If you receive a letter demanding settlement of a debt, then you need to respond to it right away. Your reply should:
- set out your financial situation in detail;
- contain a request that your creditor freeze interest;
- contain an offfer to pay weekly or monthly instalments, however small;
- mention any changes that are going to happen that will affect your ability to pay;
- contain an initial payment on account - and those payments should be kept up week by week or month by month until the creditor either accepts or refuses your offer.
If you have ignored letters of demand, and receive a Claim or a Writ, you MUST answer it.
There is no charge for doing this. You'll receive an Admission Form with the Claim Form asking you about your income and outgoings. You can make an offer on the form to repay the debt (or a lower amount if you think that you owe less than the creditor is claiming). Obviously, if you have not previously made an offer in writing, and explained your circumstances fully, now is the time to do it, because if you don't make an offer and the Court decides against you, it may decide that you must either pay the full amount immediately, or set monthly payments that are more than you can afford.
You have sixteen days from the date of the postmark to send the form back to the Court. If you need help to complete the forms, staff at your local County Court will be able to answer your questions. Make sure to keep a copy of the completed forms for yourself.
If you ignore a Claim, or miss the deadline, the Claimant can request Judgment against you without the Court ever hearing your side of the story. This is known as Judgment by Default, and can result in the Court issuing an order demanding that you pay the money in full, plus costs, immediately. Your credit rating may also be affected.
IMPORTANT! If you fail to respond to a Court Order demanding settlement, or fail to keep up with the payments under such an Order, your creditor may apply for Warrant of Execution entitling a Sheriff or Bailiff to seize and sell your possession to satisfy all or part of the debt. If you genuinely cannot pay, even by instalments, you can ask the Court to reduce the amount of the payments or suspend the Order. Moreover, if you have Judgments from more than one creditor, the Court can combine your debts and make an Administration Order saying that you must make a single payment every month to be shared by all of your creditors.
Sometimes, even if you DO respond appropriately to initial letters demanding payment, your creditor or its agents may well still refuse your offer and issue a Claim or a Writ in any event in an effort to secure the debt -although this is happening less often now that Court fees have risen so dramatically. In the event that it does happen, however, your letter will evidence your current financial situation and your willingness to pay what you can, and the Court is unlikely to ignore your letter or award larger instalments to the creditor.
Obviously ALL dunning letters need to be answered promptly, but it's particularly important to deal with 'priority debt' letters. Priority debts are:
- mortgage or rent
- fuel and utilities
- council tax
- income tax
- maintenance to ex-partners or children
- Court fines (e.g. Magistrates fines for traffic offences)
- TV licence
If any one or more of your priority creditors is threatening to start, or has started, to take Court action against you, then you should send them a 'holding letter' explaining your situation, telling them that you will contact them again in two or three weeks time, and asking them not to take any further action in the meantime. That will give you time to seek advice and help - and it's particularly important to do that if you can't afford to pay anything, and your situation is unlikely to improve.
Do NOT pay for outside help to deal with your priority or other creditors!
First port of call should be your local Citizens Advice Bureau, who will help you to write to and negotiate with your priority creditors. You can then also look to get help from Turn2Us where you can get advice, find out how to get benefits or grants to help pay your bills or buy essential items, and discover resources that you may not know about or have thought of.
Geoffrey - http://www.metlissbarfield.com/
