National Debtline - Amazon Web Servicesfs-fileshare-eu.s3.amazonaws.com/corby/imported/AdviceAndBenefit… · FACTSHEETS AND USEFUL CONTACTS National Debtline factsheets 57 Useful

ENGLAND AND WALES

dealing with your debts

for free, confidential,independent advice,

freephone 0808 808 4000

National Debtlineemail advice via website: www.nationaldebtline.co.uk

HOW TO USE THIS PACK

What this pack covers 4Six steps to working out a personal budget 4

STEP 1: Your income

STEP 2: Your outgoings

STEP 3: Money left for your debts

STEP 4: Your priority debts

STEP 5: What’s left after paying for priority debts?

STEP 6: Credit debts

How National Debtline can help 4Golden rules 6

INCREASING YOUR INCOME

Tax 7Minimum wage 7Benefits & tax credits 7

Income based job seeker’s allowance 7Income support 7Pension credit 7Working tax credit 7Child tax credit 7Housing benefit 8Council tax benefit 8Other benefits 8

Other income 8

WORKING OUT A PERSONAL BUDGET

STEP 1: Money coming in 9STEP 2: Money going out 9STEP 3: Money left over 9Why should you do a personal budget? 9How to fill in your personal budget 10Notes to help you complete STEPS 1, 2 and 3 10Are your outgoings more than your income? 12

DEALING WITH PRIORITY DEBTS

STEP 4: Which debts to pay first – your ‘priority’ debts 13

STEP 5: How much money is left over 13What are priority debts? 15

Mortgage and rent arrears 16Council tax 16Community charge arrears 18Gas and electricity arrears 18Water rates 20Magistrates’ court fines 21Parking penalty charges 22Maintenance 22Social Fund loans 22Benefit overpayments 23Hire purchase or conditional sale 23

CREDIT DEBTS

STEP 6: How to deal with credit debts 24What are credit debts? 24How to work out offers of payment 24Sample letters 26-27What if a creditor has already taken me to county court? 28What if I have no money left to pay my creditors? 28Check the name on the agreement 28Interest 28Copies of credit agreements 28Data protection 29Debts with your bank: overdrafts,loans and credit cards 29Charge cards 29Personal debts to friends and family 29Catalogue debts 30Making payments: ways to pay 30Reviewing your offers of payment 30What if a creditor refuses my offer? 30What can I do if creditors harass me? 31Collection agencies 31What if my creditors take court action? 31Bankruptcy – a quick word 33Individual voluntary arrangements 34Can I get credit again? 34Opening a bank account 34

PULL-OUT DRAFT PERSONAL BUDGET SHEET

See centre pages

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CONTENTS

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MORTGAGE ARREARS

Getting behind with mortgage payments 35Contact your lender if you have problems 36FSA rules and the mortgage code 36Help towards paying your mortgage 36

Tax relief 36Increasing your income 36Mortgage payment protection insurance 36Mortgage rescue schemes 36Help from income support, pension

credit and job seeker’s allowance 36Arranging to clear the arrears 38Other arrangements you could consider 38

Adding the arrears to your mortgage 38Changing to a repayment mortgage 38Increasing the mortgage term 38Paying off the interest only 38What else can I do? 38

What if I can’t afford my mortgage? 39What if my home is not worth enough to repay the mortgage? 39Mortgage shortfalls 39What should I do if I have amortgage shortfall? 40Second mortgages or secured loans 40What is a “time order”? 40Secured overdrafts 40What if my mortgage lender takes me to court? 41How to stop an eviction 42

RENT ARREARS

There are two rent sections. Read the introduction to this

section to find out which one applies to you. 44

RENT ARREARS 1

Introduction 45Housing benefit (rent rebate) 45How can I pay off my rent arrears? 45Is your landlord refusing to agree to your offer? 46What if my landlord takes court action? 46

Before court action 46Court action – the claim 46Filling in the defence form 47The hearing 47When you go to court 47Orders the district judge might make 47What you should ask for 48

Eviction – what can I do? 48

RENT ARREARS 2

Introduction 49What type of tenancy do I have? 50

Assured shorthold tenancies 50Assured tenancies 50

Housing benefit (rent rebate) 50What if my landlord increases my rent? 51How can I pay off my rent arrears? 51Is your landlord refusing to agree to your offer? 52What if my landlord takes court action? 52

Before court action 52If you have two months/eight weeks arrears 52Court action – the possession claim 53Filling in the defence form 53The hearing 53When you go to court 54Orders the district judge might make 54What you should ask for 54

Eviction – what can I do? 54

BAILIFFS AND RENT ARREARS

56

GETTING REHOUSED

56

FACTSHEETS AND USEFUL CONTACTS

National Debtline factsheets 57Useful addresses and phone numbers 57

ABOUT NATIONAL DEBTLINE

National Debtline and the Money Advice Trust 59Our partners 59Funding 59National Debtline – our aims and services 59

An introduction to the ‘Dealing With Your Debts’ pack, NationalDebtline, and how we can help you manage your debts.

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WHAT THIS PACK COVERS

Lots of people are in debt these days for all sorts of reasons.This pack gives you good advice on tackling your debts.It shows you:

l How to work out your personal budget.You can use this toexplain your money problems to the people you owe moneyto (i.e. your creditors).They all want to be paid, but theydon’t stop to realise that you may not be able to pay themall at once. Seeing the personal budget may stop them allchasing you for money at the same time.

l How to decide which debts to deal with first – yourpriority debts.

l How to make offers you can afford to repay your creditors.

l What action creditors can take.

l How to cope with court procedures.

If you’d like to discuss anything in more detail, please contact us.

SIX STEPS TO WORKING OUT A PERSONAL BUDGET

Using this pack will help you take six important steps to dealwith your debts. They will help you work out a personalbudget taking into account all your debts and your particularcircumstances.

Each step is explained in a different section of this pack. Don’tworry if it seems a bit daunting at first. Take it one step at atime and contact us if you have any queries.

STEP 1:Your incomeWork out all the money you have coming in, so you know justhow much you have to spend in total. See page 10.

STEP 2:Your outgoingsWork out all your regular outgoings (other than your debts).See page 10.

STEP 3: Money left for your debtsWork our how much you have left to pay your debts, aftertaking into account your other outgoings. See page 12.

STEP 4:Your priority debtsWhich debts are the most important to pay off first?See page 13.

STEP 5: What’s left after paying for priority debts?Calculate how much you have left after paying off yourpriority debts. See page 14.

STEP 6: Credit debtsWork out how much you can afford to pay towards yourcredit debts. See page 24.

Don’t forget you can contact us for advice if you havequeries about any of these steps. Following all six steps andcreating your personal budget will take some time. But it willhelp you deal with your debts. So don’t give up and docontact us for help as often as you need to.

HOW NATIONAL DEBTLINE CAN HELP

National Debtline is the national telephone helpline for peoplewith debt problems.

National Debtline offers expert, professional advice via thetelephone and email, enabling you to deal with your debts inan informed and proactive way. It offers both self-helpsolutions and free debt management plans to people inmultiple debt.

National Debtline gives expert advice over the telephone andsends every caller this information pack free of charge.The service is free, confidential and independent.

Calls are welcome via the Typetalk service. It also usesLanguage Line, a telephone interpreting service available toNational Debtline staff around the clock. This means theyalways have access to professional telephone interpreters inany of 100 languages. If you do not speak English it takes just acouple of minutes to get an interpreter on the telephone whowill translate accurately what you and the adviser are sayingto each other.

National Debtline has a proven track record and has beenawarded the Community Legal Service Quality Mark and theTelephone Helplines Association Quality Standard.

National Debtline website

You may want to visit the National Debtline websitewww.nationaldebtline.co.uk where you can view or print offthe information packs and factsheets.You can also fill insample letters to send to creditors using our sample lettersuite and complete a personal budget sheet on line.

Confidentiality

To protect callers’ confidentiality National Debtline do notuse British Telecom’s “caller display” equipment.This meansthey cannot see your number displayed on a screen when youring.They also have a permanent block on the “caller return”service.This means that if they ring you back the NationalDebtline number will not be announced as the last number toring you to anyone dialling “1471”.This is in case you don’twant anyone to know they have contacted you.

WARNING Itemised phone bills

Your phone calls to National Debtline may be listed on anitemised phone bill.You need to bear this in mind if your callis in confidence and someone else may see your phone bill. Ifyou are calling National Debtline on a mobile phone somenetworks will not charge you for the call because you areringing a helpline.

Debt management plans

National Debtline can now help you set up a free debtpayment arrangement.This is called a debt management plan (DMP).

You may be able to make one payment every month to coverall your credit debt payments.This will be divided up and sentto your creditors for you.

National Debtline can work through a personal budget withyou and see if this way of paying your debts back would be agood idea in your circumstances.This will depend on howmuch you can afford to pay back each month and how manycreditors you have.

National Debtline may be able to help you set up a free DMP if:

l you have at least three credit debts

l your money for credit debts is £100 per month or more

l You owe at least £5,000.

If this applies to you, and you would like to know more aboutthe debt management plan, contact us for advice.

Other options

Sometimes there are other options that may be suitable fordealing with your debts.We can advise you on options such asBankruptcy (see page 33) and Individual voluntary arrangements(see page 34).We can give you the information to decide whatwould be most suitable in your situation. Contact us foradvice.

WARNING Your credit rating

Some organisations will tell you it is possible to make reducedpayments to your creditors without it affecting your creditrating. This is not usually the case. Most creditors will addto your credit reference file to show that you are behind withyour payments even if they agree to your offer. You need tobear this in mind for the future. See the section Can I getcredit again? on page 34.

WARNINGCompanies that charge for advice

You may come across companies who offer to sort out yourdebts on payment of a fee. Be very careful to look at what thecompany is promising to do for you before sending them anymoney. Some of these companies say they will get yourcreditors to write off part or all of your debts. Unless youhave special circumstances this is unlikely to happen.

l Ask the company if they have a consumer credit licence.

l Ask your local Trading Standards Department if they areaware of any problems in this area.The Office of FairTrading has issued guidelines on minimum standards fordebt management companies. Ask for details of theguidelines as you can make a complaint if these are not followed.

l Remember, professional advice on dealing with your debts isalways available free from agencies such as Citizens AdviceBureaux, money advice centres, or by ringing NationalDebtline. Remember, the money you pay in fees could bebetter spent paying off your debts.

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GOLDEN RULES

If you follow these golden rules, you won’t go far wrong.

l Don’t ignore the problem. It won’t go away and thelonger you leave it, the worse it gets.

l Don’t borrow money to pay off your debts withoutthinking carefully. Get advice first. If you are ahomeowner this kind of borrowing could lead to youlosing your home.

l If you have lost your job, or are off work because ofillness, check whether your payments are covered bypayment protection insurance. Check your creditagreement.

l Check you are claiming all the benefits and tax creditsyou can. See page 7.

l Use this pack to help work out your personal budget.Make sure you show it or send it to your creditorswhen you tell them about your difficulties.

l Get in touch with your creditors straight away and explain your difficulties. Go and see them, or phone orwrite to them.

l Make sure you tackle your priority debts first – forexample, debts which could mean losing your home orhaving your gas or electricity cut off. See page 13.

l Use this pack to help work out a reasonable offer torepay the money owed. Don’t worry if it appears verysmall if that is really all you can afford. Creditors preferyou to pay a small amount regularly than make an offeryou can’t afford.You can use the Sample letters on pages26 and 27.

l Contact everyone you owe money to. If you makearrangements to pay some creditors but not others, youcould run into difficulties again.

l If the first person you speak to is unhelpful, ask to speakto somebody more senior who may be able to agree towhat you want.

l Don’t give up trying to reach an agreement even ifcreditors are difficult.

l Fill in the reply forms to court papers and let the court have all the facts.This information will be used to decide if you owe the money and what instalmentsyou should pay.

l Always attend court hearings.Take a copy of yourpersonal budget with you. Don’t think that going to the county court makes you a criminal; it’s not that kindof court.They will not send you to prison and there isno jury.

l Always keep copies of any letters or court forms yousend or receive.

REMEMBERIf you needextra help

We are always here to helpwith letters and forms, andwe can explain what to doif you are asked to go to court.

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Lots of people are in debt because they don’t receive all the moneythey are entitled to.

Before you work out your personal budget (see page 9), use thissection to see if you can increase your income.

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TAX

The rules covering tax can be complicated and difficult tounderstand. Do contact us if you are unsure about yoursituation or have any queries.

Check with your local tax office to make sure that you have the right tax code. Some employees can claim tax relief onwork-related expenses.You can get a higher tax allowance ifyou are registered blind or were widowed before 2nd April 2000.

If you are over 65 you can also get a higher tax allowance dueto your age or because you are part of a married couple.

Some maintenance payments also qualify. Check with your tax office.

The married couples allowance for people under 65 and theadditional personal allowance for someone bringing up a childwere abolished in April 2000. Mortgage interest relief (MIRAS)has been abolished from April 2000.

Children’s tax credit was a tax allowance that meant you paidless tax on your wages if you had a child under 16.This stoppedat the end of March 2003.You can still claim children’s tax creditfor 2001/2002 as a claim can be made up to six years afterwards.Contact the Inland Revenue or contact us for advice.

REMEMBER Backdated tax allowances

You can still ask for tax allowances to be backdated for up tosix years, including MIRAS, even if your ongoing entitlementhas stopped. If you think this might apply to you check withyour tax office or contact us for advice.

MINIMUM WAGE

Check that you are being paid the national minimum wage.From October 2004 this is £4.85 an hour if you are aged 22 and over, £4.10 if you are aged 18-21 and a new rate of £3.00 an hour if you are aged 16-17. For information ring the government helpline on 0845 6000 678.

BENEFITS AND TAX CREDITS

There is a range of different types of benefits which you mightbe entitled to.This will depend on your particular circumstances.

Some benefits are based on the national insurancecontributions you have paid.These include contributory jobseeker’s allowance, incapacity benefit, pensions and maternitybenefits.

Other benefits are means tested.This means the amount of

help you get depends on how much money you already havecoming into your home.There are also limits on how muchsavings you are allowed to have and still claim.These benefits“top up” any income you already have.You do not need tohave paid national insurance contributions to claim them.

Income based job seeker’s allowance.This is for peopleworking less than 16 hours per week who are signing on forwork.

Income support.This is for people who do not have to signon for work (e.g. because they are sick, or caring for someone).You may be able to get help towards your housing costs if youhave a mortgage (see Mortgage arrears: help from income support,pension credit or job seeker’s allowance on page 36).

Pension credit.This replaces income support (minimumincome guarantee) from October 2003.You can claim if youare 60 or over.The amount you are entitled to depends onyour income.There is an extra payment, called “savingscredit”, if you or your partner are 65 or over.This rewardsyou for having moderate savings.The amount you get willdepend on how much money you have saved.

Working tax credit. If you are on a low income this can bepaid on top of your wages. It replaced working families taxcredit and disabled persons tax credit in April 2003.There areseveral ways in which you can qualify.

These include if:l you or your partner are employed or self-employed for

more than 16 hours a week and are bringing up one ormore children. If you qualify by this route the credit can alsohelp with childcare costs in certain circumstances

l you or your partner are employed or self-employed formore than 16 hours per week and have a disability thatcreates a disadvantage in getting a job

l you or your partner started work in the last three monthsand are:– over 25 and are employed or self-employed for 30 hours

or more per week, or – over 50 and employed or self-employed for 16 hours or

more, and in either case, have received income support,job seeker’s allowance or incapacity benefit within the lastsix months.

Working tax credit will usually be paid as part of your wagesand is administered by the Inland Revenue. For informationring the tax credit helpline on 0845 300 3900.

Child tax credit.A new child tax credit is available from 6April 2003.This is payable to people with responsibility forchildren (under 16 or under 19 if in full time education). It can

be paid to individuals in or out of work.The amount you willget depends on your income. For information ring the taxcredit helpline on 0845 300 3900.

Education Maintenance Allowance. If you have childrenaged 16 plus who are staying on at school or college, they mayqualify for up to £30 a week, depending upon your householdincome. For information ring the helpline on 080 810 16 2 19.

Housing benefit.You may be able to get help with your rent(see Rent arrears on page 44).

Council tax benefit.You may be able to get help towardsyour council tax bill (see Council tax on page 16).

Other benefits. Some benefits are not means tested, nor doyou have to have paid any national insurance contributions inorder to claim them.These include child benefit if you havedependant children.There are also benefits for people withdisabilities such as disability living allowance, attendanceallowance, and carers allowance for their carers.Whether youcan claim any of these benefits will depend upon the nature ofyour illness or disability and the effect it has on you.

EXTRA ADVICEBenefit queries?

Working out which benefits you can claim can be complicated.For more information on benefits contact your localDepartment for Work & Pensions office, a local advice centreor contact us for advice.

OTHER INCOME

l If you have grown-up children or other relatives living inyour home, make sure they are paying enough towards thehousehold expenses.

l If you have children from a former relationship you maywant to claim maintenance or see whether the maintenanceyou are getting can be increased.

l Is there a possibility of renting out a room in your home?Before you do this there are various things to consider.Youwill need to check to see how this will affect any benefitsyou are claiming. Also check your tax position.Ask your taxoffice about the “rent-a-room” scheme which allows rentalincome up to a certain limit to be tax free.You will usuallyalso need your landlord or mortgage lender’s permission todo this as your tenancy or mortgage agreement may notallow you to rent rooms out.

l Check whether your mortgage or any other loans are coveredby payment protection insurance.This may apply if you havebeen made redundant or are off work due to illness. If you areturned down by the company when you claim on your policycontact us for advice. Be careful, your insurance companywill usually pay the lender directly but from May 1998 ifpayments are made to you then this should not be treatedas part of your income when you claim benefits.

l If you are on income support or job seeker’s allowancethere may be work which you can do without it affectingyour benefit, such as fostering.

l You may be able to work as a childminder and still claimincome support. Some of your earnings are ignored and youare not held to be working full time.The rules are differentif you are on job seeker’s allowance. Check with theDepartment for Work & Pensions or contact us for advice.

l Check with your local council to see if you can have ahome improvement grant.There may be grants availabledepending upon your income and what repairs need doingin your home.

l If you are on income support, job seeker’s allowance orpension credit you may qualify for a grant, called a“community care grant” or a loan called a “budgeting loan”from the Social Fund. Payments are discretionary and thereare guidelines on the type of items allowed and who willqualify for help. Contact us for advice.

l The Social Fund also deals with maternity grants and funeralexpenses payments for people on qualifying benefits.Contact us for advice.

l Other ways of maximising income include local exchangetrading schemes (LETS), which allow individuals in acommunity to swap skills. For example, one member of thescheme may be a hairdresser and need a lock replaced onher front door.A local unemployed joiner may require ahaircut at the same time. It is worth checking if a LETSoperates in your area.

l If you have no income or there is an emergency or disaster,you can apply for a crisis loan from the Social Fund.You donot have to be on benefits to apply but you can only gethelp with certain items.You cannot get a crisis loan if yourjob seeker’s allowance has been suspended.You have toclaim a hardship payment from the job centre instead.Contact us for advice.

l There is a range of grants available for insulation, draft-proofing, central heating and energy advice.You may be ableto apply for a Home Energy Efficiency Scheme (HEES) grantdepending upon the benefits you receive and your age. InEngland the schemes include a warm front grant and, inWales, a HEES in Wales grant. For information on HEESgrants call these freephone numbers:

0800 316 6011 in England0800 316 2815 in WalesOr check the website www.eaga.co.uk

l If you are over 60 you will usually be entitled to an annuallump sum called the winter fuel payment. Ring the winterfuel helpline on 0845 915 1515.

EXTRA INFORMATIONDepartment for Work and Pensions (DWP)

The Benefits Agency has become the Department for Workand Pensions which includes The Job Centre Plus network,The Pension Service,The Disability and Carers Service andThe Child Support Agency.We sometimes refer to theDWP for short.Working tax credit and child tax credit aredealt with by the Inland Revenue.

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9


STEP 1: Working out your incomeSTEP 2: Working out your spendingSTEP 3: Working out the money left over

A personal budget is an essential tool to help you tackle debtproblems.This section will help you work out how much you havecoming in and what you are spending.

You can then see how much you have left over to pay off your debts.

You can start to record this information on the personal budget sheet(see page 11).

WHY SHOULD YOU DO A PERSONAL BUDGET?

Working out a personal budget is important because it helpsyou:

l see how much money is coming into your household

l see how much money is going out

l see how much money you have left

l work out affordable offers to creditors

l plan your future spending.

As you go through this pack you will gradually collect the factsyou need to fill the personal budget. There’s space for you tomake a rough copy of your details at the end of each step.

You can also use the pull-out guide to your personal budgetsheet in the middle of the pack.

You can then transfer this information to the proper personalbudget sheet which is enclosed with the pack.

If you have problems working out your personal budget orany other questions, contact us for advice.

REMEMBER Weekly or monthly?

Remember to fill in either weekly or monthly figures on yourbudget sheet – whichever suits you best. Don’t mix thetwo.To work out a weekly payment on a monthly basis,multiply the payment by 52 and divide by 12. Do not mix upweekly and monthly budget figures. Stick to one or the otherwhen filling in your budget sheet.

HOW TO FILL IN YOUR PERSONAL BUDGET

The first three steps are to work out your income andoutgoings, and to see if there is any money left to pay your creditors.

Use the notes in this section (see below) to help youcalculate your income and outgoings.

l STEP 1: Your total income is added up in BOX A on thepersonal budget.

l STEP 2: Your total outgoings are added in BOX B onthe personal budget.

l STEP 3: To find out how much money you can offeryour creditors, take away your total outgoings (BOX B)from your total income (BOX A). If your income is morethan your outgoings, you have an amount of money forcreditors (BOX C) on the personal budget.

When you have read through this section, make a rough copybelow of your figures.Transfer them to your personal budgetsheet later.

You will then have filled in STEPS 1, 2 and 3 of yourpersonal budget.

The next section shows you how to deal with priority debts(STEPS 4 and 5). Look at this section to see if you have anypriority debts. If you do not have any priority debts go toCredit debts on page 24 and complete STEP 6 of your personal budget.

EXAMPLE HOUSEHOLD

To show how the personal budget can be filled in we made up a household.

l Eva lives with her partner Pat and they rent their home.

l Eva works full time and Pat works part-time.

l Pat has been working part-time since being made redundantone month ago.As Pat’s wages have gone down, they havefallen behind with the rent, electricity and credit debts.

l The household includes Glenys, who has a part-time job,and Sandra who is aged 10. Glenys gives Pat and Eva £20“keep” (non-dependant’s contribution).

Our example household has used “calendar monthly” figureson their personal budget.To work out a calendar monthlyfigure, multiply your weekly figure by 52 then divide by 12.

NOTES TO HELP YOU COMPLETE STEPS 1, 2 AND 3

STEP 1: Money coming in (income)

Add up the income for you and your household. Include:

l Wages and salary after deductions (normal take-home pay).Only include overtime if it’s regular. Check with your localtax office that you have the right tax code.

l Benefits and tax credits including child benefit.

l Contributions from other people who live in your homesuch as grown-up children and elderly relatives (known asnon-dependants).Try to make sure that any non-dependantis paying enough towards the household expenses.

l If you are on a low income, you may be entitled to moneywhich you are not claiming, such as income support, pensioncredit, job seeker’s allowance, working tax credit, child taxcredit, housing benefit or council tax benefit.

l If you are sick or disabled you may be able to claim a rangeof disability benefits.

If you need advice on claiming benefits please contact us.

