Notice of defaults: everything you need to know
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If you’ve fallen behind on your rent, and you’re now facing eviction, here’s what you should do.
Getting into problem debt feels bad enough as it is, without the added worry of potentially losing your home too. So, what can you do if you find yourself in this situation?
The first thing you should do is try to stay calm. We know it can be very worrying when you find yourself in the position of missing rent payments, and you start to get letters and phone calls demanding an explanation and immediate payment or eviction! However, there’s a process that has to be followed if your landlord wants to evict you because of rent arrears – he can’t just turf you out. This process takes time and that gives you the opportunity to try and resolve the situation, before it goes too far.
So, to give advice that we think will apply to the largest group of people, we’re going to assume a few things. We’ll assume that you’ve missed a couple of rent payments and you’re receiving letters from the landlord, or their agent, asking for the arrears to be brought up-to-date or an eviction process will begin. We’ll also assume that you are living in England or Wales, as the rules for Scotland are different.
Right, let’s crack on with a look at some reasons why you have the rent arrears in the first place, as this may affect the solution you put forward to your landlord.
Why do you have rent arrears?
There are three main reasons why you might have rent arrears. The first is that you no longer have enough money coming in to cover what’s going out, which we’ll discuss later in the blog. The second is that you are behind because of delays with your housing benefits or other benefits you are claiming. The third is that you are paying the wrong kinds of debts first and neglecting those that really need paying.
If this second scenario is you, speak to your landlord or the agency working on their behalf and explain what’s going on. This is essentially not a money issue, but more of a cash-flow one. It’s not that you won’t have the money, it’s just going to be arriving late, that’s all. Tell them where you are up to and keep them up-to-date with any developments.
If you’re also on other benefits too, you may want to ask that your rent arrears be taken from you using third party deductions. This simply means you give authority for part of your benefit amount to be paid directly to your landlord to reduce the amount owing. However, these are usually very small amounts and there’s no obligation for your landlord to accept your offer of payment.
Third party deductions can be taken from income support, pension credit, income-based jobseekers allowance or income-related employment and support allowance.
But, back to the first reason – more going out than coming in! You may have ended up with problem debt for all kinds of reasons. A change in circumstances is a common reason for running into financial difficulty – it can happen to us all, believe us! Perhaps you lost your job, or your hours were cut or maybe you’re on a zero hour contract and have to deal with all the issues that brings? Or maybe you’ve just lost a partner, through death or divorce, who contributed to the bills? Whatever the reason, what matters now is getting it sorted, and the quicker the better.
If the third scenario sounds like yours – you are paying non-priority bills instead of priority bills first – all you may need to do is re-jig your payments and your problem could be solved. So, what do we mean by priority and non-priority debts?
Priority debts are these:
mortgage or rent
• loans secured against your home
• Income Tax, National Insurance and VAT
• council Tax
• gas and electricity bills
• water rates
• court fines
• child maintenance payments
• hire purchase loans (essential ones i.e. car to get to work or oven to cook food.)
• TV licence
As you can see, at the top of this list is mortgage or rent. And the reason why it’s first on the list is because it’s really important that it gets paid or you risk losing your home. And non-priority debts are these:
• payday loans
• credit cards and store cards
• catalogue and doorstep loans
• bank or building society account overdrafts and loans
• personal loans
• money you’ve borrowed from friends and family
You should only pay these if all your priority bills have been paid first. So before you do anything else, it’d be a really good idea to sit down and see where your money is going. If you are paying money towards non-priority bills, you may find that simply moving that money to priority bills, like your rent, will solve your problem. You can read more about priority and non-priority bills on our blog with the same name.
Why does it matter if I get into arrears with rent?
It matters because if you start to miss rent, pay late or only make part payments, you may find it incredibly difficult if you ever need to move into a new property. And if you’re at the point of being threatened with eviction, it’s likely that you’re going to need to do that very soon.
This is because your potential new landlord will want a reference from your old landlord. And if you’ve not paid your rent, and he’s had to go as far as completing, or even threatening eviction, he or she may well be reluctant to say anything positive about you as a tenant. This will, understandably, make any new landlord nervous. You may also find that the deposit money you thought would be returned to you, is being used to pay off some of your rent arrears, meaning you have nothing to pay a new deposit with.
Okay, we think that’ll do for now – we don’t want to overload you with too much information. But, if you’re in immediate danger of eviction you should call us and speak to one of our advisors. They’ll be able to advise you on the best way forward. Free, impartial advice is also available from the Money Advice Service.
by Shelley BowersBack to blog home