Breathing Space from your debts

Breathing Space from your debts


‘Breathing Space’ is a new scheme to help those struggling with debt. This includes help if you have rent or mortgage arrears. It can give you the time that you need to sort out your debts without the added pressure of action being taken against you.



What is the Breathing Space scheme?


The Breathing Space scheme freezes payment demands and legal action by creditors to allow you to get free quality debt advice. It prevents the person or organisation that you owe money to from taking action against you whilst you are receiving help under the scheme. A breathing space is an opportunity for you to get a handle on your finances without the stress and worry of increasing debt and scary letters.

The Breathing Space scheme is sometimes referred to as The Debt Respite Scheme.

There are two types of breathing space:

Standard breathing space

This can last up to 60 days.

During this time you’re expected to work with your debt adviser to find a longer term debt solution.

You can’t apply for the standard breathing space yourself, it can only be started by a regulated debt adviser or your local council (if it provides debt advice to its residents).

If you’ve already had a standard breathing space in the last year, you can’t get another one.

Mental health crisis breathing space 

A mental health crisis breathing space can be put into place if you are receiving treatment for a specified mental health crisis. The breathing space can last as long as your treatment, however long this may be, plus 30 days.

To qualify for the mental health crisis breathing space, an approved mental health professional must apply and confirm you’re receiving crisis treatment.

During the breathing space you are not expected to keep in touch with the debt adviser but they will stay in contact with your approved mental health professional with a view to finding a longer term solution to your debts.

The form and guidance for mental health professionals to apply for a mental health crisis breathing space is here. There is no limit on how many times you can enter a mental health crisis breathing space.


How can a breathing space help me with my rent or mortgage arrears?


Once your landlord or mortgage lender has been made aware you’ve entered into a ‘breathing space’ they must:

  • stop contacting you about payments to the arrears
  • freeze interest, fees and charges on the arrears
  • pause any enforcement action through the courts, debt collectors or bailiffs.

This means that during the period of the breathing space:

  • mortgage lenders cannot take legal steps to make you pay the arrears or repossess your home.

A breathing space would not prevent a landlord giving notice or taking eviction action for other reasons or grounds, for example, anti-social behaviour. It would also not prevent a landlord using the ‘no fault’ eviction process for standard contract-holders. The ‘no fault’ eviction procedure can be used by private landlords (and in some circumstances community landlords). Landlords must follow certain rules to use the ‘no fault’ eviction procedure. Visit our eviction pages for more information.

Get help if you have received any paperwork from the court or your landlord.

You can also view our step-by-step guide to possession proceedings.

If you rent your home, your landlord can still contact you during the breathing space period about anything not related to the rent arrears. For example, arranging repairs or inspections for electrical or gas safety checks.

If you are a homeowner in Wales and having or facing difficulty making mortgage payments, the Help to Stay scheme might be able to provide financial assistance to help you keep your home. Speak to a debt adviser about whether this option is appropriate for you. To find out more about the scheme and how to apply, click here.


Do I still have to pay my rent or mortgage during a breathing space?


Yes. Breathing space is not a payment holiday.

Even if you can’t pay anything to your rent or mortgage arrears, you still need to pay your ongoing rent or mortgage during the breathing space. If you do not pay, your landlord or mortgage lender can ask that your breathing space be cancelled.

When your breathing space ends you are still legally required to pay what you owe.

If you are having deductions taken from your benefits or wages, these will stop while you are in your breathing space.


How do I ask for breathing space?


To qualify for a breathing space there are certain criteria you need to meet. Speak to a debt adviser or, if appropriate, your mental health worker who can go through this with you.

If a standard breathing space is set up it is important you stay in contact with your debt adviser, follow their advice, provide any information they need and report any changes.

If you don’t they may cancel the breathing space.

Be wary of debt management companies that charge for their services. Some may use the words ‘breathing space’ in adverts or on websites but could be offering debt management plans that you pay for instead.


Further information and how to get help


Contact one of our debt advisers for an appointment to discuss applying for a breathing space.

Other charities or organisations that may be able to help are:

Visit the money saving experts Free debt advice guide for a longer list.



Phone an adviser

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08000 495 495


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If you have a non-urgent problem and would like to speak to an advisor
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Cash in a crisis

Cash in a crisis


You might be able to get help with your money if you are in a crisis. Look at the different options below and don’t be afraid to ask for help.

If you are under 25, check out our Emergency Help with Money pages in our young person’s portal.


Discretionary Assistance Fund


You may be able to get help from the Discretionary Assistance Fund (DAF), which provides urgent grants to people in Wales as a last resort. The DAF can include awards for certain electrical white goods, such as fridges and cookers, in addition to household items such as beds, bedding, curtains and kitchen items. Grants do not need to be paid back.

