Notice of defaults: everything you need to know
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Find out what a Court Decree means for your finances.
If you miss a few debt repayments in England and Wales, you might get a County Court Judgement (CCJ). This means that a court has officially recognised you owe the money and if you don’t pay it back within a month, the CCJ will appear on your credit history for six years.
But CCJs don’t exist in Scotland – if you don’t keep up with your repayments here, you could get a Sheriff Court Decree instead. This is similar to a CCJ and your creditors can get one from the sheriff’s court if you’re not paying what you owe. Let’s take a look at how a Sheriff Court Decree can affect your finances and what you’ll have to do if you get one.
Sheriff Court Decrees
Your creditors can apply for a Court Decree against you from the Sheriff’s Court if you fall behind on your unsecured debt repayments. They’ll only take this action if they’ve already exhausted other ways to get the money you owe back – a Court Decree will never be the first you hear about a debt.
If you’ve had a Sheriff Court Decree for a debt you’ve fallen behind with, you’re not alone. Recent research* for us shows that 1 in 16 Scots say they’ve had a Court Decree at some point in the last five years.
If you get a Court Decree
The Court Decree will ask you to pay what you owe in full. If you can do this, you should do so as this will avoid any further action. But if you can’t afford to pay off the whole debt, you can pay it in instalments – this is a ‘time to pay direction’. You can’t pay debts over £25,000 in instalments and the same applies to some other debts, including income tax and VAT arrears.
You’ll get a form called ‘Application in writing for a time to pay direction’ along with all of the Court Decree paperwork. It’s really important that you fill this in with how much you can afford to pay and send it back within 21 days. If you don’t do this, your payments might not be affordable for you.
If you get a Court Decree and you don’t pay it off in full within one calendar month, this will appear on your credit history for six years after the date you first get it. This means that if a creditor runs a credit search on you at any point during this time, they’ll be able to see the Court Decree. This could mean they’re more likely to turn you down for credit or if they do accept you, this might be at a higher interest rate.
Even if you’re not planning on applying for credit at any point within the next six years, your credit history could affect you if you apply for some other services e.g. a mobile phone contract or a tenancy agreement.
What to do
As soon as you get a Court Decree in Scotland, you should get in touch with the creditor. You might be able to set up a new payment plan or at least negotiate to pay the Court Decree debt in instalments.
Whatever happens, you should never just ignore the Court Decree. If you’ve had a time to pay direction and you miss two payments, when the third payment is due the creditor can take further action to recover the debt, without having to go back to the Sheriff Court. This means your creditors can start diligence, which is the Scottish term for further court action. Before they proceed with most diligences however, they must issue you with a Charge for Payment, which is a demand for payment within 14 days. If the debt is not paid, the creditor can apply for an earnings arrestment where money is taken from your salary, or even force you into sequestration, if you owe more than £3,000.
You don’t have to deal with Court Decrees alone – help is available. You can get in touch with our debt advisors using any of the options on the left. They’ll be able to look at your finances and see which debt solution – if any – is best for you to help you get debt free. And don’t ever worry that there’s no way to put the situation right – there’s always a way out of problem debt.
*3Gem Research carried out online interviews with a nationally representative sample of 2,000 people between 29th June and 6th July 2016.
by Emily BancroftBack to blog home