A defendant what you need to know

We all "bury our head in the sand" for different reasons. This can mean you are unable to confront or acknowledge a problem until it is too late.

If you have been contacted by MoneyClaimsUK on behalf of a claimant you are being offered a confidential service solely with the intention of reaching an agreement. The Claimant is seeking to avoid issuing proceedings against you but will issue proceedings if there is no alternative.

I can't pay my debt what should I do?

If you cannot pay full amount of a debt or you owe more than one creditor you should take advice from one of the free, impartial, confidential debt advice services NOW, today. The sooner you have the information you need, the sooner you can reach an agreement that works for you and enables your creditor(s) to stop pursuing you and all parties incurring further costs.

Who can I go to for free, impartial, confidential debt advice?

Visit our debt advice services page where you will find the contact details of free, impartial and confidenial organisation who can give you help and support.

What is an Offer in full and final settlement?

If you have a lump sum available that will pay off part of your debts, you can ask your creditors to accept a part payment and write the rest off. Alternatively, you may get creditors to agree to you making monthly payments for a set period and then writing the balance off.

What is an Informally negotiated arrangement with creditors?

Normally, you work out your offers of payment based on a pro-rata distribution of your available income, after you have worked out what you have to pay on your essential household outgoings. This means that all your creditors are offered a fair share of what you can afford to pay. You also need to ask that any interest and charges are frozen.

You may need to offer no payments if you have no available income. This is called a "moratorium". You may prefer to make token offers of payment of £1 a month to each creditor. Creditors are only likely to accept this for a short time.

What is a Free debt-management plan (DMP)?

You will usually need to have £100 or more available income every month to pay your creditors after you have worked out what you have to pay on your essential household outgoings. You must usually have three or more creditors.

You make the agreed monthly payment to a debt-management company who distributes the payments amongst your creditors for you. Make sure you use a debt-management company that does not charge you any fees for their services.

What is an Individual voluntary arrangement (IVA)?

An IVA is an alternative to bankruptcy. It is a formal arrangement through the County Court to pay an agreed amount off your debts over a shorter period, such as five years, or through raising a lump sum. The rest of the money you owe is written off. You will need an insolvency practitioner to set up an IVA. They will charge fees for preparing and running your IVA. The arrangement has to be agreed by the majority of your creditors (75% by value of those who vote). National Debtline can help you to set up an IVA by referring you to an insolvency practitioner from a list of providers who follow good practice guidelines under the IVA Protocol.

What is Bankruptcy?

You can petition for your own bankruptcy or a creditor can make you bankrupt. Your financial affairs will be dealt with by the official receiver. Valuable assets are usually sold to raise money to pay your creditors. Your bankruptcy usually lasts one year, but you may have to make payments for three years. At the end of your bankruptcy most debts are written off. Bankruptcy may be a good option, particularly where you rent your home and have no assets.

What is a Debt relief order (DRO)?

You can apply to the official receiver for a debt relief order on a special on-line application form with the help of a money adviser who has been appointed as an approved intermediary. You will be eligible if: you are unable to pay your debts; you have less than £50 a month spare income after you have paid your normal household bills; your debts are under £15,000; your assets are worth less than £300; and, if you own a car, this is worth below £1,000. If your application is successful, most of your debts will be written off after 12 months. A DRO could be a good option if you rent your home, have few assets and little spare income.

What is an Administration order (AO)?

You must have a judgment from the County Court or High Court. Your debts must be no more than £5,000. You must have at least two debts. An application is made to your local County Court hearing centre on a form N92. An AO is an order from the County Court which allows you to make a single payment every month to the court. This is divided amongst your creditors on a pro-rata basis by the court.

What is a consolidation loan?

Apply to a lender for a loan to clear debts. These are often advertised as ‘consolidation loans’. The lender may want to secure the new loan on your house if you own property.

It is very important that you shop around for the best deal from high street and internet lenders. (If you have a poor credit rating, it is possible that a good deal may not be available to you.)

What is the problem with claims management companies?

There are lots of companies out there who say they can get your debts written off for you, or get compensation for you by claiming that your credit agreements are unenforceable.

WARNING be very careful. Most of these firms charge you large up-front fees for each agreement they agree to check, but with no guarantee that they will be successful in challenging your agreements. In most cases you will not get your money back if your claim is not successful.

Many credit agreements do meet the legal requirements under the Consumer Credit Act 1974 and are not easy to challenge as unenforceable.

Contact one of the free, independent, confidential advice agencies who can give you advice about your credit agreements and whether they are likely to be unenforceable. They can tell you if there may be genuine grounds for a challenge.

Please think very carefully before paying money that you may not be able to afford to these companies. If you are worried about debts, this is unlikely to be your best option to deal with your creditors and in many cases it is likely to make your debt problems worse. Before signing up with one of these companies, take advice from the free advice services.

Since 8 February 2012 consumers who pay for advice on managing their debts are now protected by a new Debt Management Plan (DMP) Protocol.

