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The Borrowers - Britain Deep in Debt

Nick Lord from the Citizens Advice Bureaux answered your questions on debt after the programme on 21 January 2001.


How long does it take after a CCJ has been cleared for it to come off your records?

Nick Lord: You apply to the court for a certificate of satisfaction. That will then be referred onto the Credit Reference Agency who will then show on your credit file that you have paid the CCJ.

Are there any ways of shopping around for credit without incurring too many footprints on your credit record?

Nick Lord:
Every time you make an application for credit the credit company is likely to register that with the Credit Reference Agency. If you make an informal inquiry and don't put an application in then that would not be registered with the Credit Reference Agency. So that means there is nothing to stop you from shopping around and in fact you should shop around to get the best deal but do be wary of making applications on too many occasions.

Paul Markwell:
I have 15000 debt, one of which is a finance agreement on a car, what would happen if I decided to make myself bankrupt?

Nick Lord:
It depends whether the car is on a hire purchase agreement. If the car is under an HP agreement he would normally lose it otherwise he can keep the car if it is an essential item for him. You really should take more detailed advice about bankruptcy.

Michael Pay:
Is there a way to freeze interest charges on Credit card repayments while a debt can be brought under control?

Nick Lord:
Yes, the first way is to ask for a concession from the credit card company. Most credit card companies will agree to a reduction or freezing of interest charges if you have genuine long-term repayment problems. There is also a formal procedure through the courts called a time order procedure. You will need to take more advice about this.

Michael Sagar:
How do court judgements for bills affect the prospects of getting a mortgage and for how long? And can rating be repaired?

Nick Lord:
Two questions there. Different mortgage lenders assess credit ratings in different ways. Most mortgage lenders take a severely adverse view on CCJs but there are some who will consider applications. It is always worthwhile explaining why you had problems in the past and how those problems are not going to recur again in the future. With regards to the credit reference side, it is possible to correct any wrong information which it held on you but you shouldn't believe companies who tell you that they can repair your credit ratings.

I am a student with over 8,000 worth of debt to independent companies and 5,000 to the student loans company. I pay debt repayments with my grant checks and then accrue more debt. How can I get out of this?

Nick Lord:
You would need to speak to a debt advisor, contact your CAB as a starting point. They will assist you in drawing up details of income expenditure and if necessary will help you to negotiate reduced payments with the credit companies.

Mike Get:
How can I check my credit rating? Is there anywhere online to do this?

Nick Lord:
There are companies that are now starting to offer an on-line facility but in my view it is just as easy at present to send 2 to each of the major credit reference companies and you will receive your credit file within 21 days.

Murray NN:
What happens once you've become bankrupt?

Nick Lord:
Basically your affairs are taken over by a third party. The majority of assets that you own will be sold and you may have to make payments to your creditors out of your on-going income. If you don't own anything of any value and anything that you do own is necessary to satisfy your basic domestic needs then you may not lose any property at all. It is essential that you take advice before going further with bankruptcy. There are pitfalls for the unwary.

Chris Surjinho:
Can I repair my credit history?

Nick Lord:
It is possible to correct any wrong information that is held on you. It is also possible for you to put your side of the story on your credit file with regard to any debts that you may have. What you can't do is to remove any information which is correctly held on your file. Debts would normally fall from credit files at the end of six years.

Kez Piper:
We were up to date with bills but went to a 'debt consolodation agency' to free up more of our income. It resulted in us getting default notices, and blacklisted even though we'd never been in trouble. Now we can't get a mortgage. What can we do?

Nick Lord:
If you think that you have been given bad advice which has adversely affected you from any adviser then you should complain, and if necessary seek further advice about any claim for recompense that you may have. Having said that a natural consequence of seeking reduced payments from creditors is that they will issue the default notices. This is a natural consequence of asking them to accept reduced payments.

John Palmer:
Are debt management companies any good and if so how do I go about finding a good one?

Nick Lord:
There is a good deal of concern here about the activities of debt management companies. They offer a similar service to Citizen Advice Bureaux and other advice agencies but they also administer the payments to your credit companies. If you choose to use a debt management company, you should make sure that they meet minimum standards and you certainly should not part with any money until you are absolutely sure you know the kind of service that you are going to get and that you want to go through with that service.

Maggie Kirkbride:
Apart from the CAB, who else can you seek advice about bankruptcy from? Is your own accountant a possibility?

Nick Lord:
Your own accountant is certainly a possibility if he knows about bankruptcy and insolvency! Not all accountants will be experts in that field. Other people you can try include insolvency practitioners. You can find their details in the telephone directory and you should ask for a free interview first of all in order to discuss whether bankruptcy is the right option for you. The majority of insolvency practitioners are happy to offer this service.

Steven McBride:
How do you put 'your side of the story' on your credit file?

Nick Lord:
First of all you need to get hold of your credit file and the information that comes with that will tell you exactly what to do to put your side of the story. The two major credit reference agencies are Experian and Equifax.

Paul Davies:
What is an Administration Order?

Nick Lord:
An administration order is a court order that puts all of your debts into one payment. The major problem with administration orders is that the total amount of your debt has to be below 5,000 and you must have at least one CCJ. Unfortunately most people have debts of more than 5,000 these days.

Dee Smith:
If someone demands payment for a debt which you don't owe, what do you do?

Nick Lord:
I think you write back and you ask them to provide proof of the existence of the debt.

