|Administration Order||A county court order that prevents individual creditors taking action against a debtor without the court’s permission. All debts are dealt with together – the debtor pays one amount to the court and this is then distributed fairly among creditors. Applied for on N92 Need at least 2 debts, one of which must have a CCJ against it, and debts must total no more than £5,000.|
|Attachment of Earnings /
Deduction from wager
|This is an order by the court, made post judgment and one of four options available to the judge. The order requests your employer to take money directly from your wages and pay it to the court in repayment of a debt. This prevents a creditor from enforcing the debt using a Warrant of Control. It can be used for any debt over £50. The employer has to comply. It cannot be used to deduct money from state benefits or tax credits. It can be ordered by either the County Court or the Magistrates Court.|
|Bankruptcy||One of the formal, legal remedies for dealing with insolvency if you have no money. It is suitable for high levels of debt which could not be cleared in a ‘reasonable’ time – 6 years. Most debts covered, exceptions are: student loans; court fines, maintenance orders; social fund loans; debts arising from fraud.
Need to complete an application to the bankruptcy court, and if the order is granted, an Official Receiver is appointed to manage client’s debts by raising money from client’s assets (if there are any) to repay creditors. After 12 months (usually), the debtor is discharged from bankruptcy and the remaining debts are written off. It is important to be aware that your home (if you have one) is at risk and likely to be sold to repay creditors. Cost: £680.
Creditors can make you bankrupt if you owe £5000 or more. You can be made bankrupt if your IVA fails.
Credit rating affected.
|Basic bank account||No fee; no overdraft facility; no cheque book; no credit check required; can pay in for free; no credit facilities offered; may have cashpoint / debit card|
|Charging Order||A Charging Order is an order which secures the repayment of a debt against a property or some other significant asset. This means that when the property is sold, the creditor who has obtained the charging order will have call on the sale proceeds to repay the debt, once a first mortgage and other creditors with charging orders have been paid (if applicable). Charging Orders can be made by the county court once judgment on a debt has been given. It is one of four options available to a judge and is only applicable if you own a property or other significant asset. See also Interim Charging Order.|
|Civil Procedure Rules||These are a set of rules, laid down by the Ministry of Justice, for the County Court, and must be complied with before a creditor can take court action to recover a debt. They include Pre-Action Protocol for Possession Claims by social Landlords and Mortgage Lender. They can be found on the MOJ website, and also in the yearly published Civil Court Practice Book - the ‘Green’ Book|
|Code of Practice||A set of rules / guidelines set out by organisations / governing bodies which details how their members should behave and the standards to which they should adhere.
|Collection Order||issued by the Magistrates Court to a debtor when they have failed to respond to their Notice of Fine, or as a result of the debtor completing Form MC100 requesting further time to pay. The Order must include:
The amount due
If the debtor defaults on the Collection Order, a Further Steps Notice is issued.
|Compensation Order||Issued in the Magistrates Court, in addition to a fine, when a third party has been affected by your offence. The court may order you to pay them money. This is collected by the Clerk of Court who then pays it to the third party.|
|Composition Order||When applying for an administration Order, a client can ask the judge to make a Composition Order if they feel that they will be unable to pay off their debts within a ‘reasonable’ time – usually 3 years. The Composition Order will state that the client only has to pay off a proportion of the amount owed. The client can request that the judge make a Composition Order when he completes the N92 application form. The Judge can also decide to make a Compensation Order when looking at a client’s financial circumstances.