Under the Protocol, agreed with providers and creditors, consumers will not be charged any fees before signing a contract with a Protocol compliant debt management company. These providers have agreed to spread the recovery of their set up fees, over at least the first six months, making plans more affordable and sustainable.

Companies that are signed up to the Protocol are expected to provide clients with information about other appropriate debt management options including the availability of free debt advice by providers.

How will the new rules for claims management companies help consumers?

The Claims Management Regulator (CMR) is set to introduce a number of changes in response to consumer concerns that bad practice by some Claims Management Companies (CMCs) continues to plague the industry.

Kevin Rousell, Head of Claims Management Regulation, stated, it will see an end to all verbal contract arrangements between consumers and CMCs, and the enforcement of written contracts before any fee can be taken.

The introduction of new rules is the next step in the CMR's push to crack down on bad practice by some CMCs.

Coming into force this summer the new rules will mean that CMCs must:

  • agree contracts in writing with their clients, before any fees can be taken;
  • refer to their regulatory status as being regulated by the claims management regulator - rather than the Ministry of Justice which till now could be misconstrued as an endorsement; and
  • inform clients if they are suspended or restrictions imposed on their business within 14 days of the enforcement action being taken.

How do I make a complaint about claims management company?

The Ministry of Justice is the regulator for claims management companies. They can take action against companies who break the rules. Authorised companies should not cold-call you or pressurise you into taking up their offer. They should give you written information on the costs before you agree a contract with them. There should be a cooling off period of 14 days to allow you to change your mind. The company should have a proper complaints policy.

If you have a complaint about a claims management company, this is the address to write to:

Claims Management Regulation Monitoring and Compliance Unit
57 - 60 High Street
DE14 1JS
Tel: 0845 450 6858 or 01283 233 309
Email: info@claimsregulation.gov.uk
Website: www.claimsregulation.gov.uk

How to apply for an Administration Order

The application MUST be made in person at the County Court in the area, which you (the defendant) live in.

Complete the N92 form - Application for an Administration Order.

Also read carefully in conjunction the N270 Application Guidance Notes.

You should attend the Court office with your unsigned application form and take with you proofs of each debt (payment book, copy of Court Order or Judgment, final demand notice).

You will sign the declaration at Part D of the application, and then you must swear on oath or affirm before an Officer of the Court that the contents of your application are true.

The Court will then process the application.

What is a Certificate of Satisfaction and what does it do?

If you have had a County Court Judgment in the past six years, or a High Court Judgment or fine since 1 April 2006, your name will have been placed on registers, sometimes known as "blacklists". Because your name has been entered on these registers, you may have difficulty in obtaining credit or a mortgage. A Certificate of Satisfaction will show any potential lenders that the judgment debts have been paid. A Certificate of Satisfaction is NOT a guarantee that you can have credit, there may have been other reasons for refusal.

A Certificate of Satisfaction can shown that the entries on the register are to be marked "satisfied" or that they are to be removed from the register completely. For registration to be removed from the register the judgment debt MUST be paid within one month from the date of judgment. If the debt has been paid after the month, then the entry against you will be marked "satisfied" but will remain on the register for 6 years.

How do I apply for a Certificate of Satisfaction?

You can apply to the Court for a Certificate of Satisfaction either in writing or in person at the County Court. The Court will then issue a Certificate of Satisfaction if the action is proved to have been paid or satisfied. You should keep hold of the certificate in case any potential lenders wish to take photocopies of it.

You must provide the Court with a claim number, or case number as it is sometimes called. The Court cannot always trace your file from your name and address.

You should try and provide the Court with proof of payment. The Claimant, the person who took you to Court does not always inform the Court when the action has been paid. You must prove to the Court that the debt is paid in full. In some cases, the Claimant may accept a smaller amount in settlement of the debt. In this case, the Court will need a letter from the Claimant stating that he/she is "satisfied".

You pay a fee of £15.00. It is preferable that you pay by cash. If you pay by cheque or postal order your certificate will be held for 14 days until clearance.

The Court will send instructions to Registry Trust Ltd, the company with whom the original judgment was registered, to either cancel the entry or make it satisfied. There are commercial organisations that take information from Registry Trust Ltd to compile their own registers. On receiving the Court instructions, Registry Trust Ltd will inform these organisations to mark their records accordingly.

In some very old cases the Court may no longer have details of the judgment debt and may need to obtain a copy from Registry Trust Ltd, which can delay the procedure.

N443 form Application for Certificate.

How to apply to set aside a judgment or order

A party can apply to set aside a judgment, or an order that has been made either without the knowledge of or in the absence of the party, and that party disagrees with the decision made.

If the judgment was not made in your local Court, the case may in certain circumstances be transferred there before the hearing is arranged.

If you do not go to the hearing, your request to have the judgment set aside could be dismissed (rejected). You may have to pay more costs and the claimant may take other steps to get the money you owe.

You will need to send the following documents to Court:

  • The completed N244 form
  • The court fee for setting aside a County Court Judgment is £80.00. However if the defendant has the consent of the claimant or did not receive the court claim or any court notices it is £45.00.
  • Check EX160A How to apply for help with fees