Sue Williams:
I am what is known as a shopaholic, I have credit card debt, but am managing to pay the repayments at present. If anything were to happen to me and I could not pay anymore, who will be held responsible for the debt?

Nick Lord:
The first thing is to ask whether you have any payment protection insurance which would cover the debts. Otherwise the debts would be dealt with in your estate. If there were sufficient money to repay the debts then they would be paid. If there were insufficient money then the debts would die with you unless it was a joint account or somebody else had guaranteed payment of the debt.

How do you get a copy of the consumer credit act?

Nick Lord:
What a strange question. The easiest way that I can think of would be to go to your local reference library and ask if they have a copy - most libraries will have a copy contained in their legal section.

Who funds the CAB advisors?

Nick Lord:
Most CABs are funded by their local authorities. Some CABs receive money from the credit industry but any money from the credit industry has to be given in a way that doeesn't compromise the independence and impartiality of the CAB service. Increasingly CABs receive money under the Legal Aid scheme to provide advice on debts.

Gerry Ogilvie:
Is a default notice as bad as a CCJ ?

Nick Lord:
A default notice is a computer-generated letter which says that you have missed a payment or two. A default notice has to be issued before legal proceedings can be taken against you. A CCJ is much further down the line.

Amanda Dunn:
How do you get a bank account if you are blacklisted for getting credit?

Nick Lord:
More and more banks are starting to offer accounts for people who have had problems in the past. The Government is also keen on the idea of basic bank accounts. Your local CAB can provide details of banks who offer these accounts.

Jan Cobb:
My husband has been on the sick for one year. Can we ask the loan company to accept lower payments until he returns to work?

Nick Lord:
Yes. The other thing that you should check is whether the loan payments were covered by sickness protection payments. Companies are normally always prepared to help in cases like this where there is a genuine reason for not being able to pay. Given that your husband has been off work for so long do check that you are getting all the benefits that you are entitled to.

Francis Wong:
What would your advice be to an 18 yr old starting out on a 6 yr medschool course in London be as far as borrowing money is concerned and trying to stay out of debt?

Nick Lord:
The key to staying out of debt is budgeting. You should be making a list of the money coming in and working out very carefully how you are going to spend that money. Having said that, relatively few students these days are not in debt at the end of their course. If you are going to borrow money, you need to look for the lowest interest rate deals. Student loans are actually a good deal because of their low interest rates and you should also talk with your bank and other banks about special deals that they have for students. Try and avoid running up debts on your credit cards. Although some of the advertised rates seem very low they normally revert to a much higher rate after six months.

John James:
I borrowed money from a lender. The deal was that he came down every week to collect the weekly payment. Very often he does not turn up for weeks on end and the debt/interest mounts up. What should I do?

Nick Lord:
I think you should speak with your local trading standards department. It may be that the lender is unlicensed. It may be that the terms and conditions are open to attack under the Consumer Credit Act. At the very least the fact that the lender isn't keeping to their side of the contract and that you are incurring additional interest charges as a result should be taken up with the lender and you should be arguing for a refund of the additional charges.

Linda Preston:
I live with a partner who owns and has the mortgage on the house we live in. Can I become bankrupt without him being involved?

Nick Lord:
That is a technical issue which will depend upon the legal interest that you have in the property. It is the kind of question that you MUST discuss with an experienced bankruptcy adviser before you petition. If your local CAB can't help ask an insolvency practitioner.

Tony Darroch:
What right do Experian have to give someone's details to companies like the Mortgage Group?

Nick Lord:
Credit reference agencies provide information to credit companies both positive and negative. Where companies provide information to Experian - Experian will normally provide information back. If you look closely at the small print of a credit agreement you will see that you invariably give permission for the lender to pass on information to a credit reference agency.

Kath Hamblett:
I have two loans with Ocwen - now Igroup, up to now I have not had any problems with them. Should I be worried?

Nick Lord:
There is no particular reason to be worried so long as you feel that you are getting a good deal. As with any loan from any lender it is always worthwhile shopping around to see if you might benefit by transferring the loan elsewhere. If you feel that there was anything to your detriment when you took out the loan then speak to your local trading standards department.

Tony Johnson:
How easy is it to get credit after being bankrupt?

Nick Lord:
The credit industry tends to take a very dim view of people who have been bankrupt particularly if they feel that bankruptcy has been used as a way of avoiding payment. Credit reference agencies will keep details of the bankruptcy and more and more applications for loans such as mortgages are asking the question "Have you ever been bankrupt". The best thing to do is to be honest with any creditors after bankruptcy and explain how the problems that resulted in bankruptcy are not going to surface again and that you will be able to repay any loans that you may be given. You may find that you have to get somebody else to guarantee the loan payments for you.

Kassie Zeinali:
Is it a good idea to pay a "credit repair company"?

Nick Lord:
It is not a good idea to pay a credit repair agency. Firstly, it is not possible to "repair" your credit file. What you can do is correct any wrong information and to give your side of the story. You don't need to pay somebody else to do this for you.

How can you find out if a loan company is a reputable one?

Nick Lord:
You can find out whether the company holds a consumer credit licence by contacting your local trading standards department but frankly holding a consumer credit licence is not a very good safeguard in itself. What you should do is to check the terms and conditions of any loan agreement before you sign the agreement. Don't be too tempted by any headline rate of interest chargeable but look to see how much you will repay over the total period of the loan. If you have any doubts then seek advice before you sign the loan agreement.

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