There are 2 types of grant from the DAF :

Individual Assistance Payments (IAPs)

In some urgent situations, IAPs can help if you are trying to move house or stay in your current home. There are some qualifying conditions and, to be eligible, you must be:

  • entitled to, and in receipt of, Income Support, income-based Job Seeker’s Allowance, income-related Employment and Support Allowance, Guaranteed Credit element of Pension Credit, Universal Credit, or
  • due to leave an institution or care home within 3 months, and likely to be entitled to receive one of the above benefits on leaving.

There are certain other situations when you might be able to get an IAP, for example, if:

  • you want to stay living in the community rather than having to go into an institution (hospital or care home)
  • you are setting up home after an unsettled way of life
  • you need to move home quickly due to a relationship breakdown or domestic violence
  • you are going to care for a prisoner or young offender released on a temporary license

For more information about eligibility for an IAP, see Gov.wales .

Emergency Assistance Payments (EAPs)

EAPs can help meet expenses as a result of an emergency or disaster and might be able to help pay towards heating your home in the event of extreme weather. To get an EAP, you must:

  • be in extreme financial hardship, for example you’ve lost your job, applied for benefits and waiting for your first payment or have no money to buy food, gas and electricity
  • be in a crisis situation and in need of immediate financial support
  • live in Wales
  • be over 16
  • have no other money for example savings, and considered all other legal and responsible lenders such as credit unions

The EAP is a small, short-term grant available to cover the immediate emergency needs and can be awarded towards essential needs such as food, gas, electricity, essential clothing and emergency travel. You do not have to be receiving any benefit to qualify, but you must show that you have tried other sources of affordable funding before applying.

For more information about eligibility for an EAP, see Gov.wales.

To apply online, click here. You can also apply by ringing 0800 859 5924 (9.30am – 4pm Mon-Fri).

Get help if your application for a DAF is unsuccessful. An adviser may be able to persuade them to offer you some help or be able to help you access other sources of help.

For information on the DAF in welsh, see here.


Food banks


Food banks provide food parcels to people in need. They are often run by church or community groups.

Some food banks offer a hot meal and advice. If you live in a rural area and cannot afford to travel to collect your box, some food banks offer a free delivery service.

You need a voucher to use a food bank. You then swap this at the food bank for food.

You can get food bank vouchers from:


Short-term benefit advance


If you have claimed benefits and are waiting for your first payment, you may be able to ask for an advance payment, also known as a short-term benefit advance.

You can ask for this if there is a delay in processing your benefit claim which isn’t your fault, or you are waiting for an increase in your benefit payments due to a change in your circumstances.

To be eligible, you must be claiming an income-related benefit such as jobseeker’s allowance, income support or employment & support allowance. You need to prove that you are experiencing financial hardship.

You usually have to repay the benefit advance within three months, but in some circumstances you have up to six months to pay back the money.

If you have applied for Universal Credit and don’t have enough to live on while you wait for your first payment you may be able to get a Universal Credit advance.


Hardship payments


If your benefits have stopped because of a sanction, you might be able to apply for hardship payments.  You will need to prove that you or your partner will have problems paying for essential living costs. If you’re homeless, pregnant, a single parent or vulnerable (perhaps because of an illness), you should be able to get a hardship payment straightaway.

You don’t usually have to repay a hardship payment.

If your Universal Credit has been sanctioned, see Citizens Advice here. If your JSA has been sanctioned, see Citizens Advice here.


Budgeting loans and budgeting advances


Budgeting loans are interest-free loans available only to people claiming certain income-related benefits.

There are two types of loan, depending on which benefits you are claiming:

  • budgeting loans – if you claim income support, jobseeker’s allowance, employment and support allowance or pension credit

Help to pay your rent or council tax


You may be able to get help from the council with the costs of renting your home. Local councils can provide help through:

You can also contact your council’s housing options or homelessness services for advice. Your local council may be able to offer financial help to help prevent you becoming homeless.

Get help immediately if you already have rent arrears or mortgage arrears.


Credit unions


Rather than getting a bank overdraft or spending money on your credit card, credit unions are a more affordable option if you need to borrow money for a short time. Credit unions won’t let you borrow more than they think you can pay back and the interest rates are low.

Try to avoid bank overdrafts, spending money on your credit card and borrowing from payday loan companies. These are very expensive ways to borrow money, especially if you don’t repay them in time.


Other help


Have a look at our page on other benefits or find out what other benefit help you might be able to claim by using the entitledto Benefits Calculator.

If you are under 25 and have money worries, take a look at our Money matters advice page, specifically put together for young people.