Getting a composition order depends on your ability to pay your debts, but you are more likely to get a composition order if you are sick, disabled, elderly, or a single parent and don't own your own home. Some district judges may be reluctant to give you a composition order if your application includes a debt such as a magistrates court fine or child support arrears as it may be arguable that these ought to be paid in full. It will be up to the district judge to decide. (AN 184.108.40.206)
|Controlled Goods Agreement||Issued by Enforcement Agents, this is an written agreement whereby the debtor agrees to repay his debt, usually in instalments, otherwise the goods named on the Controlled Goods Agreement will be taken away and sold to repay the creditor. The agreement must be signed by both the EA and (usually) the debtor who must be aged 16 or over (the debtor may authorise someone over 18 to sign on his behalf). The goods remain in the custody of the debtor until such times as they default on the agreement. EAs cannot make a Controlled Goods Agreement with someone who appears to be ‘vulnerable’.|
|Debt Relief Order (DRO)||A formal way of dealing with your debts if you have very little money and no assets, including property. The order covers most debts (exceptions – student loans, court fines, maintenance orders, child support, social fund loan) and can be used if your total debt amounts to £20,000 or less, you have assets worth less than £1000, a vehicle worth less than £1000, and no more than £50 surplus income each month. You must also have lived / worked in UK within the last 3 years and have not had a previous DRO within the last 6 years. You must not be subject to a bankruptcy order.
An application is made to through a DRO intermediary, and if granted, there will be a moratorium period of 12 months, usually, when your creditors are unable to force repayment. Debts are written off after 12 months.
NB/ Be careful with CT, rent arrears and HP
|Default Judgment||This is a county court order, made at the request of a creditor, against a debtor who has not responded to a claim within 14 days. It means that the debtor has foregone his opportunity to defend the claim and to put his side of the case. The default judgment will state how much the debtor has to pay, to whom, and when by. If the amount is not paid within 1 month, the Order is entered in the Register of Judgments, Orders and Fines. Client’s options are:
|Deficit Budget||Where expenditure exceeds income / you have more money going out than coming in / in the ‘red’|
|Deprivation of capital and income||See Notional capital and income.|
|First Right of Appropriation||A right to specify how money paid into your bank account is used. The account holder has the ‘first right of appropriation’ of that money. It ensures that a limited income is not swallowed as soon as it becomes available.
The bank has the second right of appropriation.
The Bank has an obligation under the Lending Code 2009 and that they should agree to leave client with sufficient money for reasonable day-to-day expenses, especially priority bills.
|Further Steps Notice||Issued by Magistrates Court if debtor defaults on a Collection Order. The ‘further steps’ that can be taken are:
|Hardship Order||See Third Part Debt Order|
|Individual Voluntary Arrangement (IVA)||A formal, legally binding debt solution, used if you have significant amount of debt, do not want to put your home at risk, and have a reasonable amount of surplus income each month – upwards of £100 - £200. It is an agreement made between an individual and their creditors to pay off their debts, or a significant percentage, 75%, usually over a period of 5/6 years. The IVA is arranged and administered by an Insolvency Practitioner. The debtor pays a monthly sum to the IP who then distributes it fairly among the creditors. An IVA has to be approved by the majority of the creditors involved.|
|Interim Charging Order||Issued by the county court as one of the 4 enforcement options open to the creditor post judgment, an interim charging order is the first of two stages of a charging order. It is an order granted by the court to a creditor, and stops you selling your property before a Final Charging Order (the second stage) is made. It is usually issued automatically. A copy is sent to the client, and a date for the final hearing is made. This is usually at least 21 days from the date the interim order is received.
Should a client wish to argue against the charging order being made, they should submit written evidence to the court and the creditor at least 7 days before the hearing. Arguments could include:
|Joint and Several Liability||Where a debt is in more than one name and all named parties can be held responsible for satisfying the debt, either together, or individually.|
|Judicial Review||A type of court proceeding in which a judge reviews the lawfulness of a decision or action made by a public body. It does not decide whether the decision was the right one, only if it was made in the right way.
Application for judicial review needs to be within 3 months of the date of the original decision.
|Limitation Act 1980||This sets out the length of time a creditor has to enforce a debt through the courts. For the debtor, this means that if a creditor has not pursued them for a debt within the prescribed time, the debt is unenforceable and they cannot be asked to pay. The time stipulated is taken from the date of default – the cause of action. Once the time limit has expired the debt is said to be ‘statute barred’, usually 6 years for an unsecured debt and 12 years for a mortgage.|
|Lodging||If a debtor in a magistrates court is already serving a prison sentence, the judge can order imprisonment for the current fine; this is known as ’lodging’ the financial penalty.|
|Maximising Income||Ensuring that a client is in receipt of as much income as is available to them, from all possible sources, and at the correct / highest rates. (CONC ch.8)|
|Minimising Expenditure||Ensuring that client is spending as little as possible on essential expenditure, and considering ways in which other expenditures could be reduced. (CONC ch8)|
|Money Judgment||When seeking a possession order, the landlord may also ask the court to make a money judgment for any money owed by the tenant, such as rent arrears or court costs. A money judgment allows a creditor (landlord) to pursue a debtor (tenant) for the money owed, for example by instructing bailiffs to attend at the debtor’s home and take her/his goods.
