, the better and cheaper option is to use the N245 form to set up a new and affordable payment arrangement.

    If you or your mother-in-law needs help filling in the N245 form or working out what is an affordable amount to offer each month then please get in touch, here are our contact details.

    Hope this helps,

    Linsi
    tojv wrote: »
    Thanks Allen. In answer to your points (as i understand them to be)

    1. When a creditor is going for a county court judgment (CCJ) a claim pack is sent out to the debtor (person liable for the debt) and includes a form (N9a) to show a copy of your budget and make an affordable offer of payment. I’m not sure whether this was filled in or not, and what judgment was made. A court will either set an instalment order (x amount/month due by x date) or judgment forthwith which means the full balance is due by a certain date).

    she says that she took this to the CAB who helped her to fill them out and sent them back, but this is the tricky bit, she didn't keep copies (would the CAB routinely?) and didn't send them back registered / recorded. And the court says they didn't receive anything hence the judgement was forthwith

    2. If whatever has been set is not affordable, your mother-in-law would need to fill in an N245 form to try and vary the judgment, meaning to set an affordable instalment up. If she doesn’t, and the original order is broken, this is when the creditor can use further enforcement options like using enforcement agents (previously called bailiffs). The creditor could already put a charging order on her property, but this is extremely unlikely to result in an order for sale application.

    I don't think this is an option now because she didn't return the forms on time acc. to the court - the lost in the post matter above. Hence she doesn't meet criteria 1 in your 'as long as' requirements on the website.

    There might be an option to ask for a variation? But can you ask for a variation against a forthwith judgement?

    Option 2. Setting aside for £255

    again not sure if this is even an option; as per your point 1. on the link, she was aware of the CCJ but hadn't expected it to be in the form it was because she'd sent her forms back and expected to be offered a repayment schedule. Would 'lost in the post' be a suitable reason for a setting aside and rehearing when she has no proof she sent forms back (if I'm honest I wouldn't allow it!) and even then it only increases the bill by £255

    Advice on the other points is very useful, thanks!
  • StepChange_RachaelStepChange_Rachael Organisation Representatives - Private Messages may not be monitored
    375 posts
    Third Anniversary 100 Posts
    ✭✭
    Hi

    Thanks for your post.

    Credit files can be a tricky as it’s up to the creditors to update them and many different things can affect them. What will normally happen with a debt once the contractual payment has been missed is that the creditor at some stage will issue you with a default notice.

    This will show on your credit file where it will remain for 6 years before being removed, whether the debt is paid or not.

    The default while it’s on their will having some negative impact on your credit file. Only one default can be issued per debt.

    As you’re making regular payments to pay the debt back this will be positive on your credit file as the creditor will update your file to show this is the case.


    Once the debt is paid in full the debt will show as full and finally paid on your credit file. This again is likely to have a positive impact on your credit file.

    The debt will come off your file completely 6 years after the last note has been placed from the creditor. So the default is likely to come off your credit file before the debt it settled.

    Here is a link to ways in which you can improve your credit score and how your credit score can be impacted. There are many things that can positively or negatively affect your credit file other than defaults and missed payments.

    You can also check your credit score to keep an eye on it's progress. You can use Noddle to check your credit file for free.

    Thanks
    Rachael


    Hello

    I hope you can give me some advice.

    A debt linking to EE has surpassed at £319 since my contract account was suspended in January of this year, am making regular payment of £40 a week to help settle the debt for a brighter future ahead, to obtain credit from other lenders. I should be debt free by December - I am currently on £159!! :)

    The debt has been passed forward to debt collection agencies and then back to my mobile phone provider, EE again. What's going to happen on my credit report, will this shown up as XX amount of missed payments after many promises of wanting to make payment previously when it was with the debt collection agency and therefore be defaulted from the date the debt had been settled for six years?
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
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