If you are struggling to pay your debts then get advice as soon as you can. Click here to find details of our free, specialist, independent, confidential debt advice service in Wales.


We are sorry that we cannot provide this information in Welsh, however if you would like to speak to an adviser in Welsh please contact 08000 495 495.





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Debt solutions

Debt solutions and negotiation


Negotiating with the people or companies that you owe money to (your ‘creditors’) could give you a solution to your debt problems. Have a look at some suggested solutions below to try and work out which would be best for you.

If you are in debt and/or struggling with rent or mortgage arrears you may eligible for the Breathing Space scheme. This gives you time to get some specialist debt advice without the pressure of formal action being taken against you. To find out more about the scheme and how to apply, click here.

These Money Helper tools might help you during any negotiations.



Debt management plans


If you can’t afford to pay your debts, a debt management plan set up with the help of a qualified debt adviser could provide a solution to your problems. These plans are set up without involving the courts, but can only help with debts that are not secured on your home, so mortgage arrears, second mortgages and other secured loans won’t be included.

Debt charities such as Step Change and National Debtline provide debt management plans for free. There are also many private companies that provide this service, but you will be charged fees.

A plan provider will help you to work out a budget and agree an affordable monthly amount for you to repay your debts. You make one payment each month to the debt charity or company and they distribute the money to your creditors.

Under the terms of a debt management plan, you will eventually repay all the money you owe to your creditors, but this could take a long time. There is no legal requirement for creditors to suspend interest payments or charges if you take out one of these plans. But it may help you if your debt adviser can try to negotiate this on your behalf. Also, your creditors don’t have to join the plan and could choose to pursue you separately for the money you owe them.


Paying a lump sum in full and final settlement


You might be able to negotiate with your creditor and ask them to agree to a one-off lump sum payment in full and final settlement of your debt. This could be a good option if you have little or no income, but can access some capital, for example by selling a valuable asset such as a car.

Never make the lump sum payment until the arrangement is accepted and confirmed in writing by your creditor. You should also get the creditor to agree to amend your credit reference file to show the debt is paid off or ‘satisfied’. If you have a number of creditors you want to settle debts with, you will need to make pro-rata offers to each.


Partial write-off of the debt


Your creditor is unlikely to write off all of the debt, but they may agree to a partial write-off if you are able to pay the rest of the debt in regular instalments.

A partial write-off may be appropriate where you have some income, or access to capital but cannot afford to pay the full debt, or where paying off the full debt would take years.


Suspending payments


A suspension of payments is also known as a moratorium. This allows you to suspend your payments for a limited period of time.

This is usually only appropriate if your financial problems are only likely to be short-term, and the creditors believe that there is a reasonable prospect that repayments will be resumed in the near future.


Making token payments towards the debt


Token payments are when you make small regular payments such as £1 per month to your creditors, typically where a creditor won’t agree to write off a debt or accept no payments.

Some creditors may agree to freeze interest charges only on condition that you make token payments. An offer of token payments may be a way of preventing court action for the debt.

Token payments are not a long term option, and will never result in the debt being repaid.


Voluntary charge on your property


Get specialist debt advice immediately if a creditor asks you to agree to a voluntary charge on your property. A creditor can use a charge against your property to force its sale.

A voluntary charge is only in your best interests in very limited circumstances, for example, if you are terminally ill and won’t need the money from the eventual sale of the property, and settling in this way would save you stress.

You may need to consider this option if you think that your creditor is going to issue, or has already issued, bankruptcy proceedings against you. Get advice immediately if you receive a statutory demand. This is a notice that has to be served before bankruptcy proceedings can begin.

Voluntary charges can be written in such a way that a creditor is prevented from repossessing your house and that interest charges stop building up, but you will need specialist advice to achieve this.

If you have agreed to a voluntary charge on your property that also requires payments to be made, your home is at risk if you fail to make the repayments.


Write-off of the debt


Your creditor may decide to accept a write-off the debt if you have little or no income, or assets.

However, in practice this is unlikely to be acceptable to a creditor, and will only ever apply in a very limited number of cases.


What if these solutions do not work?


If negotiating with your lender has not been successful, you may need to consider the pros and cons of bankruptcy, and formal alternatives to bankruptcy.



Phone an adviser

If you have a housing problem, call our expert housing advice helpline


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If you have a non-urgent problem and would like to speak to an adviser
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Alternatives to bankruptcy

Alternatives to bankruptcy


There are several formal alternatives to bankruptcy which could provide a solution to serious debt problems.



Administration orders


You can apply to the court for an administration order if:

  • you have at least two debts
  • the total of your debts is less than £5,000, and
  • you have at least one county court judgment (CCJ) against you.

