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Dealing with Debt: Finding your feet: Advice for you if you are in debt

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3 Had a default notice from creditors?

A default notice is usually the first step which creditors must take before they take you to court. In other words, a creditor must tell you in writing that you haven't paid your debt. You must also be given the opportunity to make payments to bring your account up to date. But some debts are treated differently, for example, council tax.

Go to chapter 5 for further details on council tax debts.

A default notice may be the first formal document you receive about the debt. It should say (across the top) that it is a default notice under the Consumer Credit Act 1974, and that you will be given time to make a payment to bring the account up-to-date. If you do so, the creditor can't take further action. But, if you cannot make the payment, further action may be taken against you. If that is the case, try to see a money adviser who will look at all your debts.

Depending on the level of the debt (under £25,000) you may also be able to apply to the court for a time to pay order to give you longer to pay your debt. A money adviser should be able to help you apply, and will include details of your income and outgoings as part of the application which will enable the sheriff to make an assessment about whether you can repay the debt.

If you do nothing, your creditor is likely to raise a court action against you, and, depending on the amount of your debt, you will have to repay the debt you owe with added interest and usually you will have to pay the creditor's expenses as well.

Remember: unless you tell your creditors you are having difficulties, they won't know, and they will be unable to assist you. If you seek advice at the very earliest opportunity, you will have a better chance of sorting out your debt problems.

You can find the telephone and contact numbers of local money advice agencies on the sheet that comes with this booklet.

Do you know?

  • You can't be sent to prison for non-payment of debts, such as credit cards, bank loans, and council tax. You can only go to prison for non-payment in very few circumstances, like deliberate refusal to pay aliment (money for the support of an individual or children).
  • Creditors (with a few exceptions) must send you a default notice to give you a chance to pay your debt.
  • There are agencies that can give free, independent, impartial, confidential money advice. They may well be able to assist you to improve your situation.

Go here for these agencies' numbers.