This is take from the motley fool site:
What can they do to me?
This seems to be a very common question, from those who have gotten themselves into financial difficulty and have been berated by so called 'debt recovery' departments of credit card companies and the like. These departments and agencies deliberately feed their debtors with a liberal diet of half truths and myth, in an effort to scare them into making payments or proposals, for more than they can afford.
Why do they do this? Quite simply, they have very short sighted bad debt policies and their staff are poorly trained to deal with people. A statement which is commonly heard on this board is ?we will be sending someone to pay you a visit? this is intimidating but entirely without substance and it is high time that we blew away some of the myths surrounding debt collection practices, so:
What can they do to you? (the following is regarding civil matters and does not apply in criminal matters)
Firstly, without an order of the Court they cannot do anything! Threats that ?we will be sending one of our agents round to your house? should be treated with the contempt that it deserves. This is rule number one in the 'bully boys code of practice manual'. Whilst bona fide debt collection agencies do have a license to carry out site visits, the credit control department of a credit card company do not. Even so, if you were to receive a visit at your home address, these people do not have a right of entry and you can simply refuse to discuss the matter with them and tell them to go away. Contrary to popular belief, even County Court Bailiffs or Sheriff's Officers do not have a right to force entry and they can also be summarily despatched in the same way.
OK, now that we have established that nobody has the right to force entry into your property, what remedies do creditors have?
We have already established that a creditor must first obtain a Judgement against you. Once this has been achieved they would then have to execute the Judgement, There are several ways in which they can do this and I will give brief insights to these remedies as follows:
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Apply For A Warrant Of Execution ? This would be an application made to the Court to ask that a Bailiff be sent to your address with a view to obtaining payment or to remove goods or chattels to be sold at auction to pay off your debt. This is not the most effective method of execution, however, if you allow the Bailiff access to your property, he can take what is known as ?walking possession? on your goods. Generally speaking, this means that he will make an inventory of things such as hif-fi systems, vehicles, T.V.s etc and will leave them in your possession for a period of time (usually about a week) after which time, he will return and if you don't have the money to pay the debt, he can remove the goods for sale at auction. There are restrictions on things that can be taken, such as your bed, tools of trade and goods belonging to a third party. All in all, not a very effectual method of execution.
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Apply For A Writ Of Fi Fa (nothing to do with football and pronounced Fi Fay)
This is very similar to the above but applies where the debt exceeds the sum of
£600 in which case, the creditor can ask for the matter to be sent to the High Court for execution and asks that the Sheriff be instructed. The Sheriff has
more incentive than the County Court Bailiff as he is allowed to levy 'poundage' (a commission) on top of the debt. Things can get quite a bit more
costly when they are 'upgraded' to the High Court as unlike County Court
where interest stops on Judgement, interest can continue after Judgement in certain circumstances. Nevertheless, the Sheriff also does not have any right
to force entry into your home.
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Apply For An Attachment Of Earnings Order ? A creditor can apply to the
Court for an attachment of your earnings. This would compel your employer
to make regular deductions from your salary and to send them to a Court department known as C.A.P.S. which would administer the payments and send them to your creditor. A point to note here, is that the Law will not permit deductions to be made from your salary which would reduce your income to a level below that which you could not subsist. i.e. if you don't have it, they can't take it.
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Application For Oral Examination ? Those suffering from 'Ostrich Syndrome' should take particular attention here. This is an application by the creditor to have the debtor investigated under oath by the Court. The idea here, is to establish what if any, assets that the debtor owns. The Law has recently been tightened up in this area and prior to this, it was not uncommon for debtors to ignore the summons to
attend Court.This is now highly unreccommended as it is likely to result in a warrant for arrest for contempt of Court. Nevertheless, if it is a case that you do not
own any assets, then this would not have much of an effect on you, apart from undergoing a days grilling in Court.
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Application For A Garnishee Order ? This results in an order being made to freeze funds or assets owed to you by a third party. For instance, if you had a savings
account, the account could be frozen and the bank compelled to pay funds to the Court to pay off the Judgement. This is a very specific order which means that it
will only freeze whatever amount of money is in the account, at the time that the garnishee arrives.
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Application For A Bankruptcy Order - The big one! This is the ultimate in debt enforcement and basically, strips you of whatever assets that belong to you, such as property, savings, shares, vehicles and anything else of any particular value.
However, there are a lot of myths surrounding debt in general and bankruptcy in particular and they should be dispelled.