An administration order is a county court order that allows you to make a single payment every month into the court towards repayment of all your debts, instead of paying your debts directly to different creditors. The court will then divide the money between your creditors in proportion to how much they are owed.

An administration order will stop your creditors from taking further action against you, unless they get permission from the court. It will also stop any further interest or charges building up. Once you have cleared your debts, the administration order will come to an end.

If there is no prospect of you repaying all your debts within a reasonable period, normally three years, the court may decide you only have to pay off only a percentage of the debt, and the rest will be written off. This decision is called a composition order.

To apply for an administration order you must fill in form N92 which you need to get from your local county court. Find your nearest court here.


Individual voluntary arrangements (IVAs)


An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors that enables you to repay a proportion of your debts through payments you can afford. The agreement is for a set period of time, usually five years. At the end of this period, any outstanding debt is written off.

If you have been served with a statutory demand for payment, you should consider if an IVA will be a better option for you than being forced into bankruptcy, particularly if you have enough income to pay your creditors a significant amount each month.

You will need to act quickly, as your creditor can start bankruptcy proceedings 21 days after the statutory demand is served. When deciding whether to accept the IVA, your creditors will probably consider if they are likely to receive more of the debt through an IVA than they would under a bankruptcy order.

You cannot apply for an IVA yourself. You will need the help of a qualified insolvency practitioner. Always check the costs of using a private insolvency practitioner. It might be better to contact a debt advice charity, as some provide this service for free.

An insolvency practitioner helps you to prepare a proposal for an IVA to put to your creditors and sets up a meeting to allow your creditors to consider your proposal.

The IVA can only go ahead if enough of your creditors agree. You need to obtain the agreement of creditors whose loans add up to at least 75% of the value of your debt. For example, if your overall debts amount to £20,000 and you owe one creditor £10,000 then that creditor’s vote alone is worth 50%.

If you are a homeowner, in many cases an IVA may allow you to keep your home. However, the agreement may involve your creditors taking a share in any equity you may have in your property.


Debt Relief Orders (DROs)


A debt relief order (DRO) may be an option if you have few assets, very little income and are not able to repay your debts within a reasonable time.

A DRO could provide a solution to your debt problems, however there are strict rules that you have to meet to qualify for a DRO. You must:

  • be unable to pay your debts
  • have total debts of £30,000 or less at the date the application is approved
  • have assets worth a total of £2,000 or less
  • not have a car or motor bike worth £2,000 or more (unless it has been adapted because you have a disability)
  • have £75 a month or less spare income after normal household expenses are taken into account
  • live in England or Wales (or have lived or run a business in England or Wales in the last three years), and
  • not have had a DRO in the last six years (although you may still qualify if your DRO was cancelled).

You can find out more about debt relief orders here

https://nationaldebtline.org/fact-sheet-library/debt-relief-orders-ew/

You cannot get a DRO if you already have a bankruptcy order or IVA, or had already applied for a DRO in the last six years.

If you obtain a DRO, creditors who are listed in the order will be prevented from chasing you directly for payment and your total debt will be usually be written off after 12 months. You will not be allowed to make direct payments to the creditors included in the order. You will remain liable for some debts that cannot be included in the DRO, such as court fines, child support and student loans.

A DRO can be cancelled if your financial circumstances improve so that you are able to make payments to your creditors.

A DRO is obtained through an application to the Insolvency Service and does not involve the courts. The application needs to be made through a skilled debt adviser working for an approved organisation.


Debt management plans and other solutions


If you can’t afford to make the contractual payments on your debts, a debt management plan set up with the help of a qualified debt adviser could provide a solution to your debt problems. These plans are set up without involving the courts and only cover unsecured debts.


Get advice about debt and alternatives to bankruptcy


Get advice if you need help with bankruptcy or other solutions to debt. Contact Shelter Cymru’s expert debt advice service – there might be a debt advice surgery near you or you can contact them by phone or email.

Citizen’s Advice have lots of helpful information on all of the above solutions on their website.

Alternatively, you can contact National Debtline or Step Change.



Phone an adviser

If you have a housing problem, call our expert housing advice helpline
08000 495 495


Email an adviser

If you have a non-urgent problem and would like to speak to an advisor
email us


Bankruptcy

Bankruptcy


Bankruptcy is one solution to serious debt problems. It might be right for you if you can’t afford to pay your debts and have no prospect of doing so in the near future.

Going bankrupt has serious consequences on what you own, your income, your credit rating and, in some cases, your employment. You should always get professional advice before you start the bankruptcy process.



Alternatives to bankruptcy


If you have debt that you can no longer manage, you should also consider if solutions other than bankruptcy would be better for you.

Look at our page on alternatives to bankruptcy.

