Debt Recovery Options. Agenda ELDS. AGM Workshop. Saturday 12 th March 2011

Transcription

1 Debt Recovery Options AGM Workshop Saturday 12 th March 2011 Agenda The Eligible Loans Deduction Scheme Action in the County Court Orders to obtain information Using bailiffs Attachment of earnings order Third party debt order The charging order Debtor and credit union tactics ELDS The Eligible Loans Deduction Scheme Administered by Department of Work and Pensions Sign Memorandum of Understanding and add into loan agreement Income Support, Pension Credit or Jobseekers Allowance (income based) Currently 3.30 per week deductions are allowed 1

2 ELDS Deductions are prioritised: Child Support Housing payments Rent arrears Fuel costs Water charges Council Tax Fines Eligible loans (including credit unions) The UK Court System The County Court 225 in England and Wales Deal with 2m cases per year (up 5%) 11% increase in money claims Combination of District and Circuit Judges and paid professional staff Most cases can be delegated to court staff Prioritising cases for action Debtor Characteristics Priority for recovery Highest High Medium Low Value 1, , Employment status? More than 2 years 18 months + 12 months + Not working Type of residency Local Authority Housing Association Private rented Other Length of residency More than 3 yrs 2 years + 18 months + < 18 months Potential enforcement method Attachment of earnings Attachment of earnings Attachment of earnings Order to Obtain information 2

3 Taking County Court Action The process for enforcing a claim Obtain a judgement This will be forthwith or by instalments Wait until the pay by date has passed Apply for a judgement in default There must be a sign loan agreement in place Orders to obtain information Find out about your debtor s circumstances 12 page questionnaire and you can ask supplementary questions Failure to attend is an imprisonable offence Need a bailiff to serve the documents ( 100) Good to send a message to the community Form N316 at a cost of 50. Using a bailiff Referred to as a warrant of execution 100 fee and the warrant is valid for 12 months Bailiffs can enter the property and remove goods Can send a message about the credit union s seriousness Best used to seize a non-works vehicle Warrant of Execution:

4 Using a bailiff Disadvantages Can only make peaceable entry Goods needed for basic domestic needs, other occupants and work are protected Sold goods are unlikely to recover the sums due Debtors receive a notice before the bailiff visit Attachment of earnings orders: background Popular, 74,000 in 2008 (82, ) Receive repayment via the pay packet Can obtain very large repayment orders Debtor may be moving from job to job Could lead to the dismissal of an employee Form N56 at a cost of 100 plus 10p for every 1 collected Attachment of earnings orders: the process Debtor has only eight days to respond to N56 Non response can lead to court ordering information with failure punishable by prison Punishable by a further fine if debtor changes job and does not inform the court 4

5 Attachment of earnings orders: the process Determination of means Calculator: Wages minus Income support applicable amount plus housing costs plus work related expenses = Repayment amount Third Party Debt Order: background 8,000 orders in 2008 (6, ) Commit a third party to pay a creditor not the debtor Useful to access a bank or savings account Can be used against the self-employed assign an invoice Form N349 at a cost of 100 Third Party Debt Order: the process Interim order to prevent a third party paying the debtor In most cases it would be a bank and the can charge the debtor 55 for giving information 28 days later a judge makes the full order Cannot be used against a joint account unless there is joint liability for the debt Cannot use other enforcement options at the same time. 5

6 Charging orders: background 165,000 charging orders were granted an increase of 65% vs 2006 Secures debt against a property as further charge Legally complex Expect a 500 solicitors bill Can charge statutory interest post judgement Form N379 at a cost of 100. Charging orders: process Interim order prevents sale Final charging order may be conditional Court often prevents an order for sale where there are children in the property Reputational risk to the credit union? Negotiate provisions with FSA Debtor tactics Refusal to accept delivery Judgements can be set aside Form N245 starts the process rolling again Argue that any enforcement prejudices other creditors Obtain suspended orders on conditions Opt for a debt remedy e.g. Debt Relief Order 6

7 Credit union tactics Retain information on the debtor Send recorded delivery parcel to verify address or do Credit Reference Agency check Serve documents using a court bailiff Start with an Order to Obtain Information if you are uncertain about the debtor s circumstances 7