STEP 2: Money going out (outgoings)

Work out with your family how much money you have tospend each week on basic living expenses. At this stage don’tinclude any debts or arrears or any credit payments.

l Mortgage.You will usually pay it monthly – to get a weeklyfigure multiply by 12, and then divide by 52.

l Rent. Check whether you are entitled to any housingbenefit (rent rebate).

l Council tax. Check whether you are entitled to council taxbenefit. Council tax is normally paid in 10 monthlyinstalments, but some councils will accept weekly orfortnightly payments.

l Water rates. Most water companies will accept paymentsmonthly, weekly or fortnightly.

l Gas and electricity.Work out the cost of your last four bills.Divide by 52 if preparing a weekly budget, 12 if monthly. Gasand electricity cost less if you pay by monthly direct debitfrom a bank account. If your heating bills are very high, askabout the home energy efficiency scheme (HEES) (see page8). Some fuel companies help with cheap fridge freezersand/or light bulbs. Check with your supplier.

l Housekeeping.This should include food, toiletries, cleaningmaterials, newspapers etc. and a small amount forentertainment and miscellaneous expenditure. A roughguide would be:

Single person £35 – £45 per weekCouple £60 – £75 per weekEach child £20 – £35 per weekNon-dependant £20 – £35 per week

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YOUR HOUSEHOLDEXAMPLE HOUSEHOLD

When you have read through this section, make a rough copy below of your figures.Transfer them to yourpersonal budget sheet later.There’s an example on the left of the page.

STEP 1

STEP 2

Wages/salaryWages/salary (partner)Job seeker’s allowanceIncome support/pension creditTax creditRetirement/works pensionChild benefitIncapacity benefitMaintenanceNon-dependants contributionsOther

Total income BOX A £

MortgageMortgage endowment policySecond mortgageRentCouncil taxWater ratesGround rent/service chargeBuildings/contents insuranceLife insurance/pensionGasElectricityOther fuelHousekeepingTV rental/licenceMagistrates’ court finesMaintenance paymentsHire purchase vehicleTravelling expensesSchool meals/meals at workClothingLaundryTelephone/mobile phonePrescriptions/health costsChildmindingOther 1

23

Total outgoings BOX B £

STEP 3Total income BOX A

take awayTotal outgoings BOX B

Money for creditors BOX C £

Income*Weekly/Monthly

Outgoings*Weekly/Monthly

STEP 1

STEP 2

Wages/salary 1200.00Wages/salary (partner) 435.00Job seeker’s allowanceIncome support/pension creditTax credit 45.41Retirement/works pensionChild benefit 73.67Incapacity benefitMaintenanceNon-dependants contributions 86.67Other

Total income BOX A £ 1840.75

MortgageMortgage endowment policySecond mortgageRent 400.00Council tax 75.00Water rates 25.00Ground rent/service chargeBuildings/contents insurance 23.75Life insurance/pension 45.00Gas 55.00Electricity 40.00Other fuelHousekeeping 505.00TV rental/licence 36.00Magistrates’ court finesMaintenance paymentsHire purchase vehicle 240.00Travelling expenses 100.00School meals/meals at work 32.00Clothing 65.00Laundry 22.00Telephone/mobile phone 40.00Prescriptions/health costs 15.00ChildmindingOther 1 Emergencies/repairs 20.00

2 Birthdays/xmas 12.003

Total outgoings BOX B £ 1750.75

STEP 3Total income BOX A 1840.75

take awayTotal outgoings BOX B 1750.75

Money for creditors BOX C £ 90.00



l Sundries/emergencies.This should include irregularoutgoings like birthdays/Christmas, house repairs andmaintenance, and a “cushion” against emergencies. Eitherbuild it into the housekeeping figure or list it as a separateitem on your personal budget. Be prepared to explain asundries figure to creditors who may query a high amount.

l TV licence.Allow £2.44 per week colour (£10.55 a month);81p (£3.50 a month) black and white.This is a prioritypayment.This is because if you do not have a currentlicence you can be fined in the magistrates’ court for nothaving a licence.This can lead to bailiffs calling or evenimprisonment if you don’t pay the fine. See the section onMagistrates’ court fines on page 21.As well as having the fineto deal with you will still need a TV licence.There is a 50%reduction if you are registered blind.The licence is free ifyou are over 75.There are different ways of paying a TVlicence.

– At the post office or by TV licence stamps or at PayPointoutlets in shops.

– By direct debit either quarterly or monthly from yourbank account. Contact the TV licensing customerenquiries on 0800 917 1490.

– There is a payment scheme called “cash easy entry”which allows weekly or fortnightly payments if you are on: housing benefit, council tax benefit, incomesupport/income based job seeker’s allowance, working taxcredit or child tax credit. Contact the cash easy entryhelpline on 08457 289 289 to apply.The TV licensingwebsite is www.tvlicensing.co.uk

l Magistrates’ court fines.These are a priority and should beincluded in your essential outgoings. See page 21.They aredifferent from county court judgments, which should beincluded with credit debts.

l Maintenance. Include voluntary payments and any paymentsordered by the court or Child Support Agency. See page 22.

l Travelling expenses.These should include travelling to work,school and for shopping. If you are running a car includetax, insurance, repairs, MOT and servicing as well as petrol.

l Hire purchase cars. If you need a car for work or formobility reasons (and you have bought the car using a hirepurchase type arrangement) you will need to include thesepayments in your normal “outgoings” or you may lose thecar. See Hire purchase on page 23.

l School meals. Check to see if you are entitled to incomesupport or income based job seeker’s allowance. If so, youcan claim free school meals.You can also claim if you receivechild tax credit, work less than 16 hours a week, and yourincome is below a set amount.

l Free prescriptions, dental treatment and sight tests/glasses.The rules are different depending on whether you live inEngland or Wales. Contact your local advice agency,Department for Work & Pensions or contact the HealthCost Advice Line on 0845 850 1166. If you cannot claimfree prescriptions, you may be able to reduce the cost bybuying a prepayment certificate.

l Health costs. Make sure you include any extra costs youhave because of an illness or disability.This might be due toa special diet, extra clothing, bedding, special equipment,help in the home or extra costs as well as prescriptions.

l Clothing.As a rough guide, allow £3-£5 per person perweek. Don’t forget the costs of school uniform. Onlyinclude non-dependants if you pay for their clothing.

l Telephone. Only include your ongoing bill.You should askyour phone company if you can pay in instalments. BT has anew payment card you can use at the post office or PayPointoutlets to pay towards your next bill. If you have beendisconnected, treat the bill as a credit debt (see page 24).Ask about budget payments. If you agree a payment plan foryour bill BT will let you keep an incoming calls only service.

REMEMBER It’s your budget

Your household’s outgoings may differ from our guidelines.Youmay have extra expenses because of your particularcircumstances, such as a special diet, extra transport costs dueto a disability or living in a rural community, the cost of auniform for work, or regular payments you have to makebecause of your religion. It is your personal budget, so thefigures should be your own. Be careful! If you don’t takeinto account extra expenses (or if your figures are muchbelow our guidelines) then you may find it more difficult tostick to any long term repayment plan.This could lead youinto greater difficulties.

STEP 3: Money left over for creditors

This is calculated by subtracting your total outgoings fromyour total income. If your income is more than youroutgoings, you have an amount of money for creditors (BOX C) on the personal budget.

ARE YOUR OUTGOINGS MORE THAN YOUR INCOME?

If your outgoings are more than your income you should:

l Check whether you are entitled to extra benefits such asjob seeker’s allowance, income support, pension credit,working tax credit, child tax credit or housingbenefit/council tax benefit.Ask at your local Department forWork & Pensions office, council, or local advice centre orcontact us for advice.

l Check that you are spreading out payments on yourhousehold bills so you don’t have to pay bills all at once.Gas, electricity, water and telephone companies usually havebudget payment schemes.

l See if you can cut down on any of your outgoings, but trynot to cut down on basics like food, gas and electricity.

If your outgoings are still more than your income after doingthese things contact us for advice.

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STEP 4: Which debts to pay first – your ‘priority’ debts

STEP 5: How much money is left over

You’ve worked out your income and outgoings (see previous section).Now you need to decide which are the most important debts – theones you need to start paying off first.

The rest of this section contains useful information about thefollowing priority debts, including guidance on what to do and howmuch to pay:

l Mortgage and rent arrears.

l Council tax/community charge.

l Gas and electricity.

l Water rates.

l Magistrates’ court fines.

l Maintenance.

l The Social Fund.

l Benefit overpayments.

l Hire purchase/conditional sale.

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STEPS 4 & 5: CALCULATING PRIORITY DEBT PAYMENTS AND MONEY LEFT OVER

Use this chart to work out your priority debts and how muchyou will pay off each month.

l STEP 4 is to work out how much you can pay off yourpriority debts.You can then add up all your priority debtpayments and put the total in BOX D on the personalbudget. Use the information in the rest of this section tohelp you calculate your priority debt payments.

l STEP 5 is to take away the money you need forpriority debts from the total money you haveavailable to pay creditors (which you worked out in thelast section). Put this figure in BOX E.This will tell you howmuch money you have left to pay credit debts (see STEP 6on page 24).

EXAMPLE HOUSEHOLD

In the last section we used an example household to showhow to calculate income and outgoings (see page 10).This household also has priority debts.Pat and Eva owe the following:

Rent arrears £416.00

Electricity bill £130.00

They arrange with their landlord to pay their current rentplus £22.00 a month off the arrears.They negotiate with theelectric company and agree to a budget plan to pay for theelectricity they are using at £40.00 a month plus £15.00 amonth off the arrears.

EXAMPLE HOUSEHOLD YOUR HOUSEHOLD


STEP 4

Mortgage arrearsSecond mortgage

arrearsRent arrearsCouncil tax/community

charge arrearsFuel debts: Gas

ElectricityOther

Magistrates’ courtfine arrears

Maintenance arrearsHire purchase arrearsOther 1

2

Total priority debts repayment BOX D £

STEP 5Money for creditors

BOX C £take away


Money forcredit debts BOX E £

Priority debtsBalance owed *Weekly/Monthly

Offer of repayment

STEP 4

STEP 5


Offer of repayment


arrearsRent arrears 416.00 22.00Council tax/community


Electricity 130.00 15.00Other

Magistrates’ courtfine arrears


2

Total priority debts repayment BOX D £ 37.00

Money for creditorsBOX C £ 90.00

take awayTotal priority debts repayment BOX D £ 37.00

Money forcredit debts BOX E £ 53.00

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WHAT ARE PRIORITY DEBTS?

Some debts are more important than others.The law givesdifferent creditors different ways of getting their money back.If you don’t act quickly some creditors could:

l take away your home (called “repossession” or “eviction”)

l cut off your gas or electricity (disconnection).The law has changed and your water company cannot disconnectyour water supply. See section Water rates on page 20.Contact us for advice

l send the bailiffs to take furniture from your home (called “distraint”)

l ask the magistrates’ court to send you to prison.

The chart below tells you what might happen if you delaysorting out different debts.

These are all priority debts. It is important to use your moneyfor creditors (see page 12) to make agreements to settlethese debts first.

Creditors can take action on some priority debts withoutgoing to court first. For example, gas and electricity companiescan disconnect you.There does not need to be a court orderbefore bailiffs can be used for VAT and income tax debts.Yourother priority creditors can take action against you only aftercourt action.

But don’t panic.You will always be given warning, andprovided you act quickly you should be able to stopthese things happening.

Mortgage and rent arrears are particularly important becauseyou could lose your home if you do not pay them. Detailedinformation about mortgage and rent arrears is contained atthe back of this pack (see pages 35 to 56).

Debt

TV licence

Mortgage arrears

Second mortgage/secured loan

Rent arrears

Council tax/community charge

Gas or electricity

Magistrates’ court fines

Maintenance

Hire purchase/conditional sale

Income tax, national insurance and VAT arrears

See this page for details

page 12

page 35

page 40

page 44

page 16

page 19

page 21

page 22

page 23

If you have arrears with income tax, nationalinsurance or VAT National Debtline has a detailedfactsheet onHOW TO DEAL WITH BUSINESS DEBTSphone National Debtline on 0808 808 4000

Possible action against you

Fine in magistrates’court/distraint/imprisonment

Repossession of your home/evictionfrom your home

Repossession of your home/evictionfrom your home

Eviction from your home

Distraint/deduction from wages orincome support/pension credit/jobseeker’s allowance/ imprisonment

Supply cut-off

Distraint/deduction from wages orincome support/pension credit/jobseeker’s allowance/imprisonment

Distraint/deduction from wages orincome support/pension credit/jobseeker’s allowance/imprisonment

Repossession of the goods

Distraint/bankruptcy

MORTGAGE AND RENT ARREARS

If you fall behind with mortgage or rent payments then youcould lose your home.These debts are therefore particularlyimportant.

If you have mortgage or rent arrears please read the specialsections at the back of this pack.They explain what you cando, and what to do if your lender takes action against you.

Mortgage arrears (see page 35)

Rent arrears (see page 44)

These sections contain lots of useful information for peoplewith mortgage and rent arrears so do use them if you are inthis situation.

These sections contain useful advice on, for example, thebenefits you may be able to claim to help pay your mortgageor rent, and on secured loans (i.e. loans secured on yourhouse).You might find it helpful to look at these sections evenif you are not in arrears with your mortgage or rent.

COUNCIL TAX

The amount of council tax you pay is based on two things:

l The value of your home (homes are placed in one of eightbands – A to H)

l The number of adults who live in your home and their status.

Who pays what?

Only people over 18 can be made to pay the bill. If there ismore than one person over 18 living in your home, the ownerwill normally have to pay the bill. Joint tenants and ownersmay have to pay even if their names are not on the bill. If youare married or you live with someone as husband and wifeboth you and your partner can be made to pay.

Sometimes the owner of a house will be responsible for the billeven if they don’t live there.This is in homes which are classedas those in “multiple occupation” (e.g. bedsits). If you are notsure who is responsible for the bill, contact us for advice.

Can I reduce my bill?

You may get a reduction if someone living in the house has adisability. Apply to the council for this. Only some propertieswill qualify. Contact a local welfare rights agency or contactus for advice.

You may get a discount if:

l you are the only adult in the house; or

l you share your house only with people who are not takeninto account, such as:– a full-time student, or student nurse– an apprentice or people on certain youth training

schemes or– someone with a mental disability who is getting certain

disability benefits.

Tell the council if you think you may qualify for a discount.

You may be able to claim council tax benefit if:

l you are on a low income with less than £16,000 savings; or

l you are on income support, pension credit, job seeker’sallowance or other benefits.

You may get help with paying all or some of the bill byclaiming council tax benefit. Contact the local council for an application form. If your house is in band F, G or H yourmaximum council tax benefit was restricted if you claimedbetween April 1998 and March 2004.This rule has now beenremoved and your full council tax bill is taken into account.

You may be able to claim a rebate called “second adult rebate” if:

l you share your house with someone on a low income whodoes not pay rent and is not your husband, wife or partner,and

l you don’t already get a discount for them.

If you are in this situation the council should work out if youare better off claiming your own council tax benefit or gettingthe second adult rebate.

EXTRA HELPAppealing against council tax decisions

If you feel your council tax benefit has been wrongly workedout you can ask the council for a review in writing. If you arenot happy with the outcome you can appeal against thedecision to an independent tribunal within a month of thereview decision, but only if you think a mistake has been made.

If you feel that your home is placed in the wrong band youmay be able to appeal to the Local Valuation Office Agency.This address should be on your council tax bill.

For further information about who can appeal, contact a localwelfare rights agency or contact us for advice.

What happens if I don’t pay?

The council will usually tell you to pay your bill in ten monthlyinstalments but they may accept weekly payments. If you findat any time that you can’t pay the full monthly instalmentdon’t just stop paying!

l If your circumstances have changed you may now qualify forcouncil tax benefit, so claim now.

l Keep paying what you can afford.

l Contact the council and try to come to an arrangement.Use your personal budget to help explain your situation.

Liability order

If you don’t keep to any payment arrangement you make withthe council they will ask the magistrates’ court to make a“liability order” for the full amount they say you owe, pluscourt costs.The order states that you are due to pay yourcouncil tax and have not done so.

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The court must make the liability order unless:

l the council has not gone through the proper procedures

l you have paid the amount owed

l the name on the summons is wrong.

If one of these applies to you, tell the council immediately andattend the court hearing.You should get 14 days’ notice of the hearing.

You can ask the court to adjourn (put off) the liability orderhearing if:

l you have applied for council tax benefit; or

l you have appealed to a valuation tribunal because:– you don’t agree you are liable to pay; or– you don’t agree with the amount of the bill.

The court does not have to adjourn the hearing but they mayagree to it.

WARNINGIf the council has not taken you to court for a liability

order within six years of you becoming due to pay yourcouncil tax, they cannot continue to collect the debt.Thisdepends upon when the council served a demand notice onyou. If you think this may apply to you contact us for advice.

Methods of enforcement

Contact the council to agree a payment arrangement. If youdo not pay, there are a number of ways the council can makeyou do so.

The council can demand that you and your husband, wife orpartner give them details of your financial circumstances. Youcan be fined for not giving this information.

Deductions from wagesIf you are employed, the council can order your employer totake a fixed amount from your wages to pay your council taxarrears.This is called an “attachment of earnings order” and itcan mean a large amount of your wages is deducted and sentto the council. Deductions are made on a sliding scaledepending upon how much you earn. If you owe more than oneyear’s council tax then you can have a maximum of twoattachment of earnings orders. Normally payments are takenone at a time. If this will cause you hardship, you can ask thecouncil to accept smaller voluntary payments instead. Explain tothe council why you cannot afford the higher amount.Thecouncil does not have to agree to letting you pay less but it isworth trying. If the council does not agree, contact a localadvice centre, your local councillor or contact us for advice.

DistraintThe council can ask bailiffs to visit your home and take goodswhich may be sold to pay off your debt.They must send aletter giving two weeks’ notice telling you that bailiffs will calland how much you still owe under the liability order.

The bailiffs are not allowed to take certain basichousehold goods.They could take a car parked nearby.The bailiffs cannot force their way into your home

unless you have let them in before. Do not sign anypapers the bailiffs may post through your door,otherwise you may be charged extra costs and thebailiffs may try to enter by force.

Contact the council and the bailiffs and try to make anarrangement to pay. If the bailiffs will not accept your offer ofpayment then ask the council to take the account back fromthe bailiffs to let you pay the council directly.You should dothis as soon as possible because you may be charged costs foreach time the bailiffs visit your home.

Use your personal budget to support your offer and startpaying immediately.

If the bailiffs try to break in or they threaten you, contact usfor advice.

For a factsheet onBAILIFFS AND THE COUNCIL TAXcall National Debtline on 0808 808 4000

Deductions from income support, pension credit or job seeker’s allowanceYou can ask the Department for Work & Pensions to take astandard amount each week from your income support,pension credit or income based or contributory job seeker’sallowance to pay for your council tax arrears. If they agree todo this then the council should not take any further actionwhilst the money is being taken direct from your benefit.

Charging ordersIf the debt is for £1,000 or more then the council can applyto the county court for a charge on the house on which youowe the council tax.This means the debt is “secured” on yourhouse like a mortgage, and so may put your home at risk. Ifthe council threatens this contact us for advice.

Bankruptcy The council can try to make you bankrupt if the debt is £750 ormore.This is unusual but more likely if you owe council tax billsfor lots of different years as these can be added together. If thecouncil threatens to make you bankrupt contact us for advice.

ImprisonmentIf the council has tried to use bailiffs and your council tax has stillnot been paid in full, they may apply to the magistrates’ court foran order for you to be sent to prison.The court is unlikely tosend you to prison if you have not paid because you don’t haveenough money.There must be a hearing in the court to look atwhy you have not paid and whether you have the money to pay.You must attend the hearing and show the court your personalbudget to explain why you have not been able to pay.

The court should not send you to prison if you cannot affordto pay.They should only do so if they think you have “wilfullyrefused” or “neglected” to pay when you could have done so.If you have to attend the court you should get legal advicefirst. Contact a local advice agency, a law centre, or a solicitor.Most magistrates courts have a duty solicitor scheme thatmay be able to help you. You may qualify under the “LegalHelp” scheme for a solicitor to assist you at the hearing,depending on your income. Contact us for advice.

In exceptional circumstances the court may order yourcouncil tax arrears to be written off. But normally they willorder you to pay an amount each month until the debt ispaid. If you do not pay this amount regularly you will have togo to court again and may be sent to prison for up to threemonths. If you find you can’t pay what the court has ordered,keep paying what you can afford and apply to the court toreduce the amount you have to pay.

REMEMBERCouncil tax is a priority debt

Because of the council’s powers to make you pay council tax,you must treat it as a priority debt. If you can’t pay the full amount:

l claim council tax benefit

l check the bill has been worked out correctly

l contact your council and make an arrangement to pay

l pay what you can afford.

If you have credit debts, use your personal budget to arrangereduced payments to those creditors. See the section Creditdebts on page 24 for advice on how to do this.

COMMUNITY CHARGE ARREARS

Community charge was replaced by council tax in April 1993.But you may still owe community charge arrears fromprevious years as well as having a bill for council tax.

If the debt is over six years old and the council have not takenyou to court for a liability order within six years of you becomingliable to pay community charge, they cannot continue to collectthe debt. If you think this applies to you contact us for advice.

The council can collect community charge arrears in much thesame way as council tax.They can apply for a liability order inthe magistrates’ court then use:

l distraint (bailiffs)

l deductions from income support, pension credit, incomebased or contributory job seeker’s allowance

l deductions from wages

l bankruptcy

l imprisonment.

See the section on Council tax (above) for more details.

Because of the council’s powers to make you pay communitycharge you must treat it as a priority debt. If you cannot paythe full amount:

l Contact your council and make an arrangement to pay. Ifyou have to make regular payments towards your counciltax as well, point this out to the council.Ask them to letyou pay the arrears on your community charge over alonger period of time so that you don’t fall behind on yourcouncil tax payments

l Start paying what you can afford, even if your offer is notaccepted straight away

l Ask the council if they are using an easy payment schemesuch as PayPoint.

GAS AND ELECTRICITY ARREARS

The gas and electricity companies can cut off your supply in afew weeks if you don’t pay them. No court is involved in thisdecision. It is important to contact them to make a paymentarrangement as soon as you know you are going to haveproblems. Because of this, gas and electricity bills should betreated as a priority debt.

Checking liability for the bill

If you are not the person named on the bill (e.g. it is in thename of someone who has left your home) you may not beliable to pay the arrears up to the date they left.You candispute liability with the fuel company and also contactEnergywatch.This should stop your fuel being cut off until thedispute has been sorted out. If you are in this positioncontact us for advice.

WARNINGOld bills from different addresses

You can be disconnected for a gas or electricity bill from anold address if you move home and keep the same fuelsupplier. Old bills from the same supplier therefore need to be treated as a priority.

How do I make an arrangement?

Bills for gas and electricity are usually issued quarterly.Thefuel company will usually want the bill paid before the next billis due.You can ask to pay your bills weekly, fortnightly, ormonthly. If you have arrears, phone or write to the companyand ask for a payment arrangement. See How do I avoid havingmy fuel cut off? on page 19.

REMEMBERCredit agreements with gas and electricity companies

If you have bought goods such as a cooker, fire or video fromthe company, and you are paying for them through a creditagreement, ask the company to separate your fuel accountfrom your credit account.Your fuel supply cannot be cut offbecause of arrears on the credit account. See Credit debts onpage 24 for how to deal with your credit agreement.

Use your personal budget to support your offer of payment.This must cover the cost of the fuel you are using and anamount off the arrears. Even if the company does not agree toyour offer, start paying what you have offered immediately.Do not offer to pay more than you can afford towards thearrears.All fuel companies should agree under their code ofpractice to accept an offer of repayment in instalments at arate that you can afford.