If you have serious debt problems that include, or are causing, rent or mortgage arrears, see our advice here, and get help.


Becoming bankrupt


Applying for your own bankruptcy

Applying for your own bankruptcy is known as a ‘debtor petition’.

  • You can apply online here.
  • You will need to pay a fee of £680 which you will not get back.

If you apply for your own bankruptcy using the online service, a bankruptcy order will be made by the Insolvency Service. The decision whether to grant the order should be made within 28 days.

A creditor applying for your bankruptcy

Alternatively, one or more of the people you owe money to (known as your ‘creditors’) can apply for your bankruptcy if you owe them £5,000 or more. This is known as a ‘creditor petition’. If you are made bankrupt by your creditor, a bankruptcy order will be made by the court.

A creditor can only apply for your bankruptcy if:

  • they have sent you a ‘statutory demand’ (see below), or
  • obtained a county court judgment (CCJ) against you and unsuccessfully attempted to enforce it.

Once bankrupt, your case will be handled by a trustee. This could be an official receiver or an insolvency practitioner. You will probably have to go to an interview with the trustee which may be in person or by phone.

The trustee will make the decision of how your assets are distributed, and whether any income payment orders should be made.

Bankruptcy usually lasts for a maximum of a year. When you are freed from your bankruptcy, you can no longer be pursued for your debts that you owed at the time you were made bankrupt.

In certain cases, the trustee can ask for the bankruptcy to be extended or for a bankruptcy restriction order to be made. A restriction order might be made if you have:

  • not cooperated
  • behaved fraudulently or dishonestly, for example, given false details to obtain credit
  • given away assets or sold them for less than their value
  • neglected your business so that your debts have increased.

Read more from Gov.uk about bankruptcy.


Effects of bankruptcy


When you are made bankrupt, your possessions and financial assets such as life insurance policies may be sold to pay your creditors. If you are a homeowner, your home could be sold, even if you own it jointly with someone else.

When you are bankrupt there are several restrictions on how you conduct your financial affairs, including your ability to borrow money or run a business.

Bankruptcy makes it difficult to get credit or loans in the future.

Bankruptcy orders are usually in place for one year. When you are freed from bankruptcy or ‘discharged’ most of your debts are written off.

Debts that are not written off include:

  • student loans
  • debts you incur after the bankruptcy order was made
  • family liability such as maintenance orders and child support arrears
  • court fines
  • debts arising from fraud
  • mortgage payments.

If you receive a statutory demand


A statutory demand is a document from one or more of your creditors asking for their debts to be repaid and has to be served before bankruptcy proceedings can begin. Many creditors issue a statutory demand as a way of trying to get you to deal with your debts.

If you receive a statutory demand for payment, you must act within 21 days to ensure that the creditor does not issue bankruptcy proceedings. You can prevent bankruptcy proceedings if you repay the debt in full or reduce the debt to below £5000.

You may also be able to prevent your creditor taking bankruptcy proceedings if you:

  • offer to repay the debt in instalments
  • try to settle the debt by negotiating to pay less than you owe
  • set up an individual voluntary arrangement (IVA)
  • apply for an administration order
  • offer your creditor a voluntary charge on your property (if you have one) – but always seek advice before considering this.

If you dispute the claims made under the statutory demand, you can apply to the court to have it set aside. If this is successful it prevents your creditor applying for you to be made bankrupt.


Homeowners and bankruptcy


Your home could be sold to help pay your debts.

The sale could be delayed until after the first year of bankruptcy if you have a spouse, civil partner or children living with you, so that other housing can be found.

If your home cannot be sold, your trustee may obtain a legal charge over your share in it instead. When you sell your home, the value of your share in the property is paid to your trustee, including any increase in its value.

If your trustee doesn’t sell your home, obtain a legal charge over it, or come to an arrangement with you, usually within 3 years, it may be returned to you.


Where to get help


For more information about managing your debt, contact:

You can also use the Gov.UK website which has lots of helpful information and guides prepared by the Insolvency Service.



Phone an adviser

If you have a housing problem, call our expert housing advice helpline
08000 495 495


Email an adviser

If you have a non-urgent problem and would like to speak to an advisor
email us


Consolidating debts

Consolidating debts


Consolidating your debts means that you get one single loan to pay off all or some of your other debts. A consolidation loan may be an unsecured personal loan. However, if you are a homeowner, it may be secured against your home.

If you wish to consider consolidating your debts, make sure you get expert debt advice to help you deal with your creditors and lenders.



