A question about debt?

Question

My best mate is having a lot of trouble with the Halifax. He lost his job (shocker in this day and age) he has a credit card and owes a couple of thousand on it. He is unable to make the "minimum" payment to the Halifax. He is trying to negotiate a fee to pay to them, but they are unwilling to accept and threatening him with litigation. I have advised him to go to the CAB which he is arranging next week. He is bricking it cos he thinks the bailiffs are going to be banging on his door. He's getting depressed over this what advice can I give him or reassurance. I'm expecting some moronic answers from some, but sensible answers would be appreciated.

Answer 1

Doesn't he have payment protection insurance against such a contingency, it's usually added to the monthly amount, which will cover this issue!

Bailiffs cannot act unless there is a Court Order relating to this matter which all takes time.

The law's quite clear relating to the refusal of  a reasonable offer to pay. which is dependant on the debtors personal circumstances, not what Halifax thinks is reasonable.

If insurance exists he can take Halifax to the cleaners, once he has ordered them not to repeat the allegation that he owes them money! and they persist with their claim of debt.

Don't forget a morning in court with legal representation of both sides can cost £5000 if you're onto a looser, so if you have them over a barrel don't sell yourself short.

Answer 2

I think what you did was right in advising him to go somewhere for consultation about his debt.  I presume your friend lives in Canada.  According to law in Canada, bill-collecting agencies may not collect more than the amount owing, may not cause the debtor undue anxiety or distress, may  not communicate with the debtor's employer about the debt and may not call the debtor in the middle of the night.

Your friend should be advised not to borrow more money to get him through his immediate crisis.  Although he may be able to get hold of this type of money through loan sharks, the interest rates would be very high and get him further behind.

Collection agencies tend to charge a commission and are not a pleasant resort, but legal proceedings are a lot costlier to the collection agencies than letters.  Court action therefore sometimes is used as a last resort.  You do not mention whether your friend's debts are all in one place (his credit card) or are owing in sundry amounts.

The case is likely to go to Court, probably Small Claims Court since it is under the amount that exceeds Small Claims Court.  If the claim goes to Small Court, and your friend is served a summons, he must appear in Court.  However, he has a right to make a reasonable defense in Small Claims Court if he feels it is justified.  If it is Small Claims Court he will not need the services of a lawyer.  Your friend would be advised, under these circumstances, to explain to the judge in full why he cannot meet his payments.  The most likely outcome of the case is that the judge will try to work out some kind of plan for your friend to pay off the amount owing over a longer period of time, since he would have no wages to garnishee.  If the amount owing is on a significant sale, the sale of a particular creditor could be forestalled.

If the money is still not collected, a creditor can seize his assets that are not considered as necessities, register a lien against any land he may own, or garnishee wages or other payments he may have coming in.

I am enclosing a link about Small Claims Court.

http://www.canlaw.com/scc/smallclaims.ht...

I apologize if he does not even live in Canada.

Sorry I don't have anything really positive to add.

Answer 3

Assuming your friend lives in the UK...

He's doing the right thing by going to see the CAB - they will help him by creating a financial statement showing his income and necessary expenditure - and will then try to negotiate a monthly repayment plan with each of his creditors.

However, a couple of other things to consider:

a) has he signed on for JobSeeker allowance - if not then why not?

b) if he is in rented accommodation he may be able to get help with the rent and council tax until he has a new job

c) was he made redundant? If so, did he have any payment protection insurance with this credit card? If so he should be making a claim on this policy.

d) while he is working through the CAB process he should continue to make such repayments as he can afford - and keep records to show the payments. This is evidence of his intent to repay the debt should the matter get to court.

If he does nothing then the bailiffs will eventually come knocking at the door so taking action now is exactly the right thing to do!

Wish him luck!

By the way - he also needs to work full time on getting himself a new job - that's the only permanent way out of this debt situation

Answer 4

Citizens Advice Bureau as quickly as he can get there. They will help him to negotiate with Halifax et al. Tell him to let Halifax etc know that he has an appointment with the CAB and that they will be writing to them in due course. Most creditors accept that the CAB will correctly assess what disposable income there is (or isnt) at the end of the month and will sort the creditors out. Either the CAB or Payplan who will provide a free debt management plan.  

Answer 5

Tell him not to worry about the hot air from the Halifax,he has offered to pay within his means, so no court would allow the bailiffs to get involved. CAB will advise, but if they persist then a court case will ensue, but as I said it will be to his advantage. Had he not made an offer to pay then things would have been different,but he has started out on the righ lines.

Answer 6

Halifax don't deal with the baliff's, so tell him not to worry about that side of things.  

Answer 7

I suggest he checks out the "Debt free wannabe" board on the http://moneysavingexpert.com forum.  Lots of advice there.

He should contact one of the free debt charities to arrange a repayment program - CCCS, Payplan or CAB.

The should hopefully be able to set something up, but in the short term, he can write to them stating that he is having difficulties and is paying a £1 token payment towards the debts until arrange ments can be made with all his creditors.

As for bailiffs, this only happens after he's been taken to court so anyone knocking on his door before this has the same powers as a paperboy - none.

All commumication should be made in writing so that he has proof of what is being said and agreed.  This way if they did take it to court for a CCJ then he can show that he had made attempts to pay and work out a fair offer from his available funds and was not just ignoring the debt.

Answer 8

CAB is best for the moment. I don't think he will have the bailiffs knocking on his door yet. Never ever invite them in because once you do they can break in later. Always shut windows and   doors because they can enter through an open one