What can creditors do if I don't pay?

Creditors of priority debts have different powers of recovery depending on the debt. Many will need a court hearing before taking action. It is very important that you speak to a debt adviser if you have any priority debts.

Once you miss a payment to a debt, the creditor should contact you and tell you that you are in arrears. If you cannot make an arrangement to clear the arrears they may pass the debt to a debt collection agency or apply for a County Court Judgement.

Debt Collection Agencies (DCA)

A DCA has no more power than the original creditor. They are not bailiffs and cannot come into your home or take anything from you. A DCA works on behalf of the original creditor. If you feel they are acting inappropriately you should complain to the DCA and the creditor.

If a DCA contacts you, you should deal with them in the same way as the original creditor. Send them a copy of your completed budget sheet along with a letter explaining the situation and making an offer of payment (if you can afford one). If possible you should communicate with them in writing only and keep a record of all correspondence.

County Court Judgements (CCJ)

If reasonable steps have been taken to collect a debt, creditors can apply for a County Court Judgement (CCJ). From the 1st October 2017 creditors must follow The Pre-Action Protocol for Debt Claims before taking court action. If you get a CCJ, the court will assess your situation and tell you how much you have to pay. 

A CCJ is a paper based process. You will not normally have to attend a hearing. You will need to complete the paperwork that is sent to you, and provide information as required. 

You will receive a claim form through the post from the court. You have 14 days to respond to this form. Seek debt advice if you need assistance. When you respond your options include:

• Admit that you owe the debt and make a repayment offer based on your income and expenditure. This offer should take into account any other debts you have.
• Dispute that you owe all or part of the debt. If you want to challenge a debt you will need legal advice because an unsuccessful dispute can lead to an increased debt.
• Ask for an additional 14 days to respond while you gather evidence or seek advice about disputing the debt. 

If you do not respond to the claim form in 14 days you will receive a ‘judgement in default’. This means the court decides how much you should pay. This could mean all of the debt, plus costs, are due immediately. 

If you do not reply to the claim form or you do not pay what the court has ordered, you will default on the CCJ. This allows the creditor to use enforcement options. 

The enforcement options available to creditors if you default on a CCJ are the following:

Order to Obtain Information

If a creditor wants more information about your financial situation they can apply for an Order to Obtain Information. This means you will have to attend court and provide any information that has been requested.

Attachment of Earnings

If you are working and have defaulted on a CCJ, the creditor can apply for an Attachment of Earning. This allows money to be taken directly from your wages at a rate set by the court.

Third party Debt Order

If you are owed money by a third party and you default on a CCJ, the creditor can apply for a third party debt order. This orders the third party to pay the money directly to the creditor.

Warrant of Control

If you have defaulted on your CCJ, the creditor can apply for a warrant of control  This allows bailiffs to come to your home and attempt to seize goods. There are rules that set out what actions a bailiff is allowed to take. If you are threatened with, or are contacted by bailiffs, you should contact a debt adviser immediately.

Charging Orders

If you own your property and you have received a CCJ the creditor can apply for a Charging Order. This will secure the debt against your home, or other valuable assets you own. A Charging Order is different to the other enforcement options because the creditor can apply for one even if you are up to date with the payments ordered by the court. 

If you are threatened with any court enforcement, it is important that you seek immediate debt advice. There are usually steps you can take to deal with the situation, but you need to act as quickly as possible.

If you cannot afford to pay the amount the court has set, you can apply to ‘vary’ the CCJ. A variation of a judgment will get the court to look at your circumstances again and set a new order if appropriate.