Alternatives to consolidating your debts


Before deciding to consolidate your debts, you should look at what other options may be available to you. Alternatives to consolidating your debts could include:

  • better budgeting – use Shelter Cymru’s budgeting advice to help
  • making new arrangements with your existing creditors, such as negotiating reduced loan rates
  • checking your existing loans, credit cards and overdraft facilities to see if you are getting the best rate from each – can you switch products?
  • looking at ways to increase your income or reduce your spending
  • borrowing money from friends or relatives.

There are many ways to resolve debt problems and many free sources of help and advice.


Advantages of consolidation loans


As long as you can afford the repayments for the full period of the consolidation loan, there may be advantages to consolidating your debts into one loan.

You could:

  • benefit from a lower rate of interest
  • reduce your overall monthly repayments to an affordable level
  • find it easier to make one regular repayment (if you repay all your other debts).

Disadvantages of consolidation loans


Consolidation loans often carry major risks and may not be your best option, particularly if  you are struggling with debt.

If a consolidation loan is secured against your property, it’s like having a second mortgage, and you could lose your home if you miss repayments.

Other possible disadvantages include:

  • making repayments over a much longer period of time and possibly paying more in the long run
  • paying extra charges when paying off your loans and arranging others, adding to your total debt
  • paying more by using a loan that charges interest to repay household bills – for example, it will be cheaper to pay off gas arrears in installments than to get a loan to repay them.

Your new loan provider may also have stricter rules on what happens if you miss payments in the future.


Problems with paying a consolidation loan


If your consolidation loan is an unsecured loan, it is classified as a non-priority debt.  If you don’t pay, you can be taken to court and risk having a county court judgment (CCJ) against you.

If your consolidation loan is a secured loan, you could be putting your home at risk of repossession if you later find you can’t pay.

For more advice on consolidation loans go to the Money Advice Service website.



Phone an adviser

If you have a housing problem, call our expert housing advice helpline
08000 495 495


Email an adviser

If you have a non-urgent problem and would like to speak to an advisor
email us


County Court Judgments (CCJs)

County Court Judgments (CCJs)


If you don’t pay certain debts, your creditor could threaten to take you to court and could get a county court judgment (CCJ) against you. Find out what a CCJ could mean for you and how you may be able to deal with it.



What is a county court judgment (CCJ)?


A county court judgment (CCJ) is a court order that states what you must pay towards an individual debt.

A CCJ can state how much and when the money should be paid, and if it can be paid in instalments. CCJs are often used as a way of recovering non-priority debts, such as credit card debts and pay-day loans.

A creditor is the person or company you owe money to.  Before a creditor can take you to court to get a CCJ they should send you a letter before action or a default notice, depending on the type of creditor it is. If you receive a letter or notice then get advice. You might be able to stop the matter going to court.


I have received court papers saying my creditor is applying for a CCJ. What do I do?


If your creditor decides to go to court to get a CCJ you should receive a claim form and a response pack from the county court. The claim form will give details of how much you owe, including any interest which has built up.  To check if the claim form is real look for a claim number and the court’s official stamp.

If you receive a claim form it is very important that you act quickly because you only have 14 days to send a response back.

If you agree you owe the money
If you can afford to, you might choose to clear the debt straight away. This would avoid a CCJ being made.  To do this, return the form N9A selecting the option to pay the debt in full. Always remember to deal with your priority debts first before paying off non-priority debts.

If you cannot afford to clear the debt in full, you can choose to pay by instalments. You will need to list your income and outgoings on the response form and make an offer for what you can afford after all your essential costs are met.

If your creditor accepts your offer, you may not need a hearing. The court will enter a judgment in the register of judgments.

If your creditor does not accept your offer the court will look at your income and outgoings list and decide what is affordable for you. There isn’t usually a hearing for this.

If you don’t agree with some of the claim
You will need to complete both the N9a admission form and the N9b defence form. You will need to enter the amount you agree to on the admission form. If you cannot afford to pay the amount you agree in full, you can ask to pay by instalments (see above).

If you don’t agree with any of the claim
If you don’t agree that you owe the money claimed you can choose to defend the claim. You will need to complete the N9b defence form. You must have good legal reasons for doing so, for example, the debt has already been paid or you never took out the agreement.

If you need help on responding to the claim then get advice. Act quickly as you only have 14 days to respond. Phone Shelter Cymru’s specialist debt advisers.

If you ignore the claim
If you do not reply within 14 days, your creditor can ask the court to enter “judgment in default”. This will affect your credit rating.


Problems with CCJ payments


If the court orders you to make instalments on a CCJ, it is the creditor’s responsibility to collect them.

Make sure you keep receipts and a record of all the payments you make. Try to make the correct payments, for example if monthly payments have been agreed then you must pay these every month. If you don’t, the creditor can ask the court to take further action to pay your debt and court fees.