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If the first person you speak to is unhelpful, ask to speak tosomeone more senior.

Ask the company for a copy of their code of practice.This explains your rights and how to make a paymentarrangement. Most fuel companies will not disconnect you if:

l you agree to a payment arrangement; or

l you agree to have a pre-payment meter installed; or

l the debt belongs to a person who lived in your housebefore you; or

l it is between October and March and all the adults in thehousehold are over retirement age. Some companies willalso agree not to disconnect the supply between thesetimes if the adults in the household have a severe illness.

If you are having problems making arrangements with thecompany, contact us for advice.

MORE INFORMATIONEnergywatch

If you have a complaint about how your fuel company isdealing with your arrears you can contact Energywatch on 08459 06 07 08. Energywatch deals with complaints for OFGEM, the regulatory body for gas and electricity.Energywatch uses OFGEM guidelines that say the fuelcompany should take your circumstances into account when making an arrangement to pay.The address forEnergywatch is listed on page 58 of this pack.

How do I avoid having my fuel cut off?

You must keep paying for the fuel you are using and an amountoff your debt even while you are trying to make an arrangement.To work this out, add up your last four bills to find out the totalamount for the year, and then divide by 52 to work out howmuch fuel you use each week.

If your bills are high, check that your account is notbased on estimates.Ask the fuel company to take anaccurate reading.

The company should accept the following arrangements.

InstalmentsYou could arrange to pay the gas or electricity bill by weeklyor monthly instalments paying off the whole amount beforethe next quarterly bill arrives.

Budget plansThe fuel company works out how much fuel you use over thewhole year and you pay a fixed amount weekly, fortnightly ormonthly.Any unpaid bill can be spread over the whole year andincluded in the budget plan. If you cannot afford the amountthe company is asking you to pay under the budget plan, askfor a special arrangement.The company should let you pay offyour debt at a rate you can afford, even if this means spreadingthe arrears over a longer period of time than a year.

Pre-payment metersYou pay for the gas and electricity you are continuing to use plusan amount you can afford off the arrears through a token, card,or coin meter.You must be asked if you want a pre-paymentmeter before your supply is cut off, if it is safe to install one.

REMEMBER Drawbacks with pre-payment meters

Remember there can be drawbacks to having a pre-paymentmeter. Your standing charge may be higher and if you cannotafford to buy tokens/cards you will be without fuel.

If you have not fallen behind on an arrears repaymentarrangement the fuel company cannot insist that you have apre-payment meter installed. But you do have the option torequest a pre-payment meter if you want one.

Direct payments from income support, pension creditor job seeker’s allowanceIf you get income support, pension credit or job seeker’sallowance and owe more than a set amount on your fuel billyou could ask the Department of Work & Pensions (DWP) totake weekly deductions from your benefit and pay themdirectly to the gas or electricity company.This is called FuelDirect and is part of the Third Party Deduction Scheme.Thiscovers the gas or electricity you are continuing to use plus astandard amount towards the arrears. Contact your DWPoffice and tell the fuel company you are doing this.

REMEMBER Direct payment schemes

Some fuel companies may tell you that there is no longer adirect payment scheme. Don’t be put off. Make sure you applyto the DWP as they make the decision, not the fuel company.

If you are on income support, pension credit or income basedjob seeker’s allowance and you have been disconnected, youmay be able to get a community care grant or a loan from theDWP to cover the cost of having your supply reconnected.Contact us for advice.

You cannot get help from the DWP with arrears except veryrarely through a crisis loan.

Other helpContact the social services department of your local councilor the DWP for help.The fuel company will delay cutting youoff if they are told the social services or DWP are lookinginto your case.They will usually hold action for ten workingdays but may agree to delay longer.This could give you time tomake an arrangement to pay.The Children’s Act 1989 givessocial services the power to make payments to families withchildren in certain circumstances.

EXTRA HELPQueries over gas and electricity charges

If you are asked to repay money from a coin meter after atheft, or to pay a bill in somebody else’s name, or if thecompany has set a token meter or budget scheme at a higheramount than you can afford, contact a local advice agency orcontact us for advice.

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Help from gas and electricity companies

Some fuel companies have set up trust funds that may be ableto help you pay your fuel bills if you are in financial difficulties.Ask your fuel company if they run a scheme or contact usfor details.

Switching gas/electricity suppliers

Many people swap their suppliers because they think the billswill be cheaper. Before you do this check which company willbe best for you.There are price comparisons companies whocan help. Contact Energywatch for advice.

Check with your new supplier that they offer the samepayment arrangements.You can complain about any supplierto Energywatch.All suppliers should follow a code of practicewhen dealing with people in arrears.

Special problems for tenants

Your landlord may be responsible for paying the gas orelectricity for your accommodation, and resell the fuel directlyto you. OFGEM sets maximum charges for the resale of gasand electricity. You can get advice from Energywatch abouthow much your landlord is allowed to charge you.

Contact your local advice agency or Energywatch if:

l you think you may have been overcharged for fuelor

l the company is threatening to cut your supply off becausethe landlord has not paid the bill.

WATER RATES

REMEMBERDisconnectionYou cannot be disconnected for water rates debts.

Since 1999, water companies can no longer disconnect yourwater supply if you are in arrears.They also cannot installanything in your home that restricts the flow of water fromthe taps.

If the water company threatens to disconnect you for being inarrears, complain to OFWAT who regulates the watercompanies or contact us for advice.

WARNINGDisconnecting “empty” homes

Some water companies are threatening to disconnect aproperty on the basis that “they think the property is empty”.Make sure you keep in touch with the company as they mayattempt to do this if no one has responded to their letters for some time. If you have a threat of disconnection to yoursupply, ring the water company and make sure that theyunderstand that you are still in the property and they cannotdisconnect the supply.

How do I deal with water rates arrears?

Bills for water rates are usually issued half yearly in April andOctober. If you ask to pay by instalments, the water companywill usually want the bill paid over eight months from May toDecember. However, you can ask to pay your bills weekly,fortnightly, or monthly over a longer period. Contact yourwater company to ask them for a payment arrangement.

l If the first person you speak to is unhelpful, ask to speak tosomeone more senior.

l Ask the company for a copy of their code of practice.Thisexplains your rights and how to make a payment arrangement.

If you are having problems making arrangements with thecompany, contact us for advice.

You should carry on including your current water rates in theoutgoings section of your personal budget (see page 10).Thisis because water is an ongoing bill. If you have water ratesarrears then they no longer need to be treated as a prioritydebt.You can make an offer of repayment that you can affordusing your budget sheet along with your other credit debts inSTEP 6 (see page 24).

MORE INFORMATIONOFWAT

If you have a complaint about the way the water company isdealing with your arrears, contact OFWAT, the regulatorybody for water. OFWAT guidelines say the company shouldtake your circumstances into account when making anarrangement to pay. OFWAT has regional customer servicescommittees called WaterVoice who will look into yourcomplaint about the water company. For your regional contactnumber look in your local phone book.

What if I don’t make an arrangement to pay?

If you do not agree a repayment arrangement then the watercompany can issue a county court claim against you to askyou to repay the money you owe.You can make an offer ofpayment by filling in the reply form to the claim (N9a) andsending this back to your water company within the timelimit. If the court agrees with your offer then you will be toldto pay the debt off in instalments.

For a factsheet onREPLYING TO A COUNTY COURT CLAIMcall National Debtline on 0808 808 4000

Direct payments

If you get income support, pension credit or job seeker’sallowance, you can ask the Department for Work & Pensions(DWP) to deduct from your benefit each week a sum to covercurrent water rates and a standard amount towards the arrears.The DWP will pay the money direct to the water company.

21

Pre-payment meters

You should not be offered a pre-payment/token meter.Thecourt has decided these are illegal because if you do not buy aset amount of tokens each week your water supply shuts offautomatically. If you already have a pre-payment meter or youare offered a new one contact us for advice.

Your right to a water meter

From April 2000 you have the right to have a water meter put inso that you are charged on the basis of the water you actuallyuse.You can swap back to the usual non-metered system within12 months if you don’t like the water meter (e.g. your bills arehigher than before). It may be cheaper to have a water meterput in if you don’t use much water (e.g. you are single, or out allday). Contact your water company, as some suppliers will adviseyou if your bills are likely to be cheaper with a water meter.Youcan also check websites such as www.buy.co.uk.

Help with high bills

New rights may help you with your water bill if you are on alow income and on a water meter.You will only pay theaverage bill that the water company charges overall, so if youuse a lot of water then your bill will go down.

To qualify for help:

l you must be on a water meter; and

l someone in the household must be on certain benefits; and

l there must be three or more children under 16 in thehousehold; or

l someone in the household has a medical condition thatmeans extra water use.

You can get an application form from your water company.You need to give proof of which benefit you are receiving andyou will need to explain your medical condition in detail.Youstay on the scheme for a year and then have to re-apply.

For a factsheet onWATER RATES – NEW RULEScall National Debtline on 0808 808 4000

Help from water companies

Some water companies have set up trust funds that may beable to help you pay your water bills if you are in financialdifficulties. Ask your water company if they run a scheme orcontact us for a list.

MAGISTRATES COURT FINES

The magistrates’ court may order you to pay a fine, for examplefor a driving offence, not having a television licence or otheroffence.You must treat a magistrates’ court fine as a prioritydebt because you could be sent to prison if you do not pay.

If you have been sued for a credit debt such as a loan orcredit card, this would be in the county court and you cannot

be sent to prison – treat it as a credit debt. See Credit debtson page 24.

EXTRA HELPWhat type of court?

If you have been taken to court and are not sure which typeof court it is, or whether it is a priority debt,contact us for advice.

Your financial circumstances should be taken into accountwhen the court decides the instalments for paying the fine.You can be fined if you do not give the court details of yourincome and outgoings when ordered to do so.The court canmake deductions from your wages or from your benefitseither when they set the fine or if you fall behind withpayments.You must contact the court if you cannot afford topay the amount the court fixes or you cannot pay becauseyour circumstances have changed.They may be able to lowerthe amount. If you have to go to a court hearing, take a copyof your personal budget with you.

WARNINGSome magistrates’ courts are part of a pilot scheme

which gives them increased powers to enforce fines.These arebeing rolled out nationally in 2005. Powers include:

• Increasing the amount you owe by 25% or 50% if you do not pay

• Clamping a vehicle registered in your name

• Including the fine on credit reference files which will affect your ability to get credit

• Ordering you to do unpaid work instead of paying the fine.

If you want to know if the changes apply in your area contact us for advice.

What if I don’t pay?

If you are in arrears and do not make any arrangement withthe court they may try to:

l use private bailiffs to seize goods and sell them.You do nothave to let the bailiffs in.The bailiffs cannot force their wayinto your home unless you have let them in before.Theycould take a car parked nearby

l from November 1999, bailiffs should not take a vehicleneeded for employment or business.They must leaveclothing and basic household items.To make arrangementsto pay you will need to contact the bailiffs directly, since thecourt will no longer accept payments from you

l make deductions of £5.00 a week from your incomesupport, pension credit, income based or contributoryjob seeker’s allowance.They can do this when they set the fine or if you have fallen behind with payments

l make deductions on a sliding scale from your wages under an attachment of earnings order.They can do this when theyset the fine or if you have fallen behind with payments

l order you to be sent to prison.There will be a hearingbefore this happens, which you must attend with a copy ofyour personal budget. If you explain why you have not paidand make a new offer to pay by instalments the court maysuspend the arrest warrant.

For a factsheet onMAGISTRATES COURT FINEScall National Debtline on 0808 808 4000

REMEMBERCourt hearings

l Always attend court hearings.l Try to make arrangements that you can afford to pay or

contact the court if you cannot pay.l Keep paying what you can afford.l In exceptional circumstances the court may order that your

fine is written off.

PARKING PENALTY CHARGES

Many local authorities have decriminalised parking offences andenforce parking penalty charges through the Traffic EnforcementCentre in Northampton County Court.There are special rulesthat apply if you have this type of parking penalty.You cannot besent to prison but the local authority can ask the county courtto use private bailiffs to try to recover the money. If you have aparking penalty charge contact us for advice.

MAINTENANCE

You can be ordered to pay maintenance either by the court,as part of the separation or divorce process, or by the ChildSupport Agency.

Maintenance through the court

If the court has ordered you to make regular payments, youcan apply to reduce the payments if you cannot afford them.

If you do not pay, the court can order you to attend a hearingto explain why you have not paid.They can give you more timeto pay and in exceptional circumstances write off the arrears.

If the court decides that you are deliberately not paying, theymay try to:

l use bailiffs to seize goods and sell them

l take payments direct from your wages

l order you to be sent to prison.

REMEMBER Maintenance arrears

If you are in arrears with your maintenance contact the courtimmediately.Take a copy of your personal budget to any courthearings and explain why you cannot pay the full amount.The court may reduce the amount you have to pay.

Maintenance through the Child Support Agency

The Child Support Agency (CSA) can decide what maintenanceyou should pay and then collect it.This is most likely if yourex-partner is on income support or income based job seeker’sallowance.They will decide the amount by using a set formula.If you do not pay, the CSA can collect it direct from wages,income support, pension credit, or job seeker’s allowance(either income based or contributory) without a court order.

If they are unable to do this, the CSA can ask the magistrates’court for a “liability order”.When this has happened theymay try to:

l use bailiffs to seize goods and sell them

l get a charge on your property, which means your homecould be sold if you do not pay

l seize money from your bank account

l ask the court to send you to prison.You could be sent toprison for up to six weeks but the court will only do this ifit thinks that you are deliberately not paying

l ask the court to take away your driving licence for up to two years.

If the CSA has threatened any of these things contact us foradvice.

REMEMBER Contact the CSA if you are in arrears

If you are in arrears contact the CSA and try to make anarrangement to repay them.They may accept an amount ontop of what you are already paying to clear the arrears over an extended period of time. If yourcircumstances change you should tell the CSA immediately.

SOCIAL FUND LOANS

If you are on income support, pension credit or job seeker’sallowance you may have taken out a Social Fund loan, or bethinking about asking for one. Repayments on the loan aretaken out of your benefit before you get it.This could meanyou will not have enough money to cover your normaloutgoings.Think carefully before accepting a loan.You may be entitled to a community care grant instead.This is not a loan and you do not have to pay it back.

Ask advice from a local advice centre or contact us.

If you already have a Social Fund loan and the amount beingtaken from your benefit is causing you hardship, contact theSocial Fund officer at your local Department for Work &Pensions (DWP) office. Show them your personal budgetsheet and explain the problems you are having.The SocialFund officer may be able to reduce the weekly amount being taken out of your benefit. If they refuse, contact us for advice.

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EXTRA HELPPaying back a social fund loan if you are not on benefits

If you are no longer on income support, pension credit or jobseeker’s allowance and still have a Social Fund loan, include itwith your credit debts in STEP 6 (see page 24). But becareful, the DWP can take an amount out of other benefitsinstead.These benefits include contributory job seeker’sallowance, incapacity benefit, carers allowance, retirementpensions, maternity allowance and bereavement benefits. If thishappens to you, contact us for advice.

BENEFIT OVERPAYMENTS

You may be told by the Department of Work & Pensions(DWP) that you have been overpaid a benefit, such as incomesupport, and that they want you to pay this back.

The DWP must tell you if the overpayment can be recoveredfrom you and why. If you do not agree that you owe themoney you can appeal.The law on overpayments iscomplicated so before deciding whether to appeal, contactyour local advice centre or contact us for advice.

The DWP can make deductions from most types of benefitsto collect overpayments, except child benefit.There aremaximum weekly amounts that can be deducted. If this willcause you hardship, contact the DWP and ask them to takeless.They will probably not accept a pro-rata payment in linewith your credit debts.

In some circumstances the DWP will agree to “write-off” theoverpayment if repayment is causing hardship.Ask your localMP to help.

If you are not on any benefits you can treat the overpaymentin the same way as your other credit debts. See Credit debtson page 24.

EXTRA HELPSpecial rules for housing benefit and council tax benefit

If your council says you have been overpaid housing benefit orcouncil tax benefit, special rules apply. Contact us for advice.

HIRE PURCHASE OR CONDITIONAL SALE

You can buy goods on all sorts of different credit agreements.With most credit you own the goods straight away and onlyowe the money to the creditor.The creditor cannot ask youto return goods you bought with most types of credit.Withhire purchase or conditional sale agreements you do not ownthe goods until you have paid the last instalment.

The creditor may be able to ask for the goods to be returnedand then sell them to reduce the debt.The most commontype of goods on hire purchase agreements are cars.

GOT A QUERY?What kind of agreement do you have?

If you have a hire purchase or conditional sale type of creditagreement it should state this clearly. If you are not sure whattype of agreement you have, check your agreement orcontact us for advice.

REMEMBERIf you fall behind with payments the creditor may

be able to repossess the goods. You can also return the goods voluntarily.

REMEMBERHave you paid more than a third of the debt?

If you have paid more than one third of the total owing thecreditor must go to court to ask for the goods to bereturned. They cannot just come round and remove them.

Depending on how well you have looked after the goodswhen you return them, the state of the goods may affect howmuch the creditor may try to recover from you. However, ifyou have paid half of the contractual payments, you will notusually be requested to pay anything further.

At the hearing, return of the goods can be suspendedprovided that you agree to make the payments that the courtorders.This could be:

l your normal payments plus something towards the arrears;or

l in certain circumstances, an amount which is less than thenormal payments on the agreement.You will need to showthat this is all you can afford to pay and explain why it isimportant that you keep the goods (e.g. you need the carfor work).

To make an offer you should fill in the reply form to thecounty court claim and attend the court hearing.

REMEMBER Keeping the goods

If it is important to you to keep the goods then you may wantto include the payments on your “outgoings” section of yourpersonal budget and treat this as a priority and not a creditdebt. If you do this then be prepared to explain to creditorswhy you need the goods (e.g. you need the car for work). SeeOutgoings on page 10.

Contact us for advice if you are in arrears with this type of agreement.

For a factsheet onHOW TO DEAL WITH HIRE PURCHASE DEBTScall National Debtline on 0808 808 4000

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CREDIT DEBTS

STEP 6: How to deal with credit debts

Use this section to work out how much to pay towards your creditdebts.

WHAT ARE CREDIT DEBTS?

These include lots of different types of debts where thecreditor hasn’t got extra powers (e.g. they cannot take yourhome).This means they do not have to be treated as apriority. The most common credit debts include:

l credit card debts

l personal loans with finance companies

l bank and building society loans, overdrafts and credit cards(see page 29)

l charge cards (see page 29)

l catalogues (see page 30)

l personal debts to friends and family (see page 29)

l doorstep collected loans

l credit sale agreements.

l trading cheques/vouchers.

We have included sections on common credit debts wherethere are particular things you should look out for.

REMEMBERSmall offers

Don’t worry if your offers look very small.Your creditorswould rather you pay a small amount regularly than makepromises you can’t keep to.

WARNINGOther credit debts

There are also other credit debts that are not sostraightforward to deal with.You should contact us foradvice if you have the following:

l rent, phone, gas and electricity from a previous property orsupplier

l hire purchase/conditional sale agreements where the goodshave gone back to the company (see page 23)

l debts with cheque cashing services

l gambling and spreadbetting debts

l business debts

l professional fees (solicitors, vets bills etc).

HOW TO WORK OUT OFFERS OF PAYMENT

After STEP 5 on page 14 you should have a “money forcredit debts” amount to divide amongst your creditors filledin at BOX E.

If you have something left, the best way to divide it amongstyour creditors is called a pro-rata distribution.This is howthe court would do it and means all your creditors get a fairshare of the money you have available.

25

We show you how to work out a pro-rata distribution in the“calculation box” opposite. Use a calculator to work out yourpayments.The final figure is rounded to the nearest £1. Checkthe “example household” calculation below to see how towork out a pro-rata distribution.

l If you have done a weekly personal budget, multiply your“money for credit debts” (BOX E) by 52 and divide by12. Enter this figure in STEP 6, BOX E (see below).

l Contact all your creditors to find out exactly how muchyou owe each one and list them under each creditor andbalance owed.

l Add up all the individual debts, to find out how much youowe in total.

l Put the total in BOX F.

l Calculate the monthly offer of repayment for eachcreditor by using the formula in the calculation box.

EXTRA HELPWorking out offers of payment

If you need help in working out offers of payment contact usfor advice.

CALCULATION BOX

Money for credit debts (BOX E) x each debt

÷ total amount owed (BOX F)

= offer to the creditor

EXAMPLE HOUSEHOLD

£53.00 (BOX E) x £268.00 (Newhome Catalogue)

÷ £4,318.00 (BOX F)

= £3.29 (offer to Newhome Catalogue)

Pat and Eva owe:Newhome Catalogue £ 268.00

Wellington Trust and Savings £ 2,960.00

Flexible Bank Card £ 825.00

Easicheck Financial Services £ 265.00

TOTAL £ 4,318.00

(BOX F)

Eva and Pat’s money for credit debts is now £53.00 per month(BOX E) because £37.00 a month is being paid to theelectricity company and the landlord.The example shows whatthey can afford to pay off their credit debts every month.

EXAMPLE HOUSEHOLD YOUR HOUSEHOLD


STEP 6

This is an accurate record of my financial position

at (dd/mm/yyyy) / 20

Signed

© National Debtline 2005 (England and Wales)

Creditor Balance owed Monthlyoffer of repayment

Credit debts

1

2

3

4

5

6

7

8

9

Total owedBOX F £

Total monthly repayment BOX E £

STEP 6



Signed


Creditor Balance owed Monthlyoffer of repayment

Credit debts

1 Newhome Catalogue 268.00 3.29

2 Wellington Trust & Savings 2,960.00 36.33

3 Flexible Bank Card 825.00 10.13

4 Easicheck 265.00 3.25

5

6

7

8

9

Total owedBOX F £ 4318.00

Total monthlyrepayment BOX E £ 53.00

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CREDIT DEBTS

If you are making pro-rata offers to your creditorsYou can write out this example letter and send it to your creditors with a copy of your personal budget if you aremaking pro-rata offers.We have used [square brackets] to suggest different points you may want to make. Choose theones that fit your circumstances, and make any other changes you need to explain your situation to your creditors.

Remember to keep a copy of your personal budget and any letters you send. Did you know youcan complete this letter on line at www.nationaldebtline.co.uk using our sample letter suite?

Creditor’s name and address: Your address:

Date

Dear Sir/Madam

Account No.

Since making the above agreement with you, my/our circumstances have changed.

I/we cannot now afford the agreed monthly payments because

I/we enclose a personal budget sheet which shows my/our total income from all sources, and

my/our total outgoings.As you can see I/we have only £............ per month left for my/our

creditors.

The offers I/we have made to my/our creditors have been worked out on a pro-rata basis, and

I/we have written to all my/our creditors asking them to accept reduced offers.

In view of my/our circumstances, please would you agree to accept a reduced offer of

£………… per month. If interest or other charges are being added to the account, I/we would

be grateful if you would freeze these so that all payments made will reduce what I/we owe you.

Should my/our circumstances improve I/we will contact you again.

I/we would be grateful if you would send a [paying-in book] [standing order form] to make it

easier to pay.

Thank you for your assistance. I/we look forward to hearing from you as soon as possible.

Yours faithfully,

Explain here what theproblems are, for example if you have lost your job,separated from yourpartner, or had anunexpected increase inoutgoings or drop in income.

Taken from BOX E on yourPersonal Budget Sheet.

As listed on your personalbudget under this creditor’sname.

Choose the paymentmethod you want.

