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Worried about CCJs? You need to know about this letter

Posted 17 October 2017

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Creditors have to send a Letter before Claim before they can take you to court. Learn more here.

The rules around what creditors have to do before they take you to court changed in October this year. Now, before a creditor can take you to court for not paying a debt, they have to send you a Letter before Claim.


This letter provides you with a chance to ask for more details, put a defence together if you think you shouldn’t be getting a CCJ and avoid getting one in the first place.


What will the letter say?


The letter will include a balance statement for the account, an information sheet and a form which you send back to the creditor.


There will also be a cover letter which should tell you how much you owe, whether interest and charges have been added, if the debt has been sold on (assigned), as well as details about the written agreement.


What are my options?


If you get one of these letters, it’s important that you fill out the Reply Form and send it back within 30 days, or the creditor can start court action. You need to tick one of these boxes:


• Box A - agree you owe the debt,
• Box B - agree you owe some of the debt,
• Box C- say you’re not sure, or
• Box D - dispute the debt.


The form itself is split into four sections. Section 1 is about whether or not you owe the money, section 2 is about how you will pay, section 3 is about getting debt advice and section 4 is about the information you are providing and the information you need.


Do you need more time/info?


If you need to give yourself time to get help from a debt advisor, you should tick the box to say you’re not sure.


When you get more information about the debt, you can then decide whether or not you should pay it, or offer a monthly amount – no court costs will have been added at this point.


It’s important to remember that you don’t need to pay anything if you’re not sure you owe the money. The creditor may not be able to provide proof, and if it does go to court, the CCJ won’t stay on your credit file as long as you pay it within a month.


Reasons to dispute the CCJ


If you know the debt isn’t yours, you should definitely dispute it and explain why you don’t owe the money. You should also complete section 3 of the form and ask the creditor to provide a copy of the written agreement.


You can also dispute the debt if you think the amount is wrong. If you’ve paid the amount in full, tick box B or D, depending on whether you know how much you’ve paid towards the debt already. If you think the figures are wrong but you’re not sure how much you owe, you can tick box C to ask for more information.


You can also dispute the debt if it is statute barred. This means that the creditor has lost the right to take further action against you for the money because you haven’t made a payment towards it in the last six years, or acknowledged it. Again if you’re unsure, you should tick box C and if you know the debt is statute barred, you can tick box D and state this.


Are you on a debt solution?


Mistakes happen sometimes and if you’re on a formal debt solution like an IVA, bankruptcy or Debt Relief Order then the creditor might be trying to take action against you in error. Be sure to tick box D and state what debt solution you’re on, if this is the case.


It’s also possible to complain about the affordability of the credit to begin with. To do this you need to complain to the original lender – not the debt collector, and if they reject your complaint then you can forward this onto The Financial Ombudsman.


If you go down this route, you need to complete box D on the form and state that you have sent an affordability check to the lender. The debt collector will then have to wait till the complaint is resolved, before they can start any court action. Again, you should also complete section 3 and 4 of the form, so they know you’re seeking debt advice and you want a written agreement.


The Reply Form


You have to send the Reply Form back within 30 days. If you don’t, the creditor can go to court and the next letter you get could be a Claim Form. If you admit that you owe the debt (by ticking either box A or box B) you can either pay the amount off in full or offer to pay in instalments. Just make sure you don’t put any of your priority bills at risk if you decide to pay it all in one go.


If you want to pay in instalments, make sure your offer is affordable and sustainable. If you’re already on a Debt Management Plan (DMP), get in touch with your DMP provider and let them know what’s going on. They will also be able to provide you with a copy of your budget, which you can enclose with your reply.


You can state that you’re planning to get debt advice in section 3, but sometimes you can’t do that until you have all the information you need from the creditor. If this is the case, you can say this on the form and the creditor/debt collector then has to give you 30 days leeway to seek debt advice, once they’ve sent the information you’re asking for.


In section 4, it will ask you what information you’re providing with your reply. So if you’re disputing the debt, be sure to include anything that proves you’re right and if you’re admitting the debt, you should enclose a copy of your budget.


Getting debt advice


The important thing to remember is that there is always help out there no matter how bad you think your money situation is and things don’t have to get to the stage where your lenders are threatening you with legal action. Our expert advisors are ready and willing to help – just use the options at the top of the page to get in touch.

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.