This may include :

  • sending bailiffs to your home to take your things away
  • having money taken from your wages to pay the debt. This is called an ‘attachment of earnings order’
  • taking money that you are owed by someone else from your bank account. This is called a ‘third party debt order’
  • securing the debt against your home or other property you own. This is called a ‘charging order’ and means that you could lose your home if you don’t keep up the repayments.

CCJs and your credit rating


Having a CCJ can affect your credit rating and may make it harder for you to obtain credit in the future.

If you pay the debt in full within 1 month of the date of the CCJ, you can apply to the court to have your entry in the Register removed. You’ll need to get a certificate from the court to prove you’ve paid off the debt.

If your entry is removed from the Register, the credit reference agencies will be told and details of your CCJ will be removed from your record.


Changes in circumstances


You can apply to the court to change the terms of your CCJ if your circumstances change.

You can do this, for example, if you can no longer afford the payments or the original decision was made without the court being aware of some important information.


Take steps to avoid a CCJ


Try to negotiate with a creditor who is threatening to take you to court. Make an offer of repayment that you can afford and that you can keep to.

A debt adviser can help you work out an affordable budget.

Use the Money Helper budget planner to help you work out how to manage your money and your debts.

If your creditor does apply for a county court judgment (CCJ), find more help on how to respond on the National Debtline.



Phone an adviser

If you have a housing problem, call our expert housing advice helpline
08000 495 495


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If you have a non-urgent problem and would like to speak to an advisor
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Credit card debt

Credit card debt


Missed payments on credit card bills can quickly build up into credit card debt. Find out how to keep your costs down and what to do if your spending is getting out of control.



How to keep your credit card costs down


  • Shop around for the best credit card deals before you get a card.
  • Budget for your credit card – work out what you can afford to pay each month before you borrow.
  • Switch to a cheaper card if you can – but watch out for charges and short term deals that could cost you more in the long term.
  • Pay in full each month to avoid interest charges.
  • Pay on time and make a payment each month – or pay an extra charge.
  • Pay more than your minimum payment – otherwise your debt will grow.
  • Plan your spending – if you can’t afford it and don’t need it, don’t buy it!

Budget your credit card spending


You may use your credit card as a way of budgeting for expensive costs like furniture and electrical items, or for regular costs such as your weekly shopping. Make sure you plan your spending so that your repayments are affordable.

Check what your credit card repayments will be if you spend up to your credit card limit. You can ask for your credit limit to be reduced so you are not tempted to spend more than you can budget for.

Use Money Helper’s Budget Planner to help you check you’ll be able to manage your new budget.

Work out how long it will take to repay your debt if you just pay the minimum each month, and how much you’ll pay in interest. Use an online calculator from Which?.

If you can no longer afford your credit card repayments, you need to stop spending on your card.


Missed credit card payments


Your credit card company should contact you if you miss a payment and will probably make an extra charge. Late payment charges can build up quickly, and you’ll have to pay interest on them as well.

If you miss three to six payments, the credit card company may send you a default notice. This is a letter setting out what you owe and when you have to pay.


If you don’t pay a credit card debt


If you are unable to pay the minimum payment, your credit card company (your ‘creditor’) will probably add on a late payment charge to your account. Once you have missed a number of payments you may be served a ‘default notice’. This can affect your credit rating and your debt can be passed on to a debt collection agency.  Your creditor may also take you to court to recover the money you owe. This could result in a county court judgment (CCJ) against you.

If your creditor gets a CCJ against you, you must try to keep to the terms of the court order. If you don’t keep to this, for example you don’t pay the agreed amount each month, your creditor can go back to court. It can ask the court to send bailiffs to seize your non-essential goods and sell them to pay the debt, or it could petition for your bankruptcy. If you are a homeowner, this could result in you losing your home.


Get help with credit card debt


Get help with credit card debt, and any other debts you may have too.

Priority debts such as mortgage, rent or fuel bills should be paid first. Non-payment of these debts can mean you lose your home or your gas or electricity is cut off.

Credit card debts are known as non-priority debts but this doesn’t mean they are not important.

Find out more about priority and non-priority debts.



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Priority and non-priority debts

Priority and non-priority debts


When you are in debt, some debts should always be paid first. Knowing which debts should take priority can help you to keep your home. It’s important to understand what happens if you don’t pay.



Priority debts


Some debts are called priority debts because if you do not pay them you could face serious consequences. Priority debts should always be dealt with BEFORE your non-priority debts.

Priority debts include:

  • mortgage repayments and loans secured on your home
  • rent
  • gas and electricity debts
  • council tax
  • certain payments ordered by the courts.

Child support and maintenance payments are also considered priority debts, as are payments for your TV licence.