Your signature with yourname printed underneath.

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If you are making no offer of payment or token paymentsYou can write out this example letter and send it to your creditors with a copy of your personal budget if you are making nooffer of payment or token payments.We have used [square brackets] to suggest different points you may want to make.Choose the ones that fit your circumstances, and make any other changes you need to explain your situation to your creditors.

Remember to keep a copy of your personal budget and any letters you send. Did you know youcan complete this letter on line at www.nationaldebtline.co.uk using our sample letter suite?

Creditor’s name and address: Your address:

Date

Dear Sir/Madam

Account No.

Since making the above agreement with you, my/our circumstances have changed.

I/we cannot now afford the agreed monthly payments because

I/we enclose a personal budget sheet which shows my/our total income from all sources, and the

total outgoings of my/our household.As you can see I/we have no money left to make offers of

payment to my/our creditors.

In view of my/our circumstances, would you please accept [no payments at present] [a token

offer of £1.00 per month] to be reviewed in six months. If interest or other charges are being

added to the account, I/we would be grateful if you would freeze these so my/our debt does

not increase.

Should my/our circumstances improve I/we will contact you again.

I/we would be grateful if you would send a [paying-in book] [standing order form] to make it

easier to pay.

Thank you for your assistance. I/we look forward to hearing from you as soon as possible.

Yours faithfully,

Explain here what theproblems are, for example if you have lost your job,separated from yourpartner, or had anunexpected increase inoutgoings or drop in income.

Decide if you are making atoken offer of payment orasking the creditors toaccept no offer of payment.

Only include this if offering a token payment.Choose the paymentmethod you want.

Your signature with yourname printed underneath.

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CREDIT DEBTS

WHAT IF A CREDITOR HAS ALREADY TAKENME TO COUNTY COURT?

You should include this debt with your credit debts and workout the offer of payment in the same way. See What if mycreditors take court action? on page 31. If this is less than theamount the court has ordered you to pay you may need toapply to the court to reduce the amount.This will mean allyour creditors are being treated fairly and you are not payingone creditor more than you can afford.

WHAT IF I HAVE NO MONEY LEFT TO PAY MY CREDITORS?

After paying your outgoings and making arrangements to payyour priority debts, there may be nothing left to pay othercreditors. If you have nothing left, say so. Show yourcreditors by sending them your personal budget and a letter toback this up.Ask your creditors to hold action until yourcircumstances improve.This is called asking for a “moratorium”.Or offer a token payment of £1 a month to each creditorinstead. See our Sample letters on pages 26 and 27.

CHECK THE NAME ON THE AGREEMENT

Only the person who signs an agreement is responsible forthe debt.A husband and wife are not responsible for eachother’s debts unless they both sign the agreement.

If you take out an agreement jointly with another person, youare each responsible for the whole debt and not just part of it.Make sure the creditor knows that someone else is responsible.

Check your credit agreement carefully. If you don’t understandthe terms or want to check that the agreement is in thecorrect format and that you are liable for the debt, go to yourlocal trading standards department or contact us for advice.

Under 18s

People under 18 can only be made to pay for “essential goodsand services” bought on credit such as fuel supplies. If you areunder 18 and have an agreement for non-essential goods orservices you cannot be taken to court if you owe money forthem. However, it is not always clear which things are“essential”.The court can decide this for each case. Generallyparents are not responsible for their children’s debts unlessthey have signed a guarantee.

Guarantors

Creditors may ask for a guarantor before agreeing to lendmoney.This means that if the person who has borrowed themoney does not pay it back the guarantor will be asked to pay.

If you have a guarantor for one of your credit debts, or are aguarantor for someone else, contact us for advice.

INTEREST

Debts have two parts: the money borrowed and the interest.Interest is the charge for lending you the money.

Debts have interest added in different ways:

l fixed term loans. Interest is worked out at the beginningof your loan and included in your monthly payments.Sometimes extra interest called “default interest” is chargedwhen you miss a payment.Ask the creditor to freeze anydefault interest being added.

l revolving credit agreements such as credit cards, bankoverdrafts and some loan agreements. Interest is worked outon the amount you still owe each month, and charged regularlyto your account.This means your debt grows every month.Also the interest rates may be altered by the company. Askthe creditor to freeze all the interest being added.

To find out if interest is still being added to any of your debts,check your agreement for details.

IMPORTANTStill paying interest?

Your debt will continue to grow if your new monthly offer ofpayment to the creditor is less than the interest being added.Ask the creditor to stop charging you any more interest.The creditor may agree to this for a limited period and startcharging interest again.Ask for regular statements and checkthem.When a creditor accepts your offer if they do not stateinterest has been frozen, you should check this with them again.The creditor may also try to apply administration and latepayment charges, you should ask for these to be waived.

What if a creditor refuses to freeze the interest?

Write to them again. If any of your other creditors haveagreed to freeze the interest point this out.

We can advise you on how to approach your creditors.See What if a creditor refuses my offer? on page 30 or contact us for advice.

For a factsheet onWHAT IF A CREDITOR REFUSES MY OFFER OF PAYMENT? including sample letters you may find usefulcall National Debtline on 0808 808 4000

COPIES OF CREDIT AGREEMENTS

You have the right to ask for a copy of your credit agreement.You may have lost your original agreement and need to checkthe terms such as the interest rate.Write to the creditor andask for a copy of the agreement under The Consumer CreditAct 1974, section 77-78.You must send a fee of £1.00 with theletter. If your creditor does not send you a copy of youragreement within 12 working days then they are not allowedto take further action against you until they send you theagreement.You can take out a credit agreement over theinternet from January 2005.These rules may not apply to you.Contact us for advice.

DATA PROTECTION

You can also write to your lender and request that they sendyou all information held by them on computer to do withyour account.This request should be made under the DataProtection Acts 1984 and 1998 and refer to the “right ofsubject access” under the acts. List all your addresses for thepast six years.The lender has 40 days to comply.

The lender can charge you a fee of up to £10.00 for supplyingthe information.

If the lender does not comply with the request you shouldcomplain to the Office of the Information Commissioner, theaddress is on page 58.

DEBTS WITH YOUR BANK: OVERDRAFTS,LOANS AND CREDIT CARDS

Many people use their current account with a bank or buildingsociety to have their wages paid into and to pay householdbills.This can cause problems if you have a number of debts,and your current account becomes overdrawn.

With an overdraft you pay interest and charges on theoutstanding balance. If you have a loan with the bank orbuilding society, the full monthly instalment will usually bededucted from your current account too.This may mean thatyou do not then have enough money to pay priority debtssuch as your mortgage, rent, council tax, gas or electricity.

You should deal with the overdraft and bank loans like othercredit debts, and make an offer of payment you can afford.This means you keep the current account running but reducethe overdraft over time. Contact the bank or building societyand explain your situation to them.

However you need to be very careful in dealing with this. Bearin mind some banks or building societies will react by takingall the money in your account to clear the overdraft or loan.You should consider opening an account elsewhere to haveyour wages paid into before negotiating with the bank just incase. Do this immediately if the bank or building society donot agree to your offer. See Opening a bank account on page 34.

WARNINGDo you need a new bank account?

It is a good idea to open an account with a new bank orbuilding society if you have a credit card debt with your bank,because there is a possibility that the bank might take themoney from your account to clear the credit card.

Interest and charges

If you are trying to make an arrangement to repay an overdraftyou should ask the bank or building society to stop thecharges and interest, so that the amount you pay reduces thedebt. If the staff at your local branch are not able to agree tothis, contact the regional office or head office of the bank orbuilding society and ask them to agree to do so. Point out thatthe Banking Code says banks “will consider cases of financialdifficulty sympathetically and positively.”

Voluntary charges on your home

If you have a large overdraft on a current account or a personalor business loan you may be asked to agree a voluntary chargein return for reduced payments.This would mean that the debtwould be secured on your home and you could then lose yourhome if you didn’t keep up the payments. See Secured overdraftson page 40. Banks will sometimes ask you to agree a chargewhich means any future borrowing or overdraft you have withthe bank is also secured on your home.

WARNINGBefore you agree to a voluntary charge

If you are asked to agree to a voluntary charge either by yourbank or building society, or if your partner asks you to sign anagreement to a charge on your home, you must get legaladvice first. Contact us for advice.

Complaints

Banks should have a complaints procedure under the BankingCode which they should make public. If you have a complaint youshould follow the complaints procedure outlined by your bank orbuilding society. If you do not feel they have dealt with yourcomplaint satisfactorily, you may be able to complain furtherto The Financial Ombudsman Service.They can only deal withcertain types of complaints. For information, contact The FinancialOmbudsman Service direct.The address is listed on page 58.

CHARGE CARDS

You may have a debt on a charge card such as AmericanExpress, where you have to pay the full balance off each monthrather than in instalments as with a credit card. It can be moredifficult to negotiate reduced offers of payment on chargecards as they are not ordinary credit agreements.They shouldstill be included with your other credit debts. If they takefurther action this should be in the county court, from April1999, if you owe under £15,000. If you owe more than £15,000the creditor can sue you in the High Court.The initialprocedure is the same but extra interest can be added on tojudgments in the High Court and the court procedure is moreformal. If you are having problems with a charge card and theyare threatening to take further action contact us for advice.

For a factsheet onDEALING WITH DEBTS IN THE HIGH COURT call National Debtline on 0808 808 4000

PERSONAL DEBTS TO FRIENDS AND FAMILY

You may owe money to friends and family.These debts shouldusually be treated the same as ordinary credit debts andoffers of payment made in the same way. See Credit debts onpage 24.You may be able to agree to make no payments untilyour circumstances improve so you can pay off your othercreditors faster. Sometimes you may want to make higherpayments on a personal debt because lending you the moneyhas caused hardship to someone you know or yourrelationship may suffer if you don’t.This can be difficult, as

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30

CREDIT DEBTS

your other creditors may be unhappy if you are paying moreon a personal debt than is strictly “fair”.You need to explainthe reasons to your other creditors and point out, forexample, that if you pay off the personal debt quickly you willbe able to pay more to everyone else.

CATALOGUE DEBTS

You may have a debt with a catalogue company. This should betreated as a credit debt in the same way as your other creditdebts. Goods ordered from a catalogue belong to you andcannot be taken back if you do not pay. If you have a disputewith the company or an agent about how much you owe,contact us for advice.

WARNINGDid you sign a credit agreement?

Although catalogue companies should give you a creditagreement (under the terms of the Consumer Credit Act1974), this does not always happen. In this case the agreementis not enforceable in the county court. If you can’t remembersigning an agreement when you received the catalogue, thismay apply to you, contact us for advice.

MAKING PAYMENTS: WAYS TO PAY

When you have made arrangements with your creditors, youwill need a convenient way to pay.There are several things youcould do:

l Open an instant access account which offers free standingorders

l Ask your creditors for a paying-in book. Make sure thereare no counter fees at the post office or bank

l Check whether you have a PayPoint outlet at a local shopand if your creditors are part of this scheme

l If collectors call weekly at your home and you are offering asmall amount ask them to call every month instead, butmake sure you budget in order to make payments

l You may be able to pay at a creditor’s local office or retailoutlet such as a shop

l If you send cheques or postal orders make sure you sendyour reference number, and a covering note

l Keep a record of all the payments you make in case youneed to dispute the amount the creditor says you owe

MORE INFORMATIONFree debt management plan (DMP).

Could you pay via a free DMP? This means you make onepayment every month to cover all your credit debt payments.This will be divided up and sent to your creditors for you.Contact National Debtline for advice.They may be able to helpyou set a free DMP if:

– you have at least three credit debts– your money for credit debts is £100 per month or more– you owe at least £5,000.

REVIEWING YOUR OFFERS OF PAYMENT

Your creditors will often write to you after you’ve made anagreement, perhaps every three months, to see if you can nowafford to pay more. Don’t give up if you still cannot pay thenormal instalment. If you can’t increase your payments, writeand tell them, enclosing a copy of your personal budget sheet.

GOT A QUERY? Extra helpNational Debtline have a review pack for people who canafford to make offers of payment to their creditors and areview pack for people who have no available income.Both packs include sample letters that may helpwhen creditors ask you to review your payments.Call National Debtline on 0808 808 4000 and ask for the relevant Review Pack.

WHAT IF A CREDITOR REFUSES MY OFFER?

Sometimes one or more of your creditors will refuse to acceptthe offer of payment you have made on your personal budgetand demand more than you can afford. Sometimes they refuseto freeze the interest. If a creditor accepts your offer, doublecheck the interest has been frozen if they do not state this intheir letter. Don’t give up; you can usually persuade creditorsto accept your offer of payment by using the following steps:

l Start paying the amount you have offered anyway as agesture of goodwill.

l Write to the creditor again and ask them to reconsider.Tellthem your offer is reasonable and all you can afford.

l If some of your creditors have accepted your offer ofpayment, and frozen the interest, write to the creditors whohave refused and tell them this.

l We can advise you on how to approach your creditors ifthey refuse your offer or refuse to freeze the interest. Seesection on Interest on page 28.

l If a collector calls for your payment you should not letthem persuade you to pay more than the amount you haveoffered. Otherwise, you will not be able to make thepayments you have agreed with your other creditors,particularly your priority debts.

l Most creditors are members of a trade association and haveagreed to a code of practice.The code usually says creditorsshould be sympathetic in cases of genuine difficulty.

l Creditors may ask you to fill in their own budgeting forminstead.Ask them to accept your own personal budget asthis has all the information they need.They may also ask forextra information or “proof” such as wages slips or lettersfrom other creditors.You may want to help with reasonablerequests but if the creditor wants proof of all your bills,point out this would not be asked for by the court.Contact us for advice.

Contact us if you feel a creditor is acting unreasonably and wemay be able to put you in touch with their trade association.

pull-out draft personalbudget sheet

Use this to help you:work through the information packdraw up your own personal budget

work out offers to your creditors

Use this budget sheetas a rough draft.Thencopy the informationon to the loose budgetsheet. This can then besent to your creditorsalong with a sampleletter from p26 & p27.

See p10 “How to fill in your personal budget”.

Do not include county court judgments whichshould be included with credit debts. See p24.

Make sure you include any car tax, car insurance, petrol & MOT.

Don’t forget the cost of dental treatment,glasses/sight tests as well as prescriptions

This may include sundries such as birthdays,Christmas, repairs or emergencies.

This could be a car on hire purchase/ conditional sale that you need for work.

STEP 3 is explained on p12 of the pack.Go to STEP 4 if you have priority debts.

Go to STEP 5 if you have only credit debts.

This should be your totalincome from all sources.See p7 for advice onincreasing your income.

Breakdown of travel expenses

Petrol to work/shopping

Bus fares

Car tax

Car insurance

MOT and servicing

Total £

If the amount in Box B is more than your incomein Box A, see p12 andcontact us for advice.

PERSONAL BUDGET SHEET

Name: Number of people in my household:

Address:

*Useweekly

ORmonthly

figures allthe waythrough.

Do notinclude

credit debt payments

here

*Useweekly

ORmonthly

figures allthe waythrough.

NATIONALDEBTLINE

DRAFT

STEP 1

STEP 2

Wages/salaryWages/salary (partner)Job seeker’s allowanceIncome support/pension creditTax creditRetirement/works pensionChild benefitIncapacity benefitMaintenanceNon-dependants contributionsOther

Total income BOX A £

MortgageMortgage endowment policySecond mortgageRentCouncil taxWater ratesGround rent/service chargeBuildings/contents insuranceLife insurance/pensionGasElectricityOther fuelHousekeepingTV rental/licenceMagistrates court finesMaintenance paymentsHire purchase vehicleTravelling expensesSchool meals/meals at workClothingLaundryTelephone/mobile phonePrescriptions/health costsChildmindingOther 1

23

Total outgoings BOX B £

STEP 3Total income BOX A

take awayTotal outgoings BOX B

Money for creditors BOX C £



See p10 for sample housekeeping amounts.

List your creditors in the first column.

List the amount you owe each creditorunder “balance owed”.

To work out your offers of payment on a pro-rata basis, use the calculation on p25.

To change weekly to monthly figures multiply by 52 and divide by 12.

See page 35 for advice on mortgage debt.

See page 44 for advice on rent arrears.

See the section on “Priority debts”on p13.

STEP 5 is explained on p13. If you have no money left foryour credit debts after you have paid your priority debts,contact us for advice, or see p28 on making token payments.

The amount in Box D shouldnot be greater than Box C. Ifit is contact us for advice.

This is what youcan afford to payyour credit debts.

This should be the same figure asBox E in STEP 5. This is what youare offering to pay the creditors,not what you used to pay.

UDGET SHEET

Number of people in my household:

Make sure youchangeweeklyfigures tomonthlyfigures inSTEP 6.

If you have £100 amonth ormore you can pay via a DebtManagementPlan

STEP 4

STEP 6


arrearsRent arrearsCouncil tax/community


ElectricityOther

Magistrates courtfine arrears


2




Signed


STEP 5Money for creditors

BOX C £take away


Money forcredit debts BOX E £


Offer of repayment

Creditor Balance owed Monthly offer of repayment

Credit debts

1

2

3

4

5

6

7

8

9

Total owedBOX F £

Total monthly repayment BOX E £

© Copyright National Debtline & Money Advice TrustApril 2005 (England & Wales)

For a factsheet onWHAT IF A CREDITOR REFUSES MYOFFER OF PAYMENT?including sample letters you may find usefulcall National Debtline on 0808 808 4000

REMEMBERDon’t pay more than you can afford

The offers of payment in your personal budget are fair to allyour creditors and the most you can afford. If you allow onecreditor to persuade you to pay more than is shown, you willnot have enough for your outgoings and other creditors.

WHAT CAN I DO IF CREDITORS HARASS ME?

If you do not pay, your creditors are allowed to keepreminding you from time to time but they must not actillegally. If they threaten or harass you to try and make you pay,they may be committing a criminal offence.

The Office of Fair Trading (OFT) has issued new DebtCollection Guidance from July 2003. It sets out the kind ofbehaviour which the OFT will regard as “unfair businesspractices”. Breaches may call into question the lenders fitnessto hold a consumer credit licence.

The general principles in the guidance are that creditorsshould not:

l communicate with you in an unclear, inaccurate ormisleading manner (e.g. use documents made to look likeofficial court documents)

l contact you in a deceitful manner (e.g. by misrepresentingthe legal position)

l put psychological pressure on you to the point of beingoppressive (e.g. threatening to tell your neighbours aboutyour debts)

l use unfair methods (e.g. refusing to negotiate or bypassingyour representative and contacting you direct)

l levy charges unfairly (e.g. apply unreasonable charges whichbear no relation to recovery costs).

If you think you are being treated unfairly, contact us foradvice about making a complaint to the Office of Fair Trading.

You can’t be prosecuted in the criminal court because youhaven’t paid your debts but some creditors might try to makeyou think you can – that’s illegal as well.

If you are being harassed in any of these ways tell your localtrading standards department or consumer protectiondepartment. If you have any queries about whether a creditoris acting legally, contact them.Their phone number and addressare in the phone book, under the name of your local council.

For a factsheet onHARASSMENTcall National Debtline on 0808 808 4000

COLLECTION AGENCIES

The creditor may pass your debt on to a collection agency.Don’t worry. A collection agency has no greater powers thanthe creditor.They are not bailiffs and have no rights to come into your home. If you feel a collection agency is behaving unfairlysee What can I do if creditors harass me? above.You shouldnegotiate payments with the collection agency in the same wayas your other creditors. Some collection agencies may try tocharge you extra fees for collecting the debt from you.

l Check if the agreement you signed with the creditor allowsthis to happen.

l We are concerned about extra fees being charged bycollection agencies. If you feel the fees are making it harderfor you to pay you may be able to complain to a tradeassociation. Contact us for advice.

WHAT IF MY CREDITORS TAKE COURT ACTION?

Many people are frightened of courts especially when they feelguilty because they owe money. But the county court is notthere to judge anyone guilty or innocent, but to settle disputesabout money owed, and how to repay it.The court is not thereto serve the interests of creditors alone. If court action is takenyou will not usually have to go to a court hearing. Most of theprocedure is done through the post.

l You will receive a “claim form” from the court.The claimform will include details of the debt, known as the“particulars of claim”.

l If you don’t agree with the amount of the debt the creditorsays you owe, fill in the “defence form”. In this case send theform back to the court.

GOT A QUERY?If you need extra advice

Putting in a defence or counterclaim is complicated.Contact us for advice.

If you agree you owe the debt

There will be a reply form with the claim form, for you tomake your offer of repayment.This is called the “admissionform”. There are instructions included on how to fill in theform. It looks quite like a personal budget sheet and asks forsimilar information on income and essential outgoings.

WARNINGDo make an offer of payment

In the claim form there is a section you can fill in to include thepayments you make on your priority debts.You also have spaceto include any other court judgments you have, and to list allyour credit debts. It is important to make an offer of paymenton the form in the “offer box”. If you leave it blank the court willdecide you have not made an offer and tell you to pay the wholedebt at once or order you to pay what the creditor asks for.

31

32

CREDIT DEBTS

l Fill in the form and send it back to the creditor (called the“claimant”) not the court. The address will be in the“address for service” box and may be the creditor’s agent orsolicitor. There is a time limit of 16 days from the date on thepostmark to send back the form. If you don’t send it back, thecourt can order you to pay the whole debt in one lump sum.

l If the creditor accepts your offer you will receive an orderfrom the court to pay your offer in monthly instalments.You should send your payments to the creditor, not thecourt. Keep a record of what you have paid and when.

l If the creditor does not accept your offer the court willdecide (or “determine”) what you should pay each month.

l If you owe under £50,000, the court staff will decidewithout any hearing. If you owe over £50,000 the districtjudge decides either by looking at the papers or at a hearingin your local county court.

l If you cannot afford what the court has decided you shouldpay, you can ask the court to look at your offer again.This iscalled a “re-determination”.There is no fee for doing this. Youmust do this within 14 days of getting the order.The caseshould be transferred to your local county court for a hearing.

l The re-determination will be done by the district judge.Where the order was made by the court staff, the districtjudge can decide to have a hearing or make a decision bylooking at the papers.You can ask for a hearing when youwrite to the court to ask them to look at your case again.

l If the district judge made the first order without a hearingthen the re-determination of your offer must be at a hearing.

l If there is a hearing, the case will be automaticallytransferred to your local county court so you can attend.The court will give you a hearing date.You must go to thehearing, which should be in the district judge’s rooms (inprivate).Take a copy of your personal budget with you.

WARNING Applying to get your payments reduced

If a district judge made the first order on how much you shouldpay at a hearing you cannot apply for a re-determination butmust apply for the monthly payment to be reduced or “varied”.See Reducing payments on court orders below.

For a factsheet onREPLYING TO ACOUNTY COURT CLAIMcall National Debtline on 0808 808 4000

Reducing payments on court orders

Monthly payments you have been ordered to make can bereduced if your circumstances change or if you can’t affordthem.You can apply for a reduction using form N245, whichyou can get from the local county court office.There willusually be a fee to pay with your application.

If creditors have already taken you to court you can apply to thecourt for a reduced payment based on your pro-rata offers, usingform N245. See How to work out offers of payment on page 24.

For a factsheet onREDUCING PAYMENTS OR SUSPENDING A BAILIFF’S WARRANT ON A COUNTY COURT JUDGMENTcall National Debtline on 0808 808 4000

If I am taken to court, what are the advantages?

l The court will stop interest being charged on most ordinarycredit agreements.This means that the amount you owecannot increase. If you owe over £5,000 on a personal debt orfor supplies for your business, your creditor may still be able tocharge interest. Contact us for advice. Some creditors maywell tell you they can charge interest on a debt before andafter judgment. If this happens to you contact us for advice.

