This month's advice from the Debt Doctor

02/10/2008

A great many people are now facing problems arising from debt. How can you best stop a problem becoming a crisis? Financial journalist Russell Cavanagh is our “Debt Doctor” - here to answer your queries.

 

 

Q: For the last decade I have made minimum payments on credit cards. 

Can creditors continue to chase such old debts?

 

A: National Debtline and other debt advice providers say someone in this position is probably still liable to pay. Had there been a clear period of six years where no payment was made by anyone who signed the original agreements, no written acknowledgment made by our reader and no money judgment (“CCJ”) entered, the debt would not have been legally recoverable through the county court (under s5 of the Limitation Act 1980). However, getting an advice agency like Community Legal Advice (CLA) to intervene would mean that Limitation Act issues could be checked safely and reliable advice given.

 

Although it seems our reader is liable for her debts, she would be wise to seek advice on how best to deal with them if she cannot maintain payments. CLA should provide support that may include:  negotiating reduced repayments and stopping interest, applying for bankruptcy, checking other liability issues and any number of legal remedies that may apply to her specific situation. CLA also provides a casework service for dealing direct with creditors.

 

The Limitation Act 1980 applies to England & Wales and sets out time limits for claiming money or compensation owed and details specific conditions for each type of debt. Rules in Scotland will differ but CLA can advise wherever readers live in the UK.

 

 

 

Q: I received a county court judgment (“CCJ”) for an old Barclays loan of £6,000. I know I owe the money but this is the first I have heard about any legal action and I can’t pay the money as ordered by the court.

 

A: Citizens Advice and the Child Poverty Action Group’s “Debt Advice Handbook” (7th edition) make it clear that there are several ways of dealing with this. Various applications to the court issuing the judgment can be made and they include asking for the judgment to be set-aside or requesting it be varied to affordable monthly repayments.

 

An application for set-aside would be made on a standard court form – a N244 – but there may have to be grounds to show the judgment shouldn’t have been entered and that the application was made as soon as reasonably possible. Unfortunately, as the debt is admitted and payment requests were ignored, it may be that the claim would be reissued even if court set aside the existing CCJ.

 

The application to vary the CCJ to affordable monthly instalments is done using a N245 form. It contains a financial statement section in which to detail the household budget and indicate how much is reasonable to offer.

 

Advice should be sought either from CLA or through Citizens Advice - see the contact details below - as great care is advisable in dealing with a CCJ. Court applications cost £35 but there are exemptions and remissions available depending on income. Unsuccessful applications can increase the size of the debt.

 

If a CCJ is left unattended, the creditor may enforce it using a bailiff warrant, Attachment of Earnings Order, an application to court for a legal Charge on a debtor’s property and in other ways. It is also very difficult to defend bankruptcy proceedings if a debt is over £750 and a CCJ is in place.

 

 

This article is based on journalistic research. It does not constitute financial advice. All information should be considered in regard to specific circumstances. Tips are followed at your own risk and should be followed up with independent advice tailored to your own situation.

 

You can ask Russell's advice through Mature Times (in confidence) by

emailing: tony.watts@maturetimes.co.uk.

 

 

Sources of information and advice:

 

• Community Legal Advice provides telephone advice and casework help on legal matters including benefits, housing and debt. Call 0845 345 4 345.
• Look under “Citizens Advice Bureau” in the phone directory for your  nearest CAB for advice on benefits, housing and debt. Or go to  www.citizensadvice.org.uk
• The Consumer Credit Counselling Service – 0800 138 1111 - deals with low priority debts
• Avoid paying for debt advice if you can!