There are serious consequences if you don’t pay a priority debt. For example you could:

  • lose your home through mortgage or rent arrears
  • face action by enforcement agents (previously known as ‘bailiffs’)
  • have your gas or electricity supply cut off, or have to accept an expensive pre-payment meter instead
  • lose belongings on hire purchase such as a car, furniture or other goods.

Non-priority debts


Failing to pay non-priority debts is usually less serious than not paying a priority debt.

However, your creditors (the people that you owe money to) may take enforcement action against you if you do not pay them. This could result in your debt being passed on to a debt collection agency and a county court judgment (CCJ) being made against you. A CCJ could affect your credit rating.

Non-priority debts include:

  • credit card debts
  • some hire purchase agreements (HP)
  • unsecured bank and payday loans (loans that are not secured against your property)
  • water bills
  • loans from friends and family.

If you have a CCJ made against you, you must keep to the terms of the court order. If you don’t, for example you fail to pay a certain amount each month, your creditor can go back to court and apply to enforce the debt.

Depending on the amount of the debt and your circumstances, your creditors could ask the court to send enforcement agents (previously known as bailiffs) to seize your non-essential goods, or make you bankrupt. If you are a homeowner, this could result in you losing your home.


Get help with debt problems


For more information about priority and non-priority debts, contact a specialist debt adviser.

Use the Money Helper budget planner to help you organise your finances and prioritise your debts.



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Whose debt is it?

Whose debt is it?


You may have been asked to pay a bill that’s in the name of a partner, or told that you’re responsible for a debt because you are a relative of someone who has died. But it might not be your responsibility to pay this debt.



Check you are liable for a debt


Before you start negotiating with your creditors (the people you owe money to), you should check that you are liable for the debts. You may find you do not have to pay a bill you think you owe.

You are usually liable for a debt if you signed an agreement, for example for a credit card or loan, mobile phone contract, or gas supply.

You may also be liable to pay if you agreed to guarantee someone else’s loan.


Responsibility for a partner’s debts


Don’t assume that because you are married or in a civil partnership that you are always both responsible for each other’s debts.

If only one of you signed a credit card agreement, the debt doesn’t belong to the other person. This is the case even if they are an additional card holder and have helped to build up the debt.

If you both signed a credit agreement, you are jointly and severally liable. This means you are both responsible for the full amount.

You can both be held jointly and severally liable for a council tax bill for the place you live, even if the bill is in one name only.


Responsibility for debts after a death


If a credit agreement has been signed by only you, and nobody else, then responsibility for the debt is usually only yours.

After your death, your creditors may be able to recover money you owe to them by making a claim against your estate, if you have left behind any assets (such as money and property).

The person dealing with your estate may need to seek legal advice. Your creditors are not entitled to pursue your family members for payment from their own funds.

If you die but don’t have any assets, the debt is not recoverable. Family members should send a copy of the death certificate to your creditors.


Responsibilities of guarantors


If you agree to be a guarantor for someone else’s debt, you can be held liable for it if they fail to pay.

Always look carefully at the agreement you are thinking of signing and get help from a debt adviser if you are not sure what it covers.


Responsibility for old debts


You are responsible for old debts, but there are time limits for your creditors to take court action for debts such as credit cards, personal loans, store cards, catalogues, overdrafts, water, fuel, rent and council tax.

After a long period of time, your creditors or lenders are no longer able to recover the debts through the courts. This is called being ‘statute barred’.

The debts listed above usually become statute barred if during at least the last six years:

  • you haven’t made any payment towards the debt
  • you haven’t written to the creditor admitting that you owe the money, and
  • your creditor hasn’t pursued the debt through the county court.

Mortgage lenders have 12 years to try to recover a mortgage shortfall from you through the courts, and six years to recover interest owing.

Recovery of some debts is not statute barred, for example tax debts, benefits overpayments and social fund loans.

If the debt is statute barred, your creditor cannot obtain a county court judgment (CCJ) for the debt. However, the creditor can still pursue the debt in other ways, such as using a debt collection agency or sending threatening letters.

The ways that your creditor or lender can try to recover the debt have to be fair. Contact the Citizens Advice consumer helpline for further information.


Challenge a debt


In some circumstances you may need to challenge if you should really be held responsible for a loan. This may be the case, for example, if you were put under pressure by another person (for example by a partner) to sign a loan agreement against your wishes, or if you were misled by a lender when they persuaded you to take on a loan (for example they told you your home wouldn’t be affected and you agreed to a secured loan).

Get help from a debt adviser or other specialist legal advice if you are in this situation. Contact the Law Society for details of solicitors in your area who may be able to help.

For more advice about your responsibility to pay a debt, have a look at the Citizen’s Advice website.



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