A) Your spouse's assets cannot be seized because of debts that you owe
This is a common misconception. If you have incurred debts under your own name, your spouse is not responsible for payment, even if the creditor obtains a CCJ against you. Similarly, if you receive a visit from a Bailiff, they cannot take goods which belong to your spouse, for debts that you owe.
B) You do not necessarily lose your house if you are made bankrupt
This is another common misunderstanding and if your spouse has a joint mortgage with you, this can be used to your advantage. If the property is jointly owned, then your spouse owns half the equity in the property. The creditor cannot touch your spouse's equity for debts which you owe. However, a third party (spouse, mother, father, brother etc) can make an offer for your beneficial interest in the property.
For example, lets say that the property is worth £100,000 and the mortgage is £85,000. This means that there is equity of £15,000, half of which is owned by your spouse, so that leaves you with £7,500 equity or does it? Well, it could be argued that at a forced sale value, the property would only realise say £90,000 which would reduce the equity to £2,500 where your share is concerned, then it could be argued that it would cost your trustee a fair amount in solicitors, surveyors and estate agent's fees and so possibly, an offer of £1,000 (more or less) may be accepted for your beneficial interest. If agreed, this has the effect of taking the property out of the bankruptcy and would mean that the trustee would not be able to make a claim against the property at a future date. This is very important as if the issue is not addressed at the start of the bankruptcy, the trustee could come back at any time in the future (even after discharge) and make a claim against the property, when the likelihood would be that the property has increased significantly in value.
C) You do not automatically lose your car if you are made bankrupt
Provided that you are not driving a Porsche and you can demonstrate that you need your car to get to and from work and there is no (cough) acceptable public transport alternative, you can ask your trustee, to exclude your car from the bankruptcy. Even if you are paying for it on HP.
D) You can carry on in business if you are made bankrupt
Even bankrupts have to earn a crust and therefore, you can still carry on in business if you are a bankrupt. There are a few restrictions however and you may not serve as a director of a limited company. You may not trade in any name other than that in which you were made bankrupt, i.e. if you were trading as Tommy Smith's tiling, you cannot now trade as Tipton Tiling. Apart from that it's business as usual.
E) You can have a bank account if you are made bankrupt
Many banks have recently become more sympathetic to bankrupts and have opened up paying in accounts. You will not get a cheque guarantee card or overdraft, but basic facilities are made available.
F) You can still apply for credit if you are made bankrupt
The lessons that we learn in life are the ones that cost us money and therefore as a bankrupt, it would probably be best to stay away from borrowing, at least until such time as circumstances improve. Nevertheless, bankrupts are still allowed to apply for credit. The only stipulation is, that you must not apply for credit of more than £250 without first informing the lender that you are bankrupt. If the lender is comfortable with that fact then they can lend you whatever they like
Points to note:
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If you get yourself into arrears, contact your creditor before they contact you. In many cases this reflects better on you as it shows a responsible attitude and demonstrates that you are not avoiding the situation.
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Make sure, that you put everything in writing and that you keep a copy on file
in case you need to refer back to it at a later date. Even when you have discussed the matter over the phone, always follow up in writing.
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If you experience difficulty in dealing with the creditor's representative and you are being pressured into paying more than you can afford, don't be intimidated. Ask for the name of their supervisor and speak to them, if they won't give you the supervisor's name, put the phone down, if they ring again, put the phone down and leave it off the hook for 30 minutes, if they ring again, go and make a cup of tea, if they are still on the line after 15 minutes, put the phone down. don't under any circumstances, agree to make payments which you can not afford to make and don't think 'well I suppose if I don't eat on Tuesday and Thursday, I will be able to pay the extra £10 a week that they want'
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If your creditor issues a summons, don't panic. When the summons arrives, there will be forms enclosed to enable you to make an offer of payment.
Complete these and make a realistic offer, take a photocopy and send the forms back to the Court. The Court will ask the creditor if they will accept the proposed payment and if they will, the Court will make the appropriate order. If they won't accept your offer, the Court will order a hearing, which you and they should attend and the Judge will consider your proposal and your statement of income and expenditure (which was enclosed with the original summons and which you will have already have completed). If it is apparent
that you cannot afford to pay more than you have offered, the Judge will make
an order for you to pay that amount. On many occasions, Judges have been known to make an order for less than that which has been offered.
Remember, the Law is there to protect you as well as the creditors.