If the possession order is suspended or postponed, a money judgment granted at the same time will normally be suspended on the same terms. If the possession order is enforced, the landlord can also enforce the money judgment, in the same way as s/he would for any other money claim, without needing to go to court again.
The money judgment will not be entered on the Register of Judgments, Orders and Fines until the landlord has taken steps to enforce it (from AdviserNet 220.127.116.11)
|Notional capital and income||When an individual is deemed to have disposed of capital and/or income inappropriately and is therefore treated as though the still have it. CAB's Expert Advice Team (formerly SSU) has produced a useful factsheet on the subject.|
|Order for Sale||This is a court order which forces you to sell your home to repay a debt from the proceeds of the sale. A creditor can only ask for an Order for Sale if they have previously been granted a Final Charging Order. The debt must be for at least £1000.|
|Register of Judgments, Orders and Fines||The register in which financial penalties are logged after 1 month if not paid.|
|Reserve Term||Can be set by the Magistrates Court as part of the terms of a Collection Order. It indicates that if the debtor fails to make the repayments as directed on the Order, the ‘reserve term’ will come into force without having to go back to court – this could be, for example, AEO/ DFB. If the reserve term is unsuccessful a Further Steps Notice will be issued.|
|Standard Powers||Magistrates Standard Powers can be used if a debtor appeals against the Further Steps Notice , or if the Fines Officer refers to the Magistrates Court directly. These are:
|Statute Barred||The Limitation Act 1980 sets out the length of time a creditor has to enforce a debt through the courts. For the debtor, this means that if a creditor has not pursued them for a debt within the prescribed time, the debt is unenforceable and they cannot be asked to pay. The time stipulated is taken from the date of default – the cause of action. Once the time limit has expired the debt is said to be ‘statute barred’, usually 6 years for an unsecured debt and 12 years for a mortgage.|
|Statutory Demand||This is a written warning form a creditor that they intend to instigate bankruptcy proceedings if you do not pay your debt. The debt has to be for at least £5000. It is not necessary for the creditor to have been to court before issuing a statutory demand.|
|Summary Disposal||This is where the court decides that a claim has no realistic chance of success, also known as ‘striking out’.|
|Third Party Debt Order||Issued by the County Court and one of the 4 enforcement options open to a creditor post judgment, this is where a third party who owes the debtor money, usually a bank or a building society, is ordered to pay the creditor directly. There are two stages – an interim order and a final order. Applications are made by the creditor on form N349. The order prevents the third party from reducing the amount they owe to the debtor. In the case of a bank / building society, this usually means that all accounts are frozen. The debtor can apply for a Hardship Order on form N244
Third Part Debt Orders were formerly known as garnishee orders.
|Unfair Relationship||The concept of an Unfair Relationship was introduced by the CCA 1974; it is where a creditor is deemed to have an unfair advantage over a consumer because of the way in which the credit agreement is worded, the way in which it was established, or the way in which the creditor has behaved towards the consumer in enforcing their rights under the agreement. ‘Unfair Relationship’ not specifically defined, but could include:
|Warrant of Control||A written authority from the court or creditor which allows an Enforcement Agent to visit your home and ‘take control of your goods’ if you don’t agree to pay your debt either in a lump sum, or in instalments. The warrant can include fees and costs as well as the original debt. Warrants of Control are normally issued after a county court judgement has been made against you for non-payment of a debt, or for the enforcement of magistrates’ court fines or a liability order relating to unpaid council tax.|
©2016 S. Linin