For a factsheet onINTEREST CHARGES AFTER JUDGMENT call National Debtline on 0808 808 4000

l In most cases the court is likely to let you pay a monthlyamount which you can afford. But it can only do this if youexplain your income, outgoings and other debts on thereply form to the county court claim.

l Usually you won’t have to go to the court for a hearing.Most of the procedure is done through the post.

What are the disadvantages?

l Court costs are added on to your debt, although creditorscannot add on what they wish. Court costs are added on asliding scale depending upon the amount of money owed.

l Details of judgments are recorded on the register of countycourt judgments and passed to credit reference agencies.This may make it difficult for you to get credit in the future– see Can I get credit again? on page 34.

l If you pay off your county court judgment within onemonth you can ask to have the entry removed, but there isa fee for doing this.

l If you do not pay the monthly amount which the courtorders, the creditor may take further action against you. Somake sure you pay your monthly payments regularly orapply for them to be reduced if you cannot afford the firstamount which the court fixed. See Reducing payments oncourt orders on this page.

Administration orders

When you have been taken to the county court you might beable to apply for an administration order.This is a way ofputting all your debts together and making one monthlypayment into the court.The court then shares it among yourcreditors. For some types of debt, only arrears can beincluded.The total of the debts must be no more than £5,000.

Your creditors can’t take any further action against you if youhave an administration order.

The application form (form N92) is available from your localcounty court office.You may need help in filling in theapplication form as local courts vary in the way they deal withadministration orders.

If you want to apply for an administration order contact usfirst for advice.

For a factsheet onADMINISTRATION ORDERScall National Debtline on 0808 808 4000

Further action the creditor can take

If you do not pay the monthly amount the court orders thecreditor can ask the court to take further action.Thefollowing methods are most commonly used.

Bailiff ’s warrantThe creditor can ask the court to send a notice from thecounty court bailiffs called a “warrant of execution”. You donot have to let the bailiffs in.The bailiffs cannot forcetheir way into your home unless you have let them inbefore.They could take a car parked nearby.You can askthe court to suspend a warrant by filling in a county courtform N245 and making an offer of payment you can afford.You will need to pay a fee to do this (see box below).

REMEMBERFees to pay to the court

If you want to ask the court to suspend a warrant you willneed to pay a fee, unless you are on income support, incomebased job seeker’s allowance or if you receive the guaranteecredit element of pension credit.You don’t have to pay the feeif you get working tax credit with child tax credit or if itincludes a disability element and your income is below a setamount.There is an application form called an EX160 to fill into ask for the fee to be waived by the court if it will causeyou hardship or because you are on benefits.

REMEMBERKeeping your belongings

l As long as you act quickly, it is rare for county court bailiffsto actually take people’s belongings away.

l Basic household goods cannot be taken.

l County court bailiffs have no right to break in, unless youlet them in before.

l Use an N245, to suspend the warrant immediately.

For a factsheet onSUSPENDING A BAILIFF’S WARRANT IN THE COUNTY COURT call National Debtline on 0808 808 4000

Attachment of earningsThe court can order your employer to make deductions fromyour wages to clear your debt.The rate is worked out by thecourt using a set formula.This order can be suspended if itmight affect your employment and you can make thepayments yourself. If a creditor is threatening to make anattachment of earnings against you contact us for advice.

For a factsheet onATTACHMENT OF EARNINGS IN THE COUNTY COURTcall National Debtline on 0808 808 4000

Charging OrdersIf the court orders you to pay your judgment in one lump sum(or “forthwith”) or if you fall behind on the monthly amountordered by the court, the creditor can ask for a charge on yourhome.This is called a “charging order”.This means the debt issecured on your home like a mortgage and may put your houseat risk.There must be a hearing in the court before a chargingorder is made final. It is up to the court to decide and there areseveral arguments you can use against a charging order being made.

If a creditor applies for a charging order contact us foradvice before the hearing.

For a factsheet onCHARGING ORDERScall National Debtline on 0808 808 4000

REMEMBER Your rights

l If you do have to attend a court hearing, your name will notappear in the local paper, so don’t worry about publicity.

l The county court is not a criminal court and is not there topunish anyone.

l The court staff and the district judge who decide the casesare used to dealing with people who do not have a solicitor.

l If you receive a letter or form from the court you do notunderstand, take it to them and ask for an explanation, orcontact us for advice.

Do remember that you have rights as well as your creditors.

BANKRUPTCY – A QUICK WORD

Bankruptcy is really a last resort and most creditors areunlikely to make you bankrupt.You must owe £750 or moreto that creditor before they can make you bankrupt. It coststhem money in court fees and they are unlikely to get thedebt paid back to them unless you have assets that can besold to pay your debts.The aim of bankruptcy is to claimassets that can go towards paying off your creditors. Onceyou are bankrupt your creditors can usually take no further action against you.

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34

CREDIT DEBTS

You can make yourself bankrupt but the fees are high. Goingbankrupt can have important consequences particularly if youown your home and it is worth more than your mortgage.Your house could be sold as an asset.

Bankruptcy can be a solution if you owe a lot of money, haveno assets, and can see no way of ever paying the debts off.There are new bankruptcy rules from April 2004 under theEnterprise Act.You are made bankrupt normally for a maximumof one year. Usually debts that have not been paid are thenwritten off and you are “discharged” from the bankruptcy.Youmay still have to make monthly payments for a total of threeyears under the terms of your bankruptcy order.

If a creditor has threatened to make you bankrupt or youthink it may be an option for you to consider then contactus for advice.

For a factsheet onBANKRUPTCYcall National Debtline on 0808 808 4000

INDIVIDUAL VOLUNTARY ARRANGEMENTS

There is an alternative to bankruptcy called an individualvoluntary arrangement (IVA).This is a formal arrangementthrough the county court to pay an agreed amount off yourdebts over a shorter period, such as five years.The rest arewritten off.

An IVA has to be set up by an insolvency practitioner whose feescan be quite high. Creditors can stop the IVA going ahead byvoting against it. It is usually only worth looking at if you have alot of money available every month to pay your creditors and/oryou have a lump sum or assets that can be included.You need tobe careful if you own your own home. Contact us for advice.

For a factsheet onINDIVIDUAL VOLUNTARY ARRANGEMENTScall National Debtline on 0808 808 4000

CAN I GET CREDIT AGAIN?

There is no such thing as a “credit blacklist” but if you do not payyour debts you may find it difficult to get credit in the future.

When you apply for credit most companies will consult a credit reference agency.They keep records of all county courtjudgments, bankruptcy orders and details about credit accounts.This information is kept on file for six years. It will show if youare behind with your payments. If you are in arrears or have acounty court judgment you may well be refused credit.

The credit records will also show when you have paid yourdebts. Information should only be kept on you and anyone youa have a “financial connection with” at the same address. Afinancial connection is created if you make an application forcredit in joint names or open a joint bank account.This meansthat other people’s credit details should not affect your creditrating.You can file a notice of “disassociation” with the creditreference agency to tell them a financial connection has ended.

If you are refused credit you have a right to ask if the financecompany has used a credit reference agency. They must giveyou the agency’s name and address.

The company should give you good reasons why they turnedyou down for credit.This includes telling you if they have useda credit scoring system.

To find out what information an agency holds on you, write tothem and enclose a cheque or postal order for £2.The agencyshould send the information within seven days. If theinformation is wrong, you have a right to change it. If theinformation is correct, the agency does not have to remove iteven if you ask them to. If you have paid the debt, you can askthem to mark the file as “satisfied” to show this is the case.

The Office of the Information Commissioner publishes auseful guide for dealing with credit reference agencies, calledCredit Explained. The address is listed on page 58.

For a factsheet onCREDIT REFERENCE AGENCIEScall National Debtline on 0808 808 4000

Credit repair companies

You may have heard of companies that offer to clear yourcredit record on payment of a fee. Be very careful. Manycredit repair companies promise to remove judgments whenthey cannot legally be removed. Before sending any money toa credit repair company, contact your local trading standardsdepartment or look at this website which gives moreinformation on credit repair (www.ukcreditrepair.co.uk) orcontact us for advice.

OPENING A BANK ACCOUNT

You may have difficulty opening a bank account if you havedebts showing up on your credit file. Some banks and buildingsocieties have “instant access” accounts, also known as basicbank accounts, which allow you to have wages or benefits paidin and take cash out. Some accounts let you have direct debitsand standing orders.

You are not usually allowed cheque books, cheque guaranteecards or an overdraft. If you want this type of account youshould shop around the high street banks and building societies.

The post office now offers basic bank account customers thefacility for paying in and withdrawing cash at a post officecounter. If you don’t want a basic bank account you can optfor a post office “card account”. Benefits can be paid into thisaccount and you can make withdrawals at a post office counter.

EXTRA INFORMATIONInstant access accounts

National Debtline can send you a list of instant accessaccounts that may help you.This can also be found on the FSA website www.fsa.gov.uk. Call National Debtline on 0808 808 4000.

GETTING BEHIND WITH MORTGAGE PAYMENTS

This section is for people with mortgage arrears.You may havea first and second mortgage:

l The first mortgage is the loan you took out to buy yourhome.

l The second mortgage (also known as a secured loan,further advance, second charge or sometimes aconsolidated loan plan) is a separate loan which is securedon your home.

Check all your loan agreements to see if they are “unsecured”or “secured” on your home. If they are secured loans, treatthem as priority debts because lenders can ask the court forpossession of your home if you cannot pay your monthlyinstalments.The property can then be sold to pay off your debt.

The legal term for the company or building society who gaveyou your mortgage is a “mortgagee”. In this pack we call them “lenders”.

35

MORTGAGE ARREARS

This section contains useful information for people with mortgagearrears or debts secured on their home.

l Getting behind with mortgage payments.

l Contact your lender if you have problems.

l FSA rules and the mortgage code.

l Help towards paying your mortgage.

l Arranging to clear the arrears.

l What if I can’t afford my mortgage?

l What if my home is not worth enough to repay the mortgage?

l Mortgage shortfalls.

l What should I do if I have a mortgage shortfall?

l Second mortgages or secured loans.

l What is a “time order”?

l Secured overdrafts.

l What if my mortgage lender takes me to court?

l How to stop an eviction.

Mortgage arrears are very important because you could lose your home if you do not pay them off. They must be treated as a priority debt.

36

MORTGAGE ARREARS

CONTACT YOUR LENDER IF YOU HAVE PROBLEMS

It’s never too early or too late to contact your lender.Youmay not be in arrears yet or your lender may have startedcourt action.Whatever the situation, do not delay incontacting your lender. Get in touch as soon as possible bywriting, phoning or making an appointment to see them.

If the local office is unhelpful or difficult, contact their headoffice and try to reach an agreement with them.

If you have not paid the mortgage for a number of months it’svery important that you start paying what you can, even if youcan’t afford the full monthly payment.

FSA RULES AND THE MORTGAGE CODE

Most lenders are now regulated by the Financial ServicesAuthority (FSA).The FSA rules say a lender must “deal fairly withany customer who is in arrears”.The rules also require a lender to:

l Have a written policy on how to deal with customersin arrears

l Establish a payment plan which is practical in yourcircumstances and which extends over the remaining term of your mortgage, where appropriate

l Send you regular information about your arrears

l Not put pressure on you through excessive telephonecalls or letters.

If you think you are being treated unfairly by a lender, you cancomplain to the Financial Ombudsman Service.The contactdetails are at the back of this pack.

MORE INFORMATIONThe FSA rules have now replaced the Mortgage

Code but you may still be able to complain to the FinancialOmbudsman Service under the Mortgage Code if yourmortgage was taken out before 31st October 2004 and yourcomplaint is about events that took place before this date.TheMortgage Code included a commitment to consider all casesof financial difficulty and mortgage arrears sympathetically andpositively. If you want more information about the MortgageCode contact us for advice.

HELP TOWARDS PAYING YOUR MORTGAGE

Tax relief

MIRAS (mortgage interest relief at source) has been abolished.You may have been eligible to get tax relief on the first £30,000of your mortgage up to April 2000. MIRAS can be backdatedfor up to six years. If you think you did not get MIRAS on yourmortgage check the reason with your local tax office.

Increasing your income

You may be able to claim other benefits such as incomesupport, pension credit, job seeker’s allowance, working taxcredit and child tax credit. See page 7 for information onincreasing your income. Contact your local Department for

Work & Pensions office or local advice centre for moreinformation or contact us.

Mortgage payment protection insurance

Check that you have claimed under any mortgage paymentprotection insurance you may have.This is particularlyimportant now that you can get less help with your mortgagepayments from income support, pension credit and jobseeker’s allowance. If you are turned down by the insurancecompany, contact us for advice.

Mortgage rescue schemes

Some lenders offer mortgage rescue schemes.These involvebuying back your home so that you become a tenant, or partrent/part buy schemes (these are also known as sharedownership schemes).

Mortgage rescue schemes are rare. Contact your lender tosee if they run a scheme.You can also ask the HousingCorporation for details of local housing associations who mayrun a scheme, and ask your local council housing department.The address for the Housing Corporation is listed on page 58.

Help from income support, pension credit and job seeker’s allowance

If you claim income support, pension credit or income basedjob seeker’s allowance, the Department for Work & Pensionswill normally pay at least some of the interest on themortgage if you took the mortgage out to buy your home.

From 2nd October 1995 these are the rules:

l From December 2004 mortgage interest is paid at a standardrate set by the government and based on the Bank of Englandbase rate, not at the rate you actually have to pay. If yourinterest rate is less than 5% there are special rules that mayapply to you. Contact us for advice.

l All mortgage interest payments are sent directly to your lenderby the Department for Work & Pensions (DWP), unless yourlender is not part of the scheme agreed with the DWP.

l You can only claim interest on the first £100,000 of yourmortgage, unless the extra was taken out to adapt yourhome for someone with a disability.

l There is no help with capital payments on your mortgage or any endowment policies or with any interest on arrearsbuilt up during the waiting period of your claim (see below).

Existing borrowersIf you took your current mortgage out before 2nd October1995, you will generally have to wait eight weeks beforegetting any help with mortgage interest payments when youclaim. You will then only get half of your mortgage interestpaid for the next 18 weeks (four months) of your claim.Afterthis, you will have your mortgage interest paid in full.

New borrowersIf you took out a new mortgage, or remortgaged, after2nd October 1995, you will generally get no help at all withmortgage interest payments for the first 39 weeks (nine

37

months) of your claim.You will then have your mortgageinterest paid in full.

Special rulesIf you or your partner are aged 60 or over, the Departmentfor Work & Pensions will pay the interest in full immediatelywith no waiting time as part of your claim for pension credit.

You will be treated as an existing borrower and not have towait the full nine months if:

l you don’t have to sign on because you are caring forsomeone who is sick

l you have had a mortgage payment protection insuranceclaim refused because of pre-existing illness or HIV/AIDSrelated illness

l you are a prisoner on remand

l you have a child living with you and you are claiming incomesupport because your partner has died or has deserted you.

Other help from income support, pension credit andjob seeker’s allowance?You may also claim income support, pension credit, jobseeker’s allowance for the interest on the following:

l A loan that was used for home repairs and improvements.You are still subject to the same waiting periods (seeabove). Only certain repairs and improvements count, suchas adapting your home for someone with a disability. If yourclaim is turned down you can appeal against the decision.Contact us for advice on whether it is worth appealing.

l A mortgage which is in somebody else’s name, if they arenot paying and you have to pay the mortgage in order tokeep your home.The Department for Work & Pensions willdecide if it is reasonable for you to pay. If you are in thisposition contact us for advice.

l A new mortgage with any lender for the same amount orless than your existing mortgage as long as this is the onlyremortgage since 2nd October 1995.This rule applies from28th November 2004.

l Other housing costs such as ground rent and some service charges.

What will income support, pension credit and jobseeker’s allowance not help with?You cannot normally claim for help for:

l the full interest on a remortgage for more than the originalloan that was used to buy your home, unless the extra wasused for certain home improvements (see above)

l a mortgage or secured loan if the money was used to payoff other debts, fund a business or buy a car or holiday

l interest on a larger loan taken out whilst you are onincome support, pension credit or job seeker’s allowance orwithin 26 weeks of coming off benefit. Only the interest upto the amount of your original loan will be covered

l if they decide your housing costs are excessive because yourhome is larger or more expensive than you need

l the full interest on a mortgage if you have adults living withyou who are not part of your household.The Departmentfor Work & Pensions calls them “non-dependants”, and willusually make a deduction from your mortgage interestpayment depending upon the circumstances and age of yournon-dependant.The non-dependant is then expected to makeup the difference. In some circumstances no non-dependantdeduction will be made (e.g. if you or your partner are blindor receive attendance allowance or disability living allowancebecause you need care). Contact us for advice.

WARNINGIf you are on income support

If you have been on income support continually from before 2nd October 1995, the amount of help you receive is protected.This is called “add back”. This rule is complicated and the helpyou receive can disappear over time. Contact us for advice.If you have more than a 12 week break in your claim fromAugust 1999 you will lose your protection and your housingcosts.Any new claim for benefit will be paid under the new rules.

What else can I do if I am on income support, pensioncredit or job seeker’s allowance?If you are in arrears and your lender is threatening to takecourt action, you should take the following steps.

l Ask your lender if they will accept direct payments if theydo not already receive them.

l Get a complete breakdown of how your housing costs havebeen worked out by the Department for Work & Pensions(DWP) if your full mortgage is not being paid. Make sureyou know how much you have to contribute for the capital/endowment part of your mortgage.You may also have topay towards the interest on your mortgage if the standardrate paid by the DWP is less than your actual interest rate.Your lender may expect you to make up the payments fromyour benefit.There may be deductions being made becauseof non-dependants living with you. Check these deductionshave been made correctly by contacting your DWP, orcontact us for advice.

l Tell your lender you are on income support, pension creditor job seeker’s allowance.

l Most lenders are now regulated by the Financial ServicesAuthority.The FSA rules have replaced the Mortgage Codebut you can still complain to the Financial OmbudsmanService under the Mortgage Code if your mortgage wastaken out before 31st October 2004 and your complaint isto do with events before that date.

REMEMBERStandard rate interest

Mortgage interest is paid at a standard rate set by thegovernment, not at the rate you actually have to pay.All yourinterest may not be covered unless your interest rate is lessthan the standard rate.

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If the lender takes you to court, ask the court not to make apossession order because the DWP are paying your mortgageinterest. See What if my mortgage lender takes me to court? onpage 41. If the head office will not agree to stop court actioncontact us for advice.

GOT A QUERY?Help with mortgage interest

If you are not sure that you are getting all the help with themortgage interest that you should, contact a local adviceagency or contact us for advice. You may be able to appealagainst the decision of the Department for Work & Pensions.

ARRANGING TO CLEAR THE ARREARS

WARNINGDon’t take an extra loan

Don’t be tempted to take out an extra loan to repay yourmortgage arrears. Often these are very expensive and couldput your home at greater risk. Contact us for advice.

You will usually have to offer an extra monthly payment to clearthe arrears. Lenders will sometimes ask for the arrears to becleared over 12 to 24 months. Ask for a longer time to paythe arrears if you cannot afford to do this. If you cannotmanage to clear the arrears within the time the lender wants,start paying the amount you have offered anyway. Explain whyyou can’t pay the amount they have asked for, particularly ifthere are circumstances such as a long-term illness, birth of achild, relationship breakdown or unemployment.

If the value of your home is far more than the total mortgage,tell the lender.The more your house is worth, the less riskyour lender is taking.A recent court of appeal case (calledCheltenham & Gloucester v Norgan) says in this situation areasonable time to pay back the arrears could be the wholelife-time of your mortgage. If this applies to you, tell yourlender. Contact us for advice.

If your home is not worth as much as the mortgage, see thesection on page 39.

OTHER ARRANGEMENTS YOU COULD CONSIDER

Sometimes your lender may agree a different arrangement.Some of these are set out below.

Adding the arrears to your mortgage

This is called “capitalising” the arrears. Normally you can onlydo this:

l on first mortgage arrears; and

l if the value of your property is a lot more than the totalamount of your mortgage.

It works like this: the amount of the arrears is added to thetotal mortgage. The monthly repayments are increased totake account of this. So the arrears are spread over theremaining years of the mortgage term.

Your lender may be more likely to agree to this if you havealready kept to a payment agreement for some months,because this shows you are able to pay.

Changing to a repayment mortgage

If you have an endowment mortgage you may be able tochange this to a repayment mortgage. Endowment mortgagesinclude an insurance policy and if you have had this policy fora few years it may have a surrender value.The surrender valueis the amount of cash the policy is worth if you cancel it.

Ask your lender about this and get independent advice onwhether:

l it is a good idea to cash in or sell your endowment

l changing to a repayment mortgage will reduce your monthly payments.

There are also other companies in the market who will buyinsurance policies at higher rates than the insurers will pay insurrender value. If you decide to sell and the policy is “assigned”to your mortgage company, you must request they release thepolicy before you can cash it in. If you cancel your endowmentpolicy, ask your lender about a mortgage protection insurancepolicy.This would pay the mortgage if you died.

If you do change to a repayment mortgage you could also askyour lender to extend the mortgage term (see below).

WARNINGSeek financial advice

If you are thinking of surrendering your endowment policy orchanging to a repayment mortgage you should always seekindependent financial advice.There may be a charge for theservice. For a list of independent financial advisers in yourlocal area contact the IFA Promotions office.The number islisted on page 58.

Increasing the mortgage term

Most mortgages are spread over 25 years – this is called themortgage term. If you have already lived in your home forseveral years, you could ask your lenders to extend the termback to 25 or even 30 years.This could cut the monthlypayments so that you could afford to pay something towardsthe arrears each month. If you have an endowment mortgage,this may be more difficult. Ask your lender.

Paying off the interest only

If you have a repayment mortgage you could ask your lender toaccept a monthly payment which covers only the interest partof the normal monthly payment.This will probably have to be atemporary arrangement. If you already have arrears your lenderwill expect small monthly payments off the arrears as well.

What else can I do?

You should make sure that you are getting all the help whichis available. You may be able to claim income support, pensioncredit, job seeker’s allowance, working tax credit or child tax

credit (see page 7). Contact your local Department for Work & Pensions office for more information. Or contactus for advice.

WHAT IF I CAN’T AFFORD MY MORTGAGE?

Many people find that because their mortgage is high or theirincome has fallen they can’t pay the monthly instalments.If you are in this situation:

l explain the problem to your lender

l pay what you can afford

l look for ways to increase your income.

Handing back the keys

REMEMBERHanding back keysYou may be thinking about handing the keys back to

your lenders or selling your home. Contact us for advice.This may not be a good idea.

If you give your home back to your lenders you will still becharged the monthly instalments on the mortgage. If you donot pay, the instalments will be added to the debt you owewhen the house is sold. Extra interest can also be added on tothe arrears figure.The monthly instalments will only stopbeing added on when your lender sells your home.This couldtake a long time.The lender will probably add solicitor’s andestate agent’s fees and any court costs on to the bill.

Your lender will probably get a lower price for the house thanif you sold it yourself. It is harder to get a buyer for an emptyhouse. Empty houses are more likely to be vandalised or damaged.

If you give up your home and ask your council to re-house youthey will probably say that you have made yourself “intentionallyhomeless” and so refuse to offer you anywhere to live. Contactus before you do this. See Getting rehoused on page 56.

