Am I liable for my partner's debts?

If two people jointly enter into a credit agreement, they are both liable for the whole amount of the debt. This is known as 'joint and several liability'. For an agreement to be joint and several, it must be signed by all parties in the form required by the Consumer Credit Act. So, if you have not signed such an agreement, you are not liable for your partner's debts.

However, joint and several liability can also apply to rent arrears on joint tenancies, or arrears on joint mortgages, to council tax payments for couples and to water/sewerage charges on properties which are jointly occupied. You need to talk to the individual creditor to obtain a clear understanding of the liability for the debt.

If I die does the debt die with me?

Any debts become the liability of your estate. If there were sufficient assets in your estate to settle your debts then this would be done by the executors. Creditors may sometimes attempt to claim payment from a partner or relative of the deceased, particularly if they lived with them, but if the estate cannot settle the debts, partners or relatives are not obliged to do so.

There are several possible exceptions to this rule:

1. Debts for which someone had joint and several liability with the deceased.

2. A mortgage remains on a property even if this passes to a new owner by inheritance (although it may be paid off by an insurance policy at death).

3. Taking over tenancy from the deceased by succession, which may involve taking over rent arrears if these cannot be paid by the estate. A tenant by succession can lose their home if the arrears are not paid.

4. For married couples, there is joint liability for council tax. Although liability ceases at the date of death, the surviving partner remains jointly liable for any arrears. Local authorities have the usual powers to pursue a surviving partner, but in practice they will not normally seek repayment of community charge arrears from the surviving partner unless s/he has inherited money from the deceased.

It is always worth checking to see if there is payment protection or other insurance in place to clear the debts on death.

When can a creditor take me to Court?

If you are behind with the payments you agreed when you first took out a credit agreement, even if you are making reduced payments, your creditor can take you to Court by issuing a Sheriff Court Citation. The cost of any resulting Court action will be added to the amount you already owe.

The creditor must formally let you know you are in default by issuing a Default Notice, before commencing Court proceedings.

What should I do if I receive a Sheriff Court Citation?

This information relates to the procedure in Scotland. For residents of England and Wales, please click here for information on English debt law.

If you receive a Sheriff Court citation you do not need to attend Court but you do need to reply to all correspondence within the specified timescales to ensure the Court takes your situation and views into consideration.

The citation will arrive by post, together with a 'Time to Pay Direction'.

Complete the 'Time to Pay Direction' form with details of your offer of payment and return to the court within the 21 days (see date on form).

The amount you offer should be the same as if Court action was not being taken. Do not feel pressured into offering to pay more than you can afford.

Return the completed form to the address of the Sheriff Court. If the court accepts your offer, the Decree with time to pay will be granted. This means that no further action can be taken as long as the payments are maintained. However if you miss two payments, on the date that the third becomes due, the Time to Pay Direction breaks down and the creditor can take further action e.g. wage arrestment.

We know that the majority of people do not respond to the initial summons, most of the time Decree will pass and diligence (formal debt enforcement) can follow.

IF YOU WANT TO DEFEND THE CLAIM:

Complete the 'deny the claim - intention to appear' form with details of your reasons for disputing the claim. Return the completed form to the Court. Follow the instructions on the form to the letter and if possible get some representation. You must attend the hearing even if you do not have a representative.

What should I do if I cannot afford to pay the amount set by the Court?

The 'Time to Pay Order' is used after Decree has been granted, you can apply for this when diligence has begun i.e. a charge has been served. Orders are like 'Time to Pay Directions' they stop any further action - they are not available for debts over £10,000 or Council Tax arrears.

However, a 'Time to Pay Order' would be inappropriate if a 'Time to Pay Direction' was granted and has defaulted. As the majority of people will not have responded to the initial action then a 'Time to Pay Order' may then be used.

If the creditor does not object to the payment offer made then the Sheriff will grant a 'Time to Pay Order'. If the creditor objects, a date for a hearing will be given.

The benefits of applying for a 'Time to Pay Order' is that it can prevent pressure from creditors to pay an amount that is too high.

If you are unable to pay the amount ordered by the Court, due perhaps to a change in circumstances you can apply to the Sheriff to grant smaller instalments - this is called a 'Variation of a Time to Pay Order'. However this option is also available to your creditors who can apply to increase the payment, if realistic.

In Scotland there is no fee payable for any of the 'Time to Pay' forms.

ARRESTMENTS

There are two common forms of arrestment :

Arrestment of bank/building society accounts.

Arrestment against earnings.

If a creditor does not know where the account is held then it is served on the head offices of the major Banks and Building societies. A copy could also be sent to the branch where the account is held, this prevents any monies being available as the account is then frozen. Either a mandate to authorise the funds to be released is signed or the creditor raises through the court, an action of furthcoming which is used to force the funds release - expenses could be awarded to the creditor.

There are three forms of Arrestment against earnings :

Earnings Arrestment is used mainly to enforce any kind of debt including council tax arrears, consumer credit debts, arrears of spousal maintenance and damages awards. An Arrestment is used to force payment of a debt, it recovers the amount outstanding plus any interest and expenses due by either a Decree or a Summary Warrant. The Arrestment is served on the employer of the debtor with an arrestment schedule this states:

The name, designation & address of the creditor

Details of the Decree i.e. when it was issued

The date any charge for payment was served

The amount outstanding and the calculation details

Current Maintenance Arrestment as the name suggests is for current spousal maintenance.

Conjoined Arrestment, where an Arrestment is already in operation an employer should return the new arrestment to the sheriff court. The second creditor must apply to the court for a "Conjoined Arrestment Order" if successful this means that a percentage of the amount arrested wil be sent to the second creditor. If a third creditor enters the amount is split three ways and so on. The split is on a pro rata basis.

What effect will a Decree have on my ability to obtain credit?

Decrees' are recorded on the Credit Reference Files maintained by Credit Reference Agencies. The entry on your file may affect your ability to obtain further credit as most lenders check the file to help them decide whether or not to grant credit. Creditors record only factual information on individuals such as missed or reduced payments and the general 'blacklisting' of families or addresses is a misconception.

How can I find out what is on my credit file?

You can obtain a copy of your credit file by contacting the credit reference bureaux direct. There is a small fee for this information. Click on one of the links below for more information:

www.uk.experian.com

www.equifax.co.uk

www.callcredit.plc.uk

What happens if I fail to make payments under a Decree?

If you do not make payments under a Decree, the creditor can apply for:

• A Wage Arrestment - so that a sum can be deducted from your pay before you receive it

• An Inhibition - so that that the debt can be secured against your home/property

However, a creditor cannot take any enforcement action without first obtaining a Decree. So it is essential that you respond to Summons Forms with an offer that you can afford to maintain.

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