We get emailed loads of questions when it comes to debt so lets look at some of them and look at the answers.

Can bailiffs break in to your property to seize your possessions? I am paying my creditors on a repayment plan  each month but I am being harassed by one company which calls me up to 3 times a day. I have made a formal written offer to pay a a sum of money each month, however they have not responded to my letter.

Debt collection agencies will try to collect outstanding money by letter, telephone call or by sending a debt collector to your house.  A debt collector is different from a bailiff so they can not take any of your belongings or enter your home.

For debt such as a credit cards or personal loans, the creditor can only apply to court for a bailiff if you have failed to pay on a county court judgement.  Bailiffs can still not break into your home. They can only gain access by ‘peaceful entry’ so you should ensure that you keep all your windows and doors locked.

If you feel that the calls from these debt collection companies are causing stress, then you need to put this in writing and request that your telephone number be deleted from their records.  If they continue to contact you via the phone, then you could seek some advice from the OFT.  The OFT makes sure that these companies comply with its debt collection guidelines.

I have a repayment arrangements in place with various creditors for things such as credit cards and unsecured loans. One lender will not accept any proposal to repay the debt and want to take the matter to court. Can the court force me to pay the full amount of the debt or will they take my current income into consideration?

Should the lender want to go to court you will have a chance to make an offer based on what you can afford each month.  You will be sent a court document known as an ‘N1′ form and if you admit to the claim you would fill out ‘N9A’ section within two weeks.  The N9A is a financial statement which documents income and expenditure.

Once you have sent this back to the court, the judge will review it and if the judge feels your offer is fair, then this would be accepted.  The lender will not be able to make you to pay back anything more than what has been agreed.

My boyfriend is in over £15,000 of credit card debt which she is trying to repay on a debt management plan.  Are there any consequences on my credit rating as she is also on the mortgage. Could I, in time, be pursued for the debt?

You cannot be pursued for other peoples debt.  Only debts in joint names will affect your credit rating.

As for your joint mortgage, as long as you are up to date with payments, your credit rating will not be affected.  Therefore, unless you are a joint card holder on any of your boyfriends accounts, you can not be chased for these debts, ever.

Q5. I am being chased by a debt collection agency for unpaid council tax on a house that was repossessed.  I have been advised that if i don’t pay this, it will result in a criminal offence.  Is this true and should I pay it?

If the you owned the property when the council tax relates to, then you must pay.  The only exception to this rule is if you agreed with the council that you could pay a reduced amount.

If you refuse to pay this council tax bill, then its possible you could go to prison for 28 days.  The most likely scenario is that the council would look to take the money from either your wages or benefits.

So there you have it.  Keep your debt questions coming.  From mortgages to bankruptcy, nothing is out of bounds!

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Debt Relief Orders were introduced in the UK as a new form of bankruptcy. A debt relief order is quicker and cheaper than bankruptcy and is suitable for debtors who have little or no assets or disposable income. A Debt Relief Order is a form of insolvency and will be subject to a public listing.

The number of personal insolvencies in the UK rose to 134,053 by the end of 2009. There has also been an increase in the number of people seeking debt solutions.  There are debt solutions such as, Debt Management Plans, Debt Relief Orders, Trust Deeds (Scotland only) and Bankruptcy.

A DRO is designed to help those who have no chance of ever being able to repay their debts and is stil a form of insolvency.  One major difference between bankruptcy and DRO’s is that the Official Receiver will have no legal claim over the debtor’s property.

Debt Relief Orders came into force in England and Wales on 6th April 2009 and are intended to provide debt relief for people if:

* The debtor’s disposable income, must not exceed £50 per month.
* The debtor must be located in England or Wales.
* The debtor is unable to pay their debts;
* The debtor’s total unsecured liabilities must not exceed the sum of £15,000.
* The debtor’s total gross assets must not exceed £300.
* The debtor must not have previously been subject to a DRO within the last 6 years.
* The debtor must not be involved in another insolvency procedure

The only way that you can apply for a DRO is via organizations such as the Citizens Advice Bureau. They will decide if you do qualify for a Debt Relief Order using the information on your application form.  If it is agreed that your application meets all of the requirements it will be approved without any involvement of a court.

During the period that an order is in force, the debtor will be protected from enforcement action by their creditors.  A persons credit rating will be affected when in a debt relief order.

For the duration of the Order, the debtor will be subject to similar restrictions as in bankruptcy.  When in a DRO, The debtor must not obtain credit of £500 or more, without disclosing that they are subject to a DRO to the lender.  The debtor may not be involved with the promotion or the management of a limited company, without the court’s permission. The debtor may not carry on a business in a name that is different from the name under which the DRO was granted under, without telling the people that the debtor does business with, the name which they were granted the debt relief order.

Although DRO’s are aimed at providing a cheaper method of seeking debt relief, they are not an easy option to get rid of debt and should only be considered when other options, such as debt management are not viable.

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