Selling your home

If you are thinking of selling your home you need to thinkabout where you will live.

l Can you “trade down” by selling your home and buying asmaller property?

l If you sell your home and ask your local council to rehouseyou they will probably say you have made yourselfintentionally homeless and so refuse to offer you anywhereto live. See Getting rehoused on page 56.

l Look at renting from a housing association as an option.

l Private renting may be an option but you need to be carefulabout the type of tenancy you are offered and how high therent is. Sometimes if you claim housing benefit (rent rebate)your council can decide that your rent is too high andrestrict the amount of rebate they will pay you.

l You may have relations or friends that you can live with,at least temporarily.

Contact us before you put your home on the market. SeeGetting rehoused, on page 56.

WHAT IF MY HOME IS NOT WORTH ENOUGHTO REPAY THE MORTGAGE?

If your home is not worth enough to repay the mortgage infull, this is often known as having “negative equity”. If you havenegative equity then your options can be limited.Your lendershould consider allowing you to sell your house yourselfunder the FSA Mortgages: Conduct of Business Rules.

For a factsheet onNEGATIVE EQUITYcall National Debtline on 0808 808 4000

If you hand back the keys or your lender repossesses, they willsell the property. If your home is not worth enough to repayyour mortgage, your lender can ask you to pay the difference.This is usually called a “mortgage shortfall” (see below).

MORTGAGE SHORTFALLS

When you bought your home you may have made a one-offpayment to your lender for indemnity insurance.This isknown as a mortgage indemnity guarantee. From 31stOctober 2004 these will be known as “higher lending charges”under the FSA rules.This means that if the lender repossessesand sells your home for a price which does not clear yourdebt to them, they can claim any loss from the insurancecompany.

WARNINGIndemnity policies

The indemnity policy is usually insurance for your lender, notfor you.The insurance company can ask you to pay them whatthey have paid out to the mortgage lender.

l The indemnity policy may only cover the lender’s loss to aset limit, so if your debt is much bigger than the sale priceof your home you may still owe something to the lender, aswell as the insurance company.

l The lender and the insurance company often club togetherand one company will pursue you for the whole debt.

l Most second mortgages are not covered by an indemnitypolicy. Even if your first mortgage is repaid from the saleyou may still owe something to your second lender, as wellas the insurance company.

l The insurance company can ask you to pay them what theyhave paid out to the mortgage lender.

Indemnity policies often vary, so contact your lender to find out whether you have paid for a policy and what itsterms are.

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WHAT SHOULD I DO IF I HAVE A MORTGAGE SHORTFALL?

WARNINGAfter six years

If the lender first contacts you over six years from the dateyour house was sold it may be too late for them to recoverthe debt.This applies if they are members of the Council ofMortgage Lenders. Before getting in touch with the lendercontact us for advice.

You have options on how to negotiate with the lender.You could:l make an offer of payment

l ask the lender to accept a small lump sum and write-off therest.This is called an offer in “full and final settlement”.

They could:l reject your offer, and take you to court where a level of

repayment could be set

l claim on their indemnity policy if they have one

l ask for you to agree to a charge (a type of mortgage to“secure” the debt) if you have bought another home.

If you are in a rented home and have no assets (valuablegoods or savings) explain this to your lender or the insurancecompany.They may decide not to take any further action.

For a factsheet onMORTGAGE SHORTFALLScall National Debtline on 0808 808 4000

SECOND MORTGAGES OR SECURED LOANS

You may have a second mortgage or secured loan. Even if youare paying your first mortgage in full, if you don’t keep up withpayments on the second mortgage you could lose your home.

Second mortgages tend to be at higher interest rates thanfirst mortgages and run for shorter periods, for example fiveor ten years.This makes them expensive and also means thatthe monthly payments will be higher.

l If your home is worth more than your mortgages, it may beworth asking your first lender if they could offer you aremortgage.This means giving you one new mortgageinstead of the two you already have.This may be helpful asthe new monthly mortgage payment should be cheaper thanthe two previous payments added together. Before signingany agreement, contact us for further advice.

l You may be able to claim income support, pension credit orjob seeker’s allowance to cover the interest on a secondmortgage, if it was for certain home improvements. SeeHelp from income support, pension credit or job seeker’sallowance on page 36. Contact us for advice.

l If your second mortgage company takes you to court, seeWhat if my mortgage lender takes me to court? on page 41.

l Some lenders charge very high interest rates or havecontracts with a higher interest rate if you get into arrears.

You may be able to argue this is an unfair contract term.Contact your trading standards department or contact usfor advice.

WHAT IS A “TIME ORDER”?

With some secured loans you can apply to the court for a “timeorder”.A time order is particularly useful if you have a securedloan at a high rate of interest and large monthly instalmentsthat you cannot afford.The court could reduce the monthlypayments, extend the term of the loan, and even change theinterest rate. But the court can only make a time order if:

l the amount you originally borrowed was less than £15,000.On agreements taken out on or after 1st May 1998, thelimit is £25,000, and

l the lender has “called in” the loan.This means they havesent you a “default notice” demanding you pay the fullamount you owe within a fixed period of time.

You can still apply for a time order after your lender has taken court action.

Courts do not make time orders very often, but may be morelikely to help following a recent court decision. You should getdetailed advice from a local advice centre or contact usbefore you apply to the court. You may need to pay a fee todo this (see box below).


If you want to ask the court for a time order you may needto pay a fee, unless you are on income support, income basedjob seeker’s allowance or if you receive the guarantee creditelement of pension credit.You don’t have to pay the fee if youget working tax credit with child tax credit or if it includes adisability element and your income is below a set amount.There is an application form called an EX160 to fill in to askfor the fee to be waived by the court if it will cause youhardship or because you are on benefits.

If you can’t afford the full monthly payment on your securedloan and think you may be able to apply for a time order,contact us for advice.

For a factsheet on TIME ORDERScall National Debtline on 0808 808 4000

SECURED OVERDRAFTS

You may have a bank overdraft secured on your home (e.g. because you have a small business).This may have highinterest charges and no fixed monthly instalment to pay.

If the bank takes you to court it may be difficult to suspend apossession order to pay off the overdraft in instalments. If youhave an overdraft secured on your home contact us for advice.

If a bank is asking you to agree to secure an overdraft on yourhome see Debts with your bank on page 29, and contact usfor advice.

WARNINGBeware of consolidation loans

Beware of advertisements in newspapers offering loans toclear all your debts (often called “consolidation loans”).Theyare often very expensive and will put your home at risk.

WHAT IF MY MORTGAGE LENDER TAKES ME TO COURT?

You cannot be evicted from your home without a court order.If you have left your home voluntarily the lender might be ableto take over the house and sell it without going to court first.Court procedures are the same for first and second mortgages(secured loans), so the following advice applies to both.

Before the hearing

These are the usual stages leading to county court action.

l When your mortgage is in arrears the lender will write askingfor the arrears to be paid. If you have not already contactedyour lender, do so now and try to reach an agreement.

l If you don’t contact your lender to agree an arrangement topay the arrears, they will write again.They may refer thematter to their solicitor who will write to you andsometimes send a “calling-in notice” or “default notice”.Thisasks you to pay off the whole debt.

l Contact the solicitor and try to negotiate payment of thearrears. If the solicitor rejects your offer out of hand you caninsist that they tell the lender about your offer.Alternatively,contact the lender’s head office directly yourself to try andreach an agreement. Even if your lender refuses your offer,start paying the amount you have offered anyway.

Court papers

If you have not reached an agreement, the lender will apply toyour local county court to issue a “possession claim” whichwill give you a date and time for a hearing in the countycourt.You should have at least 28 days’ notice of the hearingdate. This doesn’t mean you will automatically loseyour home. Even if the court decides you cannot afford tostay there, you will not be evicted from your home on thedate of the hearing.

A document called “particulars of claim” will be sent as well.This sets out your lenders’ case for taking possession of yourhome.You will also receive form N11M called a “defenceform” which you should fill in and return to the court within14 days.

Filling in the defence form

l It is important to fill in the defence form as you can give thecourt a full picture of your finances and what you can affordto pay as well as say if you disagree with the amountclaimed.

l Check the details of your lender’s particulars of claim tosee if you agree with them. Say if you think that theinformation is wrong.You will be asked how much you canafford to pay off the arrears.

l Use your personal budget sheet to work out how muchyou can afford to offer.

l Put down an amount which you can afford, even if yourlender has already refused your offer.

l Use the personal budget guidelines on page 10 of the packto complete the financial details on the form.

l You are given a chance to explain why you got into arrears.If you are hoping that your circumstances will improve inthe future, or you want time to be able to sell you home,then say so in the space provided.

l It is still worth sending back the reply form even after 14days if it will reach the court before the hearing date.Remember to keep a copy.

REMEMBERStart paying what you have offered

It’s important to start paying the amount you have offered.You can still negotiate with your lender or their solicitor.If you can reach an agreement, the hearing date can be put off (“adjourned”) to give the agreement a chance to work.

The hearing

REMEMBERNo eviction at the hearing

You will not be evicted from your home on the day of the hearing.

You should attend the court hearing even if you have made anagreement with your lender.

If you will not be able to go to the hearing because of illnessor disability, write to the court to explain your circumstancesand ask if a relative or friend can represent you. Don’t forgetto include the case number in the letter.

The purpose of the hearing is to decide on an arrangementwhich is fair for both sides, not to find anyone guilty orinnocent.

Mortgage arrears should be dealt with in private with onlyyou, the lender’s representative and the district judge present.The district judge is the person who decides your case.Call them “Sir” or “Madam.”

When you go to court

l Make short notes about what you want to say at the hearing.Take these with you and refer to them if you need to.

l If your circumstances have changed since you filled in thecourt form, work out a new personal budget sheet.Takethree copies of your personal budget with you (one for you,one for the district judge and one for the lender’srepresentative).

l If English is not your first language you could take aninterpreter with you.

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l Don’t be afraid to approach the lender’s representativebefore the hearing to see if you can come to an agreementto present to the district judge. But don’t be pressed intooffering more than you can afford.The district judge mayagree with you and allow you to pay less than the lender’srepresentative wants.

l Answer questions clearly, calmly and fully.This will help thedistrict judge make their decision. Remember you have asmuch right to put your case as the lender.

What you should ask for

l If you can pay all the arrears in a short time, for instancethrough a remortgage, ask for an adjournment.

l If you don’t agree with the arrears figure ask for anadjournment for the lender to provide a detailed statementof your account.

WARNINGExtra costs

Watch out for extra costs being added on for each hearingyou go to.You may be able to ask the district judge to orderthat the lender pays their own costs e.g. if their figures arewrong or they have not followed correct procedures and yourhearing has to be adjourned. Contact us for advice.

l If the amount of arrears is agreed, make an offer ofrepayment that you can afford. But remember the districtjudge will usually expect you to repay the arrears within a“reasonable period” which depends upon yourcircumstances. If your offer of repayment will take longerthan 3-5 years to clear the arrears, explain to the districtjudge why you cannot offer more and point out the figuresshown in your personal budget.A recent court decision(called Cheltenham & Gloucester v. Norgan) means you maybe able to pay your arrears over a longer time, even thewhole lifetime of the mortgage. Contact us for advice.

If the district judge thinks your offer is reasonable they willprobably make a “possession order” but it will be suspended ifyou agree to pay the normal mortgage payment plus an extramonthly amount off the arrears. If you keep to these paymentsthe lender cannot take any further action.

If the court does not accept your offer, you could ask for anadjournment to give you time to sell your home yourself. Showthe court proof that your home is on the market, such as aletter from the estate agent.This may be better than letting thelender take possession, and sell your home. But before doingthis, read Getting rehoused on page 56. Contact us for advice.

Even if the district judge won’t adjourn to give you time tosell, you can ask them to postpone the possession order for alonger period (e.g. three months) to give you time to sell thehouse yourself.

If the court will not accept this either, the district judge canmake a possession order, which allows you a set period,usually 28 days, before your lender can take any action – seeHow to stop an eviction on this page. If this happens you can askthe court to give you longer than 28 days to find somewhereelse to live.

What if I can’t pay the order?

If at any time you find you cannot pay the amount which thecourt has ordered, you should go back to the court and askfor the order to be changed. Use the form N244, availablefrom the court office.There will be a fee to pay to make thisapplication.You do not have to pay a fee if you are on certainbenefits. See How to stop an eviction on this page.You should also contact your lender and try to make a new arrangement.

HOW TO STOP AN EVICTION

The court will not take action to evict you unless your lenderasks it to. Contact your lender immediately if:

l you have not kept up the payments under a suspendedpossession order; or

l the time period given on a possession order has run out.

Try to make an arrangement with your lender. If you cannotreach an agreement your lender can apply to the court for a“warrant of possession”.You should be given a “notice ofeviction” by the court bailiffs giving you a date and time whenthey will come to evict you. You may be able to stop this,but you must act quickly.

If you need further time to sell, to find somewhere else tolive, or want to make a renewed offer to pay the arrears bymonthly instalments you should apply for the warrant to besuspended on court form N244.This is a general applicationform available from your local county court.You should fill inthe N244 form including:

l the claim number of the case

l the warrant number

l the reason you’ve not been able to pay and your new offer(in Part A on the front of the form)

l In Part B you should tick the box saying you rely on“evidence in Part C”

l In Part C on the back of the form attach your personalbudget or write it out on the form

l Sign the “statement of truth” at the end of the form

l Do this as soon as possible to allow the court time toarrange a hearing.

There will be a fee to pay the court (see box below).

REMEMBERFee to pay

If you want to ask the court to suspend the warrant ofpossession you will need to pay a fee, unless you are onincome support, income based job seeker’s allowance, or ifyou receive the guarantee credit element of pension credit,working tax credit with child tax credit or it includes adisability element and your income is below a set amount.There is an application form called an EX160 to fill in to askfor the fee to be waived by the court if it will cause youhardship or because you are on benefits.

WARNINGThe court may refuse to accept an application within

48 hours of the eviction time. If the court refuses yourapplication because it is late, contact us for advice.

REMEMBERSuspending the warrant

You can apply to suspend the warrant for the following reasons:

l To make a new offer of payment on your arrears. Make sureyou don’t offer more than you can afford.Work out a newpersonal budget, and send it with the form.

l To ask the court to give you more time to sell.

l To ask the court to give you more time to find somewhereelse to live.

The court will set a date for a hearing, usually before theeviction date, which you must attend or the court isunlikely to suspend the warrant.

If any further warrants are issued you may still be able to askthe court to suspend them (e.g. to give you time to findsomewhere else to live).

If all your efforts to remain in the property fail, you will begiven an eviction date. If you are in this position contact usfor advice.

Try to move out before the eviction date because the bailiffscan force their way in if they have to.They do not need toremove your furniture and possessions, which will remainlocked in the property.You will then have to get the lenders’permission to re-enter the property in the future and arrangeto remove your furniture. Some lenders try to argue that theycan keep any belongings left in the house. It is safer to removeall that you can before the eviction date. If your lender isrefusing you permission to remove your furniture contact usfor advice.

After you are evicted, interest will still be added to yourmortgage account until the property is sold.

Your lender must:

l follow FSA rules and sell your home for the best price that might reasonably be paid taking into account factorssuch as market conditions. However, sale by lenders is likelyto produce a lower price than if you sold it yourself.

l use the money from the sale to pay off the court costs,estate agent’s and solicitor’s bills, the mortgage and anysecond or third mortgages.

l tell you in writing how the money has been spent.

l send you any money which is left over. Remember to givethem a new address.

Mortgages are paid off in the order you took them out. If thesale of your home does not raise enough money to repay thefirst mortgage and any other mortgages plus all the costs, youmay still owe some money to the lender. See What if my home

is not worth enough to repay the mortgage? on page 39.Your lender could take court action against you to collect the rest of the debt using the same court procedure as credit debts.This is set out on page 31.

Complaints

Your lender should have an internal complaints policy whichyou can use if you feel that at any stage your lender has actedunfairly. If you are not happy with the outcome of yourcomplaint you can contact the Financial Ombudsman Service.The address is listed on page 58 of this pack.The FinancialOmbudsman Service will look at whether your lender hasfollowed the FSA rules that cover lenders from 31st October2004.They can also look at complaints about events that tookplace before that date under the terms of the old MortgageCode. If this applies to you contact us for advice.

REMEMBERPay your mortgage first

You must pay your mortgage before credit debts such as bankloans, credit cards, door-to-door collectors, or overdrafts whichare not secured on your home. If your mortgage arrears andother priority debts use up all your money for creditors, andthere is nothing left to offer on your credit debts, tell yourcreditors this and send them a copy of your personal budget.See How to work out offers of payment on page 24.

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REMEMBER No eviction without a court order

Tenants cannot be evicted for rent arrears without a court order. Licensees and squatters do not have the same rights as tenants.

This section is for people with rent arrears. It explains more aboutarrears, what you can do to repay them, and what your landlord can do.

Rent arrears are very important because you could lose your home ifyou do not pay them off.

There are several different types of tenancy. Each type gives differentrights.Your right to stay in your home depends on the type oftenancy. So it’s important for you to find out what type of tenancyyou have.

There are two sections on rent arrears – rent arrears 1 and rentarrears 2.

Go to rent arrears 1 on page 45 if:

l you are a housing association tenant and you started renting your homebefore 15th January 1989

l you rent from a private landlord and you started renting your home before 15th January 1989

l you have a shorthold tenancy that began before 15th January 1989

l you are a council tenant.

Go to the rent arrears 2 on page 49 if:

l you are a housing association tenant and you started renting your home on orafter 15th January 1989

l you rent from a private landlord and you started renting your home on orafter 15th January 1989.

If you are not sure which kind of tenancy you have, read the first partsof rent arrears 1 and 2 or contact Shelter (see page 58), your localcitizens advice bureau, or contact us for further advice.

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Rent arrears 1The following advice is for:

l all council tenantsl private tenants and housing association tenants who started renting

their homes before 15th January 1989.

It covers topics including:l Housing benefit (rent rebate)l How can I pay off my rent arrears?l Is your landlord refusing to agree to your offer?l What if my landlord takes court action?l Eviction – what can I do?

HOUSING BENEFIT (RENT REBATE)

Rent arrears often build up when tenants don’t claim all thebenefits they can. Claiming housing benefit can reduce therent you pay.

l To make a claim, ask your council’s housing benefit office fora form.

l When you make a claim, keep a copy of your claim formand any letters you send or receive.

l Pay as much as you can towards your rent until your rebatecomes through.The housing benefit office or a local advicecentre should be able to tell you how much you need topay.

Contact us for advice if you are having problems withhousing benefit.

Payment of housing benefit

If you are a council tenant, your housing benefit will be paiddirect to the rent office of your council’s housing department.It is usually known as a “rent rebate”.

If you are a housing association or private tenant, housingbenefit will be paid direct to you. But you can arrange to haveit paid direct to your landlord if you wish. Doing this maymake them more willing to come to an arrangement overyour arrears because they will be sure of receiving a regular payment.

Arrange this with your landlord and ask the housing benefitoffice to start making payments to the landlord. In somecircumstances your landlord and the housing benefitdepartment can agree for housing benefit to go directly to thelandlord without your agreement.

Is your rent registered as a fair rent?

If you pay rent to a private landlord (not a council or housingassociation), and feel your rent is very high, it may be worthhaving a fair rent registered on your home.A rent officer fromthe Rent Service will decide what a fair rent for your home isand fix it at that.Your landlord cannot then increase the rentunless the rent officer agrees. For details see the Rent Servicewebsite www.therentservice.gov.uk

WARNINGCheck local rent levels

Before you apply to the rent officer, check how much rentother people are paying in your area for similar flats orhouses to see if your rent is above average.The rent officercan increase the rent on your home as well as reduce it.

HOW CAN I PAY OFF MY RENT ARREARS?

It is never too early or too late to come to an arrangementto pay off your arrears.

You may not be in arrears yet, or your landlord may havestarted court action.Whatever the situation, do not delay –contact your landlord as soon as possible.

If you are a private or housing association tenant and:

l you are waiting for a housing benefit claim to be sorted out

l 14 days have gone by; and

l this is making your rent arrears worse

explain this to the housing benefit office and ask for aninterim payment of housing benefit. Contact us for advice.

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Have the rent arrears been worked out properly?

Get a breakdown of your rent account from your landlord.Check that all the payments you have made have been creditedto the account.Ask for regular statements. Keep your receipts.

In particular, check whether you have been overpaid any housingbenefit (rent rebate). Sometimes housing benefit that has beenclaimed back by the council is included as rent arrears on yourrent account. If you are a council tenant, housing benefitoverpayments cannot be treated as rent arrears andshould be kept in a separate account. You cannot be evictedfrom your home for a housing benefit overpayment.

If you are not sure if your rent arrears include housing benefitoverpayments, or the council refuses to separate the two,then contact us for advice.

If you are not a council tenant then the rules are complicatedas to whether or not a housing benefit overpayment is treatedas rent arrears. Contact us for advice if this applies to you.

Extra weekly payments

l Use your personal budget to work out how much to pay offthe arrears each week.

l Don’t be afraid to offer only a small amount if that is all youcan afford.

l If you get housing benefit, offer to have it paid direct toyour landlord.This might make them more willing to agreeto your offer.

l Start paying the amount you are offering immediately to thelandlord or agent.

If you can’t afford to pay anything contact us for advice.

Direct payment of rent arrears

If you get income support, pension credit or job seeker’sallowance you can have a standard amount taken out of yourbenefit each week and paid direct to your landlord for rentarrears.This way you can point out to your landlord that thearrears will be paid back even though it may take a long time.

IS YOUR LANDLORD REFUSING TO AGREE TO YOUR OFFER?

Just because your landlord refuses your offer of payment thatdoes not mean you will automatically lose your home. If yourlandlord refuses to accept your offer:

l start paying your rent immediately plus the amount youhave offered off the arrears

l contact your landlord – use your personal budget to showthat the amount you have offered is all you can afford

l keep a record of all payments and letters to and from yourlandlord

l keep paying your rent and arrears payments.

If your landlord still takes further action against you, contactus for advice.

Your landlord might make it difficult for you to pay, forexample by not calling for the rent. If this is happeningcontact us for advice.

If your landlord threatens to use bailiffs against you to recoverthe rent arrears, see Bailiffs on page 56. Contact us foradvice immediately.

WARNINGNo eviction without a court order

You cannot be evicted without a court order. If your landlordthreatens to throw you out without going to court orharasses you to make you leave, they may be acting illegally. Ifthis is happening to you, contact your local council.Ask for the person who deals with harassment of tenants.

WHAT IF MY LANDLORD TAKES COURT ACTION?

Before court action

These are the usual stages leading to county court action.Thelandlord will normally send a letter asking you to pay off thearrears. If you have not already contacted your landlord to tryto reach an agreement, do it now. Keep paying the rent andwhat you have offered off the arrears.

If you haven’t made an arrangement to pay off the arrears,some landlords may send a second letter or may get theirsolicitor to write to you. Before landlords can take courtaction they must send you a formal letter which is called a“notice of seeking possession” (council and housingassociation landlords) or a “notice to quit” (private landlords).These must be served on a tenant before court proceedingscan be started. They do not mean you have to leaveyour home. Contact your landlord straight away and try toreach an agreement. Keep paying your rent and what you haveoffered off the arrears.

Court action – The claim

If you’ve not been able to make an arrangement with yourlandlord and the time limit on the notice has run out(normally 28 days after you receive it), your landlord can thenask the court to send you a claim.This will give you a dateand time for a hearing in the county court. You should haveat least 28 days’ notice of the hearing date.

Even if you are taken to the county court this does not meanyou will automatically lose your home. Even if the courtdecides you cannot afford to stay there, you will not beevicted from your home on the date of the hearing.

Keep paying your rent and the amount offered off the arrears.This will show the court that you are now able to pay.

