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England and Wales > Debt Advice > Secondary Debts > What If My Creditor Takes Court Action?

What If My Creditor Takes Court Action?

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Replying to a county court claim (93KB)
Suspending a bailiff’s warrant and reducing the instalments on a county court judgement (90KB)
Administration orders (79)

Many people are frightened of courts, especially when they feel guilty because they owe money. But the county court is not there to judge anyone guilty or innocent, but to settle disputes about money owed, and how to repay it.

The court is not there to serve the interests of creditors alone.

If court action is taken you will not usually have to go to a court hearing. Most of the procedure is carried out through the post.

You will receive a ‘claim form’ from the court. The claim form will include details of the debt, known as the ‘particulars of claim’.
If you don’t agree with the amount of the debt the creditor says you owe, fill in the ‘defence form’. In this case send the form back to the court.

Putting in a defence or counterclaim is complicated. Phone us for advice.

If You Agree You Owe the Debt

The only way to avoid having a county court judgment (CCJ) registered on your credit file is to pay the amount in full plus the costs stated on the claim form.

If you are unable to do this there will be a reply form with the claim form, for you to make your offer of repayment. This is called the ‘admission form’. There are instructions included on how to fill in the form. It looks quite like a personal budget sheet and asks for similar information on income and essential outgoings.

Do make an offer of payment
In the claim form there is a section you can fill in to include the payments you make on your priority debts. You also have space to include any other court judgments you have, and to list all your credit debts. It is important to make an offer of payment on the form in the ‘offer box’. If you leave it blank the court will decide you have not made an offer and tell you to pay the whole debt at once or order you to pay what the creditor asks for.

Fill in the form and send it back to the creditor (called the ‘claimant’) not the court. The address will be in the ‘address for service’ box and may be the creditor’s agent or solicitor. There is a time limit of 16 days from the date on the postmark to send back the form. If you don’t send it back, the court can order you to pay the whole debt in one lump sum.
If the creditor accepts your offer you will receive an order from the court to pay your offer in monthly instalments. You should send your payments to the creditor, not the court. Keep a record of what you have paid and when. A CCJ will still be entered against you.
If the creditor does not accept your offer the court will decide (or ‘determine’) what you should pay each month.
If you owe under £50,000, the court staff will decide without any hearing. If you owe over £50,000 the district judge decides either by looking at the papers or at a hearing in your local county court. When there is a hearing it is very important that you attend, taking your budget sheet with you.
If you cannot afford what the court has decided you should pay, you can ask the court to look at your offer again. This is called a ‘re-determination’. There is no fee for doing this. You must do this within 14 days of getting the order. The case should be transferred to your local county court for a hearing.
The re-determination will be done by the district judge. Where the order was made by the court staff, the district judge can decide to have a hearing or make a decision by looking at the papers. You can ask for a hearing when you write to the court to ask them to look at your case again.
If the district judge made the first order without a hearing then the re-determination of your offer must be at a hearing.
If there is a hearing, the case will be automatically transferred to your local county court so you can attend. The court will give you a hearing date. You must go to the hearing, which should be in the district judge’s rooms (in private). Take a copy of your personal budget with you.

Applying to get your payments reduced
If a district judge made the first order on how much you should pay at a hearing you cannot apply for a re-determination but must apply for the monthly payment to be reduced or ‘varied’.

Reducing Payments on Court Orders

Monthly payments you have been ordered to make can be reduced if your circumstances change or if you can’t afford them.

You can apply for a reduction using form N245, which you can get from the local county court office. There will usually be a fee to pay with your application.

If creditors have already taken you to court you can apply to the court for a reduced payment based on your pro-rata offers, using form N245.

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If I Am Taken to Court, What Are the Advantages?

Depending on the type and amount of the agreement and what the terms within it are, the court may stop interest being charged. If you owe over £5,000 on a personal debt or for supplies for your business, your creditor may still be able to charge interest. Some creditors may well tell you they can charge interest on a debt before and after judgment. If this happens to you phone us for advice.
In most cases the court is likely to let you pay a monthly amount which you can afford. But it can only do this if you explain your income, outgoings and other debts on the reply form to the county court claim.
Usually you won’t have to go to the court for a hearing. Most of the procedure is done through the post.

What Are the Disadvantages?

Court costs are added on to your debt, although creditors cannot add on what they wish. The costs are added on a sliding scale depending on the amount of money owed.
Details of judgments are recorded on the register of county court judgments and passed to credit reference agencies. This may make it difficult for you to get credit in the future.
If you pay off your county court judgment within one month you can ask to have the entry removed, but there is a fee for doing this.
If you do not pay the monthly amount which the court orders, the creditor may take further action against you. So make sure you pay your monthly payments regularly or apply for them to be reduced if you cannot afford the first amount that the court fixed, see ‘Reducing payments on court orders’.

Administration Orders

When you have been taken to the county court you might be able to apply for an administration order.

This is a way of putting all your debts together and making one monthly payment into the court. The court then shares it among your creditors.

For some types of debt, only arrears can be included. The total of the debts must be no more than £5,000.

Your creditors can’t take any further action against you if you have an administration order.

The application form (form N92) is available from your local county court office. You may need help in filling in the application form as local courts vary in the way they deal with administration orders.

It is often more difficult for the self-employed to obtain an administration order but if you can show the court that you are trading on a cash only basis and not incurring further credit, the court may be prepared to grant an order.

If you want to apply for an administration order, phone us for advice.

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