The court will send you a form called “particulars of claim” aswell.This sets out your landlord’s case for taking possession ofyour home.You will also get form N11R, called a “defenceform”, which you should fill in and return to the courtwithin 14 days.


It is important to fill in the defence form as you can give thecourt a full picture of your finances and what you can afford topay as well as say if you disagree with the amount claimed.

Read through the particulars of claim. It should state:

l the amount of the rent arrears

l details of any arrangements that you have made with yourlandlord to repay the arrears

l information about your circumstances that your landlord isaware of, such as whether you receive housing benefit.

If you do not agree with any of the details, say so on the firstpage of the form.

You are asked whether you can pay anything towards thearrears. Put down the amount which you have worked outthat you can pay using your personal budget, even if yourlandlord has already refused to accept this amount. It is betterto put down an amount which you can realistically afford to pay.

If you cannot afford to pay anything off the arrears, contactus for advice.

The form asks if you have a counterclaim against yourlandlord. In this section you could include details of any claimfor money that you have against your landlord.For example:

l if you have been made ill by damp or dangerous conditions

l if any repairs need doing

l if your belongings have been damaged, for instance by aleaking roof.

If this has happened to you, contact us for advice.

Complete the financial details.This will allow the court to seehow you have worked out how much you can afford to paytowards the arrears. Use the spare boxes for items which arenot on the form but which appear on your personal budget.

You are asked for details about your bank account. If you havemoney in your account to pay household bills do not includethis in the credit balance on the form.

At the bottom of the form there is a space for giving yourside of the case. Explain why you got into arrears.Ask here ifyou want the court to give you more time to find somewhereelse to live.

REMEMBERKeep paying your rent

If you have arrears it is important to start paying the amountyou have offered.You can still come to an agreement withyour landlord or their solicitor. If you can reach an agreement,the hearing date can be put off (“adjourned”) to give theagreement a chance to work.

If your landlord says they can evict you without a court orderor is threatening you, contact us.

The hearing

Remember, you will not be evicted from your homeon the day of the hearing.

You must attend the court hearing even if you have alreadymade an agreement with your landlord.


The purpose of the hearing is not to find anyone guilty orinnocent but to come to a fair decision for both sides. Rentarrears cases should be dealt with in private.At the hearingyou, your landlord or their representative and the districtjudge will be present.The district judge is the person whodecides your case. Call the district judge “Sir” or “Madam”.



l If your circumstances have changed since you filled in thecourt form, work out a new personal budget sheet.Take three copies of your personal budget with you – one for you, one for the district judge and one for the landlord’s representative.


l Don’t be afraid to approach the landlord’s representativebefore the hearing to see if you can come to an agreementto present to the district judge. But don’t be pressed intooffering more than you can afford.The district judge mayagree with you and allow you to pay less than the landlord’srepresentative wants.

l Answer questions clearly, calmly and fully.This will help thedistrict judge make his or her decision. Remember you haveas much right to put your case as the landlord.

Orders the district judge might make

At the hearing the district judge can make one of thefollowing orders.

l An order dismissing your landlord’s action, for examplewhere all the arrears have been cleared before the hearing date.

l An order putting off (“adjourning”) the case.The court maydo this to give you time to provide extra information tosupport your case, or to pay off your arrears in full, forexample by sorting out your housing benefit claim.

l An order for possession of the property to be given toyour landlord, but suspended on conditions the court feelsare right.This means that if you keep to the court’s order(normally that you pay the rent plus a set amount off thearrears each week or month), the court will not allow yourlandlord to take your home.

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l An order for outright possession of the property.Thismeans that at the end of a set period (usually 28 days) yourlandlord can take the next step towards repossession ofyour home (see Eviction on this page).


l If you can show the court that it would be unreasonable tomake a possession order, you should ask the district judge todismiss the landlord’s action.This might be because you havebeen paying the rent plus a regular amount off the arrearsfor several months, or your arrears are due to a delay inyour housing benefit claim. If you think this may apply to you,contact us for advice before you go to court.

l If you can pay all the arrears in a short time, for instance by sorting out your housing benefit claim, ask for anadjournment.

l If you can’t pay the arrears in a short time and the amountof arrears is correct, you should make an offer of repaymentthat you can afford.

l If you are on income support, pension credit, job seeker’sallowance or a low income, do not be afraid to offer a verysmall amount if that is all you can afford. Use theDepartment of Work & Pensions standard amount fordirect payments as a guide.This amount changes each Aprilso contact us for advice.

l If the district judge thinks your offer is fair he or she islikely to make an order for possession but it will besuspended if you agree to pay the normal rent plus theamount ordered each week or month off the arrears.Aslong as you keep to what is ordered your landlord can takeno further action.

l If the court will not accept any of these arrangements, thedistrict judge can make an outright order for possession.This would normally allow you at least 28 days before yourlandlord could take further action.Ask the district judge togive you more time to find somewhere else to live (forexample two months). Read the section on Getting rehousedon page 56.

REMEMBERWhat if I can’t pay the order?

If at any time you find you cannot pay the amount which thecourt has ordered, you must go back to the court and ask forthe order to be changed. Use the form N244, available fromthe court office.There is a fee to pay unless you are oncertain benefits or the fee will cause you hardship. See Eviction– what can I do? on this page.You should also contact yourlandlord and try to make a new arrangement.

EVICTION – WHAT CAN I DO?

The court will not take action to evict you unless yourlandlord asks it to. Contact your landlord immediately:

l if you have not kept up the payments under a suspendedorder for possession; or

l the time given on an outright order for possession has run out.

Try to make an arrangement with them. If you cannot reachan agreement your landlord can apply to the court for a“warrant of possession”.This is a letter from the court bailiffsgiving you a date and time when they will come to evict you.You may be able to stop this, but you must act quickly.

If you need further time or want to make a renewed offer topay the arrears by monthly instalments you should apply forthe warrant to be suspended on form N244.You will need topay a fee to do this (see box below)


If you want to ask the court to suspend the warrant ofpossession you will need to pay a fee, unless you are onincome support, income based job seeker’s allowance or if you receive the guarantee credit element of pension credit.You don’t have to pay the fee if you get working tax creditwith child tax credit or if it includes a disability element andyour income is below a set amount. There is an applicationform called an EX160 to fill in to ask for the fee to be waived by the court if it will cause you hardship or becauseyou are on benefits.

Fill in the N244 showing:



l the reason you’ve not been able to pay and your new offer,in part A on the front of the form

l In part B you should tick the box saying you rely on“evidence in part C”

l In part C attach your personal budget or write it out on the form


l Do this as soon as possible to allow the court time toarrange a hearing. If the court refuses your applicationbecause it is late, contact us for advice.


You can apply to suspend the warrant for the followingreasons:

l to make a new offer of payment on your arrears. Make sureyou don’t offer more than you can afford.Work out a newpersonal budget, and send it with the form

l to ask the court to give you more time to be re-housed.

The court will then fix a new hearing, usually before theeviction date, which you must attend. If you don’t, thecourt is unlikely to suspend the warrant.

If any further warrants are issued you may still be able to askfor more time or ask the court to suspend the warrants.


Try and move out before the eviction date because the bailiffscan force their way into your home if they have to.They mightremove your possessions from the house.

After you are evicted your landlord may:

l ask you to pay the rent you still owe. See section on Creditdebts, on page 24, to find out how to deal with this

l ask you to pay for repairing any damage done to your homewhile you were renting it.

Getting rehoused

For information on how to make an application for rehousing,see Getting rehoused on page 56.

Bailiffs and rent arrears

If your landlord threatens to use bailiffs without a court order,see Bailiffs and rent arrears on page 56.

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Rent arrears 2

The following advice is for private tenants and housing associationtenants who started renting their home on or after 15th January 1989.

If you are a council tenant this information does not apply to you.Go to Rent arrears 1 on page 45.

If you started renting your home before 15th January 1989 thisinformation does not apply to you. Go to Rent arrears 1 on page 45.

This section covers topic including:

l What type of tenancy do I have?l Housing benefit (rent rebate).l What if my landlord increases my rent?l How can I pay off my rent arrears?l Is your landlord refusing to agree to your offer?l What if my landlord takes court action?l Eviction – what can I do?

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WHAT TYPE OF TENANCY DO I HAVE?

It is very important to check exactly what sort of tenancyagreement you have. It is a lot easier for a landlord to evictyou from your home if you have an “assured shortholdtenancy” (see below). If your tenancy agreement has run outthen the court must give your home back to the landlord aslong as you have had two months’ notice in writing. SeeAccelerated possession procedure on page 55.

If you have an assured tenancy then in most cases the court candecide if it is reasonable to make you leave your home, exceptwhen you have over two months’/eight weeks’ rent arrears.

Assured shorthold tenancies

From 27th February 1997 new tenancies will normally beassured shorthold tenancies, unless you are given a notice bythe landlord to say you have an “assured tenancy”.

l For assured shorthold tenancies that began before 27thFebruary 1997 your landlord must have given you awritten notice that your tenancy is an assured shortholdtenancy before the tenancy began.The tenancy must havebeen for a fixed term of more than six months.

l If your tenancy started after 27th February 1997 yourlandlord does not have to give you any written notice ofthe tenancy. All tenancies will automatically be assuredshorthold tenancies. Even if your tenancy is not for a fixedterm it will still be an assured shorthold tenancy.

Assured tenancies

Assured tenancies usually have no time limits although somemay last for a fixed time. Housing association tenants willnormally have this sort of tenancy, as well as some tenants ofprivate landlords.

From 27th February 1997 you will not be an assured tenantunless your landlord gives you notice to say so.

If you are not sure what sort of tenancy you have, contact us.

WARNINGAre you already an assured tenant?

If you are already an assured tenant, your landlord cannotmake your tenancy an assured shorthold tenancy. If yourlandlord tries to do this, contact us for advice.

HOUSING BENEFIT (RENT REBATE)

Rent arrears often build up when tenants don’t claim all thebenefits they can. Claiming housing benefit can reduce therent you pay.

l To make a claim, ask your council’s housing benefit office fora form.

l When you make a claim, keep a copy of your claim formand any letters you send or receive.

l Pay as much as you can towards your rent until your rebatecomes through.The housing benefit office or a local advicecentre should be able to tell you how much you need to pay.

Contact us for advice if you are having problems withhousing benefit.

New rules for housing benefit

From 2nd January 1996, if you make a new claim for housingbenefit you may not have your rent covered in full.These newrules could affect you if:

l you rent from a private landlord and

l your tenancy began after 15th January 1989.

If you were already claiming housing benefit the new rules willonly affect you if you move or you make a new claim after agap of more than four weeks.

These rules do not apply to council tenants, housing actiontrust tenancies or certain hostel accommodation. If you rentfrom a housing association the council can only refuse tocover the full rent if they decide your accommodation is“unreasonably” large or expensive.

Housing benefit may only cover a “single room rent” if youare single and aged under 25 and in a private tenancy. From2nd July 2001 this covers a bedroom, bathroom and livingroom. If this applies to you contact us for advice.

How will my benefit be worked out?

The council will have your rent assessed by the rent officerservice which will decide if your rent is reasonable, takingyour needs and the size of the property into account.Theywill also work out the average rent charged in your area forsimilar homes.

If your rent is higher than the average for the area, the councilmay decide the rent you are being charged is too high and seta maximum rent that will be met by housing benefit.There is acalculation they use to decide this. For details see the RentService website www.therentservice.gov.uk

What can I do if the council does not pay all my rent?

l You may be able to ask the landlord to charge less rent.

l Pay the extra rent yourself out of your income.

l Take in a lodger but get advice to see how this would affectyour tenancy and benefits first.

l Ask the council to review their decision.You can appeal thedecision to an independent tribunal within a month of thereview decision, but only if you think a mistake has been made.

l Payments made directly to your landlord for the extra rentby friends/relatives or a charity do not affect your benefits.

l Councils can pay all your rent out of a limited fund called a“discretionary housing payment”.They will only help if youcan show you will be in hardship due to exceptionalcircumstances. If the fund has no money left in it, they canrefuse to pay.You can ask the council to review theirdecision.There is no right of appeal.

l Write to the housing benefit department and ask them totop up your rent explaining your circumstances fully.

GOT A QUERYIf all your rent is not covered

If the council will not pay all your rent after claiming housingbenefit contact a local advice centre or contact us for advice.

You can ask the council to let you know how much of yourrent they will pay before you decide to move.This is called a“pre-tenancy determination” and is decided by a rent officer. Itis valid for a year.

MORE INFORMATIONLocal Housing Allowance Rules

There are new rules for housing benefit being piloted in some“Pathfinder” areas.This might affect you if you are a privatetenant and your tenancy began on or after 15th January 1989. Itdoes not apply to housing association or council tenants.Yourhousing benefit will be paid at a flat rate depending on the areayou live and the size of your household. If your rent is less thanthe allowance you can keep the difference but if your rent ishigher then you may have to top up your rent payments fromyour income. If you want to know if you are in a Pathfinderarea, ask your local council or contact us for advice.

Payment of housing benefit

It can sometimes take several weeks for a housing benefitclaim to be sorted out.

If you are either an assured or an assured shorthold tenant itis very important that your housing benefit is paid quicklybecause if you have more than two months’ or eight weeks’rent arrears and your landlord takes you to court, the courtcannot allow you to stay in your home.

The council should start paying your housing benefit within 14 days, so if your claim has been delayed ask for an interimpayment.You should get a “payment on account” unless youhaven’t given all the information requested to deal with yourclaim. Contact us for advice.

Your housing benefit will normally be paid to you by cheque.It is paid four weeks in arrears. But you can arrange to have it paid direct to your landlord if you wish. Doing this may makethem more willing to come to an arrangement over yourarrears because they will be sure of receiving a regular payment.

Arrange this with your landlord and ask the housing benefitoffice to start making payments to the landlord.

WHAT IF MY LANDLORD INCREASES MY RENT?

With assured and assured shorthold tenancies there is nofixed limit on the rent. If your landlord increases it, you maybe able to challenge the increase by appealing to a rentassessment committee.

If your landlord wants to increase your rent and you think it istoo much:

l write to your landlord and tell them you do not agree tothe increase. Keep a copy of the letter

l appeal to the rent assessment committee (their number is

in the phone book under “rent assessment committee” or“rent assessment panel”). Contact the Residential PropertyTribunal Service on 0845 600 3178.

l Keep paying your old rent, but put money aside to pay theincrease in case the rent assessment committee decides thenew rent is correct

l contact your housing benefit office immediately.Tell themthat your landlord has increased your rent but you haveappealed to the rent assessment committee. Don’t waituntil the committee decides your appeal, or you may losebenefit. If you are not already claiming housing benefit, theincrease in rent may mean you will now qualify.

Appealing to a rent assessment committee is complicated.Contact a local housing advice centre. Or contact us foradvice.

HOW CAN I PAY OFF MY RENT ARREARS?

It is never too early or too late to come to an arrangement torepay your arrears.You may not be in arrears yet, or yourlandlord may have started court action.Whatever the situationdon’t delay – contact your landlord as soon as possible.

Explain to the housing benefit office if you are waiting for ahousing benefit claim to be sorted out and this is making yourrent arrears worse.Ask for an interim payment if you have beenwaiting more than 14 days. Contact us for advice.

Have the rent arrears been worked out properly?

Get a breakdown of your rent account from your landlord.Check that all the payments you have made have been creditedto the account.Ask for regular statements. Keep your receipts.

If housing benefit is paid direct to your landlord and there hasbeen an overpayment, the rules on whether or not a housingbenefit overpayment should be treated as rent arrears arecomplicated. Contact us for advice if this applies to you.

If you are not sure if your rent arrears include housingbenefit overpayments, or the landlord refuses toseparate the two, contact us for advice.

Extra weekly payments

Use your personal budget to work out how much you canafford to pay each week off the arrears. Don’t be afraid tooffer only a small amount if that is all you can afford.

If you get housing benefit, offer to have it paid direct to yourlandlord.This might make them more willing to agree to your offer.The council must pay your housing benefit directlyto your landlord if you have eight weeks rent arrears or more.

Start paying the amount you are offering immediately. If youcannot afford to pay anything, contact us for advice.

Direct payment of rent arrears

If you get income support, pension credit or job seeker’sallowance you can have a standard amount taken out of yourbenefit each week and paid direct to your landlord for rent

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arrears along with your housing benefit.This way you canpoint out to your landlord that they are sure of getting theirmoney back even though it may take a long time.

IS YOUR LANDLORD REFUSING TO AGREE TO YOUR OFFER?

Just because your landlord refuses your offer of payment thisdoes not mean you will automatically lose your home. If yourlandlord refuses to accept your offer:

l start paying your rent immediately plus the amount youhave offered off the arrears

l contact your landlord. Use your personal budget to showthat the amount you have offered is all you can afford

l keep a record of all payments, and letters to and from your landlord

l keep paying your rent and arrears payment.

If your landlord still takes further action against you, contactus for advice.

Your landlord might make it difficult for you to pay, forexample by not calling for the rent. If this happens, contactus for advice.

GOT A QUERYThreat of bailiffs or harassment

If your landlord threatens to use bailiffs against you to recoverthe rent arrears, see Bailiffs on page 56. Contact us foradvice immediately.

You cannot be evicted without a court order. If your landlordthreatens to throw you out without going to court orharasses you to make you leave, they may be acting illegally.

If this is happening to you, contact your local council.Ask forthe person who deals with harassment of tenants.

Renewal of assured shorthold tenancies

If you have an assured shorthold tenancy your landlord doesnot have to renew your tenancy when it runs out.They arenot likely to let you stay if you are in rent arrears.You musttry to come to an agreement with your landlord and pay theamount you have offered off your arrears. If you pay regularlyyour landlord may be willing to renew your tenancy.

REMEMBERNo eviction without a court order

You cannot be evicted without a court order but yourlandlord may be able to use the accelerated possessionprocedure, see page 55. If you are an assured shorthold tenant and your landlord starts court action because yourtenancy has come to an end, then the court cannot allow you to stay in your home. If this applies to you, contact a local advice centre. Or contact us.

For a factsheet onHOW CAN MY LANDLORD END MYASSURED TENANCY? call National Debtline on 0808 808 4000

WHAT IF MY LANDLORD TAKES COURT ACTION?

Your landlord can take court action if:

l you have any rent arrears; or

l you have rent arrears of more than two months/eightweeks; or

l you have “persistently delayed” in paying your rent.You donot have to be in arrears when your landlord starts courtaction for this reason. (For example, if your housing benefitalways arrives after the date the rent is due.)

If you have an assured shorthold tenancy that has run out, seeRenewal of assured shorthold tenancies above.

Before court action

These are the usual stages leading to county court action.

The landlord will normally send a letter asking you to pay offthe arrears. If you have not already contacted your landlord,do so now and try to reach an agreement. Keep paying yourrent and the amount you have offered off the arrears.

If you haven’t made an arrangement to pay off the arrears,some landlords may send a second letter or may get theirsolicitors to write to you.

Before landlords can take court action they must send you aformal letter which is called a “notice of possession proceedings”.This must be served on you before court proceedings can start.It does not mean you have to leave your home.

Contact your landlord straight away and try to reach anagreement. Keep paying your rent and the amount you haveoffered off the arrears.

If you have two months/eight weeks arrears

If you have two months/eight weeks rent arrears when youreceive your notice of possession proceedings, you must startpaying your rent and something off the arrears now.

WARNINGIf you still have two months arrears

If your landlord goes to court and you still have twomonths/eight weeks rent arrears at the date of the hearing,the court cannot allow you to make an arrangement to paythe arrears.The only protection the court can give you is toallow you 14 days, or up to six weeks in exceptionalcircumstances, to find somewhere else to live.

l If you have two months/eight weeks rent arrears startpaying your rent and something off the arrears immediately.The amount you pay must reduce your arrears to undertwo months/eight weeks by the date of the court hearing.

l If you are in arrears because you’re waiting for housingbenefit to be paid, contact your housing benefit office.Explain why your claim is urgent and ask for an interim payment.

l If you can’t start paying immediately or if you can’t reduceyour arrears quickly enough, contact us for advice.

Court action – the possession claim

If you have not been able to make an arrangement with yourlandlord and the time limit on the notice has run out, yourlandlord can then ask the court to send you a “possessionclaim” form N5.This will give you a date and time for ahearing in the county court.You should have at least 28 days’notice of the hearing date.

l Your landlord can start court action even if you have norent arrears, but have had arrears in the past.

l Even if your landlord takes you to the county court you willnot lose your home on the date of the court hearing.

l Keep paying your rent and the amount you have offered offthe arrears.This shows the court you are now able to pay.

l Even if you have managed to clear your arrears by the dateof the court hearing, the landlord can still go ahead with thecourt action. So you must fill in the court papers andattend any court hearing.

The court will send you a form called “particulars of claim” aswell.This sets out the landlord’s case for taking possession ofyour home.You will also get form N11R called a “defenceform” which you should fill in and return to the courtwithin 14 days.


It is important to fill in the defence form as you can give thecourt a full picture of your finances and what you can affordto pay as well as say if you disagree with the amount claimed.Read through the particulars of claim. It should state:

l the amount of the rent arrears

l details of any arrangements that you have made with yourlandlord to repay the arrears

l information about your circumstances that your landlord isaware of, such as whether you receive housing benefit.

If you do not agree with any of the details, say so on the firstpage of the form.

l You are asked whether you can pay anything towards thearrears. Use your personal budget to work out what youcan afford to pay. If your landlord is asking for possessionbecause you have two months’/eight weeks’ rent arrears,remember it could be very important to reduce them toless than this by the date of the hearing.

l If you cannot afford to pay anything off the arrears, contactus for advice.

The form asks if you have a counterclaim against yourlandlord. In this section you could include details of any claimfor money that you have against your landlord. For example:

l if you have been made ill by damp or dangerous conditions

l if any repairs need doing

l if your belongings have been damaged, for instance by aleaking roof.

If this has happened to you, contact us for advice.

l Complete the financial details.This will allow the court to seehow you have worked out how much you can afford to paytowards the arrears. Use the spare boxes for items which arenot on the form but which appear on your personal budget.You are asked for details about your bank account. If youhave money in your account to pay household bills do notinclude this in the credit balance on the form.

l At the bottom of the form there is a space for giving yourside of the case. If you are not in rent arrears now, but havebeen in the past, explain why you got into rent arrears andwhy you can now afford to pay your rent. If you are goingto find it difficult to find somewhere else to live ask thecourt if you can be given some extra time.

REMEMBERKeep paying your rent

If you have arrears it is important to start paying the amountyou have offered.You can still come to an agreement with yourlandlord or their solicitor. If you can reach an agreement, thehearing date can be put off (“adjourned”) to give the agreementa chance to work. If your landlord says they can evict youwithout a court order or is threatening you, contact us.

The hearing

REMEMBERNo eviction at the hearing

You will not be evicted from your home on the day of the hearing.

You must attend the court hearing even if youhave no rent arrears or if you have already made an agreement with your landlord.


The purpose of the hearing is not to find anyone guilty orinnocent but to come to a fair decision for both sides.As long asyour arrears are under two months/eight weeks the court shouldconsider any offer of payment you make on your rent arrears.

Rent arrears cases should be dealt with in private.At thehearing you, your landlord or their representative and thedistrict judge will be present.The district judge is the personwho decides your case. Call the district judge “Sir” or “Madam”.

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RENT ARREARS 2



l If your circumstances have changed since you filled in thecourt form, work out a new personal budget sheet.Takethree copies of your personal budget with you – one foryou, one for the district judge and one for the landlord’srepresentative.


l Don’t be afraid to approach the landlord’s representativebefore the hearing to see if you can come to an agreementto present to the district judge. But don’t be pressed intooffering more than you can afford.The district judge mayagree with you and allow you to pay less than the landlord’srepresentative wants.

l Answer questions clearly, calmly and fully.This will help thedistrict judge make his or her decision. Remember you haveas much right to put your case as the landlord.

Orders the district judge might make

At the hearing the district judge can make one of thefollowing orders:

l an order putting off (“adjourning”) the case.The court maydo this to give you time to provide extra information tosupport your case. For example, the court can tell thelandlord to provide full details of your arrears if you havenot had these

l an order in your favour (e.g. if you have a counterclaim forrepairs for the same amount or more than the arrears)

l an order for possession of the property to be given to yourlandlord but suspended on conditions that the court feelsare right.This means that if you keep to the court’s order(normally that you pay the rent plus a set amount off anyarrears each week or month) the court will not allow yourlandlord to take your home

l an outright order for possession of the property.Thismeans that at the end of a set period your landlord cantake the next step towards repossession of your home (seeEviction on this page).


If you are not in arrears, ask the court to adjourn thehearing because you can now afford to pay your rent regularly.If at any time in the future you have problems paying yourrent, you must contact your landlord to make an arrangement.

If you are in arrears, ask the district judge to adjourn thehearing if you can pay all the arrears in a short space of time,for example by sorting out your housing benefit claim.Thecourt may not be prepared to do this unless you can showyou have “exceptional circumstances.”

REMEMBERIf you still have two months arrearsIf your rent arrears are two months/eight weeks at

the date of the hearing the district judge may not be able togive you time to pay.

l If you can’t pay the arrears in a short time and you agreethat the amount of the arrears is correct you should makean offer of repayment that you can afford.

l If you are on income support, pension credit or job seeker’sallowance or a low income, don’t be afraid to offer a verysmall amount if that is all you can afford. Use the DWPstandard amount for direct payments as a guide.Thisamount changes each April. Contact us for advice.

l If the district judge thinks your offer is fair he or she islikely to grant a suspended order for possession unless yourarrears are more than two months/eight weeks.This meansthat as long as you keep paying the normal rent plus theamount ordered each week or month off the arrears, thelandlord can take no further action.

l If the court will not accept any of these, the district judgecan make an outright order for possession. So long as yourarrears are less than two months/eight weeks this willnormally allow you at least 28 days before your landlordcould take further action.Ask the district judge to give youmore time to find somewhere else to live (for example twomonths). Read Getting rehoused on page 56.

REMEMBERIf you can’t pay

If at any time you find you cannot pay the amount which thecourt has ordered, you must go back to the court and ask forthe order to be changed. Use the form N244, available fromthe court office.There is a fee to pay unless you are oncertain benefits or the fee will cause you hardship. See Eviction– what can I do? below. You should also contact your landlordto make a new arrangement.

EVICTION – WHAT CAN I DO?

The court will not take action to evict you unless yourlandlord asks it to. Contact your landlord immediately:

l if you have not kept up the payments under a suspendedorder for possession; or

l the time given on an outright order for possession has runout;

and try to make an arrangement with them.

If you cannot reach an agreement your landlord can apply tothe court for a “warrant of possession”.This is a letter fromthe court bailiffs giving you a date and time when they willcome to evict you. You may be able to stop this, but youmust act quickly.

If you need further time or want to make a renewed offer topay the arrears by monthly instalments you should apply forthe warrant to be suspended on form N244.You will need topay a fee to do this (see box below).


If you want to ask the court to suspend the warrant ofpossession you will need to pay a fee, unless you are onincome support, income based job seeker’s allowance or if you receive the guarantee credit element of pension credit.You don’t have to pay the fee if you get working tax creditwith child tax credit or if it includes a disability element andyour income is below a set amount.There is an applicationform called an EX160 to fill in to ask for the fee to be waivedby the court if it will cause you hardship or because you areon benefits.

Fill in the N244 showing:



l the reason you’ve not been able to pay and your new offer,in part A on the front of the form

l In part B you should tick the box saying you rely on“evidence in part C”

l In part C attach your personal budget or write it out onthe form


l Do this as soon as possible to allow the court time toarrange a hearing. If the court refuses your applicationbecause it is late, contact us for advice.


You can apply to suspend the warrant for the following reasons:

l to make a new offer of payment on your arrears. Make sureyou don’t offer more than you can afford. Work out a newpersonal budget, and send it with the form

l to ask the court to give you more time to be re-housed.

The court will then fix a new hearing, usually before theeviction date, which you must attend. If you don’t, thecourt is unlikely to suspend the warrant.

If any further warrants are issued you may still be able to askfor more time or ask the court to suspend the warrants.


Try and move out before the eviction date because the bailiffscan force their way into your home if they have to.They mightremove your possessions from the house.

After you are evicted your landlord may:

l ask you to pay the rent you still owe (see How to deal withcredit debts, on page 24, to find out how to deal with this)

l ask you to pay for repairing any damage done to your homewhile you were renting it.

WARNINGAccelerated possession procedure

If you have an assured shorthold tenancy, your landlord maybe able to ask the court to make a possession order withouta court hearing.This only happens if your tenancy has come toan end.You must have had two months’ notice in writing fromthe landlord.The landlord cannot use this procedure for anyother reason.The court will send you details of yourlandlord’s claim on form N5B and ask you to fill in a replyform on N11B.

It is very important that you reply with any defence you have.Also you can ask to stay in the tenancy for up to sixweeks if leaving after 14 days will cause you and your familysevere hardship.The court will then set a hearing date, todecide what will happen.

If you do not reply to the claim your landlord can get apossession order after 14 days without a hearing. If yourlandlord is asking for possession in this way, contact a localadvice agency, housing aid centre or contact us for advice.

If a possession order is made without a court hearing yourlandlord will need to take separate court action to recoverany rent arrears you had at the end of the tenancy.

For a factsheet onHOW CAN MY LANDLORD END MYASSURED TENANCY?call National Debtline on 0808 808 4000

Getting rehoused

For information on how to make an application for rehousingsee Getting rehoused on page 56.

Bailiffs and rent arrears

If your landlord threatens to use bailiffs without a court ordersee Bailiffs and rent arrears on page 56.

55

56

Landlords cannot take possession of your home for rentarrears without a court order. But without going to court,some landlords may use a procedure called “distraint”.This isnot used very often.

Distraint means the landlord can get a private bailiff to visityour home, take your belongings and sell them to pay off therent arrears.The bailiff can arrange to sell your belongings atan auction house if you haven’t paid the arrears within a setlength of time (normally seven days).The money raised at thesale pays the auctioneer’s costs, the bailiff ’s costs and the rentarrears.

If you have already received a bailiff ’s visit, or one isthreatened, you must contact the bailiff ’s office and yourlandlord at once. Make an offer of payment, using yourpersonal budget to support your offer. Once the bailiffs haveremoved your belongings, only an offer to pay off most of thearrears quickly will prevent the sale taking place. If this ishappening, contact us immediately for advice.

If you have a private landlord who is threatening touse distraint against you, contact us immediately foradvice. Most private landlords can only use distraint aftergoing to a court hearing and asking for permission.

REMEMBERBailiffs

The bailiffs cannot force their way into your home unless youhave already let them in on a previous visit. If a bailiff calls,don’t let them in or agree anything on the first visit. Contactus for advice.

If you think you may lose your home, you should contact yourlocal council for help as a homeless person.The council onlyhas to offer you permanent re-housing as homeless undercertain circumstances.

The council has to look at whether you:

l are homeless and eligible for help

l are in a priority need group

l deliberately did something that made you lose your home(this is called “intentionally homeless”)

l Have a local connection with the area in which you haveapplied for help.

If the council has to offer you another home, you may nothave any choice where it is in your local area as long as it is“suitable” under the rules.

If you think you may eventually lose your home it is veryimportant to get advice beforehand.We can advise you onhow to approach your local housing department for re-housing and whether you are likely to be re-housed.

The council must follow certain procedures to deal withhomelessness applications. If you do not think they have dealtwith your application properly or taken all your circumstancesinto account you can ask for a review then appeal to thecounty court. Contact a local housing aid centre or contactus for advice.

You should also contact housing associations in your area.They may have different policies from the council and be ableto offer you somewhere to live. Contact the HousingCorporation for a list of your local housing associations.Theaddress for the head office is listed on page 58.

You should go on the ordinary waiting list for council re-housing.This is not the same as applying for help as ahomeless person. Make sure you do both.

Your local citizens advice bureau or a housing aid centre suchas Shelter may be able to help you.They will not be able togive you a home but they can offer advice on getting re-housed and information on private landlords.

Shelter publish a booklet about housing rights calledHomeless? Read this. For a copy of the booklet contactShelterline.The phone number is listed on page 58.They willalso be able to tell you the address of your nearest housingaid centre.

For a factsheet onHOMELESSNESSphone National Debtline on 0808 808 4000

REMEMBER Mortgage and rent arrears

For detailed advice on mortgage arrears turn to page 35.For advice on rent arrears turn to page 44.

BAILIFFS AND RENT ARREARS

GETTING REHOUSED

57


A list of factsheets produced by National Debtline, plus useful addressesand telephone numbers.Visit the National Debtline website for usefullinks including trade associations and credit reference agencies.

FACTSHEETS

National Debtline produce a series of factsheets listed below.These cover specific subjects in depth that are not included inthis pack.We refer to the factsheets throughout the pack.

Our factsheets are free to individuals.There is a charge toagencies and professionals.

l Administration orders in the county court.l Attachment of earnings orders in the county court.l Bailiffs and the council tax.l Bankruptcy.l Charging orders in the county court.l Credit reference agencies.l Dealing with debt in the High Court.l Debt management plans (DMPs).l Harassment by creditors.l Homelessness.l How can my landlord end my assured tenancy?l How to avoid debt at Christmas.l How to deal with business debts.l How to deal with hire purchase debts.l How to make offers in full and final settlement.l How to set aside a judgment in the county court.l Individual voluntary arrangements.l Interest charges on county court judgments for

Consumer Credit Act regulated agreements.l Liability for debts and The Limitation Act.l Magistrates’ court fines.l Mortgage shortfalls.l Negative equity – what can I do?l Replying to a county court claim form.l Reducing payments or suspending a bailiff ’s warrant on a

county court judgment.l Review pack – to review offers to creditors when you

have no available income.l Review pack – to review offers to creditors when you

can make offers of payment.l Student debt.l Time orders in the county court.l Water rates – new rules.l What if a creditor refuses my offer of payment?l What to do about debts when someone dies.

To request a factsheet phone 0808 808 4000

or write to:National DebtlineThe Arch48-52 Floodgate Street DigbethBirmingham B5 5SL

The factsheets can be printed off from the National Debtlinewebsite or requested via email from the sitewww.nationaldebtline.co.uk

USEFUL ADDRESSES AND PHONE NUMBERS

Many of these are head office addresses which should be ableto give you the address of a local office.You can also usuallycheck their website for details.

adviceUK Telephone 020 7407 407012th Floor www.adviceuk.org.ukLondon Bridge House25 London Bridge Street, London SE1 9ST

Age Concern Telephone 0800 00 99 66 Free Post (SWB 303752) (for a range of factsheets)Ashburton, Devon TQ13 7ZZ www.ace.org.uk

Business Debtline Telephone 0800 197 6026318 Summer Lane www.bdl.org.ukBirmingham B19 3RJ

ChildLine Telephone 0800 1111Freepost 1111, London N1 0BR www.childline.org.uk

Consumer Direct Telephone 0845 404 0506(helpline for consumer problems) www.consumerdirect.gov.uk

Council of Mortgage Lenders Telephone 020 7437 00753 Saville Row Factsheet line 020 7440 2255London W1F 3PB www.cml.org.uk

Cruse Telephone 0870 167 1677(Advice and support www.crusebereavementcare.org.ukfor bereaved families)126 Sheen Road, Richmond TW9 1UR

DIAL UK Telephone 01302 310 123(Helpline offering advice for www.dialuk.org.ukpeople with disabilities)St Catherine’s House Hospice,Tickhill Road, Doncaster DN4 8QN

Disability Rights Commission Telephone 0845 7622 633Freepost MID 02164 www.drc-gb.orgStratford upon Avon CV37 9BR

Drinkline Telephone 0800 917 8282

Department for Work & Pensions (DWP)

Carer’s Allowance Unit Telephone 0125 385 6123

Child Support Agency Enquiry Line Telephone 0845 7133 133www.csa.gov.uk

Disability Benefits Enquiry Line Telephone 0800 88 22 00www.dwp.gov.uk

Disability Living Allowance & Telephone 0845 712 3456Attendance Allowance Helpline

New Deal Telephone 0845 606 2626www.newdeal.gov.uk

New Deal for Lone Parents Telephone 0800 868 868www.newdeal.gov.uk

Pension Credit Claim Line Telephone 0800 99 1234www.thepensionservice.gov.uk

Tax Credits Helpline Telephone 0845 300 3900www.inlandrevenue.gov.uk/taxcredits

Veterans Agency Freeline Telephone 0800 169 2277www.veteransagency.mod.uk

Winter Fuel Payments Helpline Telephone 0845 915 1515www.thepensionservice.gov.uk/winterfuel

58


Energywatch Telephone 0845 906 07 08(For fuel complaints and www.energywatch.org.ukto compare fuel prices)4th Floor,Artillery House,Artillery Road, London SW1P

Financial Services Authority (FSA) Telephone 0845 606 1234(Advice on endowments/pensions etc) www.fsa.gov.ukConsumer Helpline, 25 The North ColonnadeCanary Wharf, London E14 5HS

Financial Services Telephone 020 7892 7300Compensation Scheme www.fscs.org.uk7th Floor, Lloyds Chambers 1 Portsoken Street, London E1 8BN

Financial Ombudsman Service Telephone 0845 080 1800(For complaints about Banks, www.financial-ombudsman.org.ukBuilding Societies, insurance,investments, endowments and pensions)South Quay Plaza, 183 Marsh Wall, London E14 9SR

Gamblers Anonymous Telephone 08700 50 88 80PO Box 88, London SW10 0EU www.gamblersanonymous.org.uk

Gamcare Telephone 0845 600 0133 (Advice on gambling issues) www.gamcare.org.uk2/3 Baden Place, Crosby Row, London SE1 1YW

Gingerbread Telephone 0800 018 4318(National network for one parent families) www.gingerbread.org.ukSovereign Close, Sovereign CourtLondon E1W 3HW

Help the Aged Seniorline 0808 800 6565207-221 Pentonville Road www.helptheaged.org.ukLondon N1 9UZ

Housing Corporation Telephone 0845 230 7000(For a list of housing associations) Fax 020 7393 2111149 Tottenham Court Road, London W1T 7BN www.housingcorp.gov.uk

IFA Promotions Office Telephone 0800 0853 250(For a list of Independent Financial Advisers) www.unbiased.co.uk2nd Floor, 117 Farringdon Road, London EC1R 3BX

Information Commissioner Telephone 01625 545 700(For Data Protection Issues) www.informationcommissioner.gov.ukWycliffe House,Water LaneWilmslow, Cheshire SK9 5AF

Law Centres Federation Telephone 020 7387 8570(They do not give advice but refer www.lawcentres.org.ukqueries on to the local law centre)Duchess House, 18/19 Warren Street, London W1T 5LR

Law Society Telephone 020 7242 1222113 Chancery Lane, London WC2A 1PL www.lawsociety.org.uk

The Law Society Consumer Telephone 0845 608 6565Complaints Service www.lawsociety.org.ukVictoria Court, 8 Dormer Place, Leamington Spa,Warwickshire CV32 5AE

Local Government Ombudsman Telephone advice line:21 Queen Anne’s Gate 0845 602 1983London SW1H 9BU www.lgo.org.uk

Mind Telephone 0845 7660 16315-19 Broadway, London E15 4BQ www.mind.org.uk

National Aids Helpline Telephone 0800 567 123

National Domestic Violence Helpline Telephone 0808 200 0247www.refuge.org.uk

National Drugs Helpline Telephone 0800 77 66 00www.talktofrank.com

Office of Fair Trading (OFT) Telephone 0845 722 4499Fleetbank House www.oft.gov.uk2-6 Salisbury Square, London EC4Y 8JX

Office of Gas and Electricity Markets Telephone 0845 906 0708(OFGEM) 9 Millbank, London SW1P 3GE www.ofgem.gov.uk

Office of Communications (OFCOM) Telephone 0845 456 3000Riverside House, 2a Southwark Bridge Road, www.ofcom.gov.ukLondon, SE1 9HA

Office of Telecommunications Telephone 0845 050 1614Ombudsman Service (OTELO) www.otelo.org.ukWilderspoon Park,Warrington, Cheshire WA4 6HL

Office of Water Services (OFWAT) Telephone 0121 625 1300(Check your yellow pages for your www.ofwat.gov.ukregional WaterVoice office)

One Parent Families Telephone 0800 018 5026255 Kentish Town Road www.oneparentfamilies.org.ukLondon NW5 2LX

Parliamentary Ombudsman Telephone 0845 015 4033(Investigates complaints about government www.ombudsman.org.ukdepartments.Ask your MP)Millbank Tower, Millbank, London SW1P 4QP

Relate Telephone 0845 130 40 16www.relate.org.uk

Rights of Women Telephone advice line 020 7251 6577(legal advice for women) www.rightsofwomen.org.uk52-54 Featherstone Street, London EC1Y 8RT.

Samaritans Telephone 0845 790 9090www.samaritans.org.uk

Saneline Telephone 0845 767 8000(Support for mental illness) www.sane.org.uk

Shelter (Shelterline) Telephone 0808 800 444488 Old Street, London EC1V 9HU www.shelter.org.uk

Taxaid Telephone 020 7803 4959(Advice on tax problems) www.taxaid.org.uk

Telephone Helplines Association Telephone 0845 120 3767(Provides information on helplines) www.helplines.org.uk

Trading Standards www.consumercomplaints.org.uk(To complain to your local trading standards department on-line)

TV Licensing (General enquiries) Telephone 0870 241 6468Bristol, BS98 1TL www.tvlicensing.co.uk

You will also find the following local services listed in the phone book.

Citizens advice bureaux: Offering impartial and confidential advice onissues such as debt, money problems and welfare benefits. Most bureauxhave trained advice workers who can help with budgeting, negotiate withcreditors etc. www.adviceguide.org.uk and www.citizensadvice.org.uk

Community Legal Service Direct: A directory of agencies providinglegal advice in your area. Check your local library or the websitewww.clsdirect.org.uk Ring 0845 345 4 345 for legal help and advice.

Department for Work & Pensions/Social Security Offices:Find your local office to claim most benefits.

Job Centre Plus: Find your local office to claim most benefits if youare unemployed.

Local council: Provides a range of services. Contact your council toclaim housing benefit and council tax benefit or make a housingapplication.

Trading standards departments (consumer protectiondepartments): Part of your local council. Contact them to complainabout harassment.

Law centres: They offer legal advice on housing, welfare benefits,immigrations and sometimes debt.

Money advice centres: Local advice on dealing with debts.

Welfare rights agencies: Local advice on claiming welfare benefits.May be part of your local council.

ABOUT NATIONAL DEBTLINE

59

NATIONAL DEBTLINE AND THE MONEY ADVICE TRUST

National Debtline (NDL) is part of the Money Advice Trust(MAT), a charity formed in 1991 to increase the quality andavailability of free, independent money advice in the UK. MATworks in partnership with government, the private sector andthe UK’s leading money advice agencies to:l increase the availability of money advicel improve its qualityl improve the efficiency and effectiveness of its delivery.

Our partners

MAT works with seven leading UK agencies to achieve itsobjectives:l adviceUKl Birmingham Settlement l Citizens Advicel Citizens Advice Scotlandl Money Advice Associationl Money Advice Scotlandl Northern Ireland Association of Citizens Advice Bureaux.

NATIONAL DEBTLINE: OUR AIMS & SERVICES

National Debtline aims to provide a high quality service.Youcan expect:l The attention of approachable advisers who are trained to a

high standard.l A guarantee that any information you give about your

situation will be kept strictly confidential. Records of ourcalls are kept on a database. If you need to contact us again,this means you don’t have to tell us about your situation allover again.Your details are not passed on to any otherorganisation without your permission.We do ask yourpermission to be contacted by a third party researchorganisation, but only for the purpose of a telephone orwritten questionnaire on the quality of our service.However, you do not have to tell us anything, such as yourname and address, if you would prefer not to. Pleasecontact us if you do not want us to keep your details onfile. If we do not hear from you we will take it that youagree to us doing so.

l Prompt attention.Although our lines are very busy, we willdo all we can to answer your call promptly.

l Non-discriminatory practice. National Debtline iscommitted to equality of opportunity in all its services andwill tackle prejudice and discrimination to ensure this.

If you are not satisfied with the service you receive, contact aNational Debtline Team Leader. Please remember that atcertain times our lines are very busy and you may havedifficulty getting through to an adviser.

If you wish to make a complaint or have any ideas onhow to improve our services, please write to us at:National Debtline,The Arch, 48-52 Floodgate Street,Digbeth, Birmingham B5 5SL.We have a complaintsprocedure and guarantee your complaint will be givenfull consideration.

FUNDING

The Money Advice Trust would like to thank all its supportersfor their generosity in supporting National Debtline.In particular we thank:

Abbey

Alliance & Leicester

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Argos

Bank of Scotland

Barclays

BMW Finance

Bradford & Bingley

British Gas

British Telecommunicationsplc

Building SocietiesAssociation

Building Societies Trust

Capital One

CPP Group plc

Centrica plc

Chelsea Building Society

Citifinancial Europe

Clifford Chance

Clydesdale Bank

Consumer CreditAssociation

Consumer CreditCounselling Service

Council of MortgageLenders

Department forConstitutional Affairs

Department of Trade and Industry

Dunfermline BuildingSociety

EDF Energy

Egg

Experian

Finance & LeasingAssociation

Ford Credit Britain

GE Capital Bank Ltd

Halifax

HBOS plc

HSBC Bank plc

Legal & General plc

Littlewoods

Lloyds TSB Group plc

Mail Order Traders’Association

Marks & Spencer Money

MBNA

Morgan Stanley

Mortgages plc

National Australia Group

Nationwide BuildingSociety

NatWest

Northern Bank

Norwich and Peterborough

Paragon

Payplan Ltd

PowerGen Energy plc

Provident Financial

Royal Bank of Scotland

Scottish Executive

ShareGift

Shop Direct Financial Services

Southern Pacific MortgageLtd

Swift Advances plc

The 29th May 1961Charitable Trust

The Michael & Anna WixCharitable Trust

Wescot Credit Services

WWWATT Ltd

Yorkshire Bank

Monday to Friday 9.00am - 9.00pmSaturday 9.30am - 1.00pm

Also 24 hour voicemail service

National DebtlineENGLAND AND WALES

Copyright notice The technical material in this pack represents original work by National Debtline.The copyright is with National Debtline and the Money Advice Trust and court action will be taken to resist breaches of copyright.

The booklet may not, in whole or part, be copied, photocopied or reproduced without prior written consent,except for the making of single copies for individual use by people with debt problems.

Price: Free to individuals; there is a charge to agencies.

Whilst we endeavour to keep our information packs and factsheets as up to date as possible,National Debtline cannot be held responsible for changes in legislation

or for developments in caselaw since this edition was issued.

National Debtline is part of the Money Advice Trust.Money Advice Trust is a Registered Charity Number 1099506

A company limited by guarantee. Registered in England and Wales, Number 4741583

Registered Office: Bridge House, 181 Queen Victoria Street, London EC1V 4DZ

© National Debtline/Money Advice Trust 14th Edition April 2005

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