Are some debts more serious than others?
With the increase in the availability of credit over the past decade, more and more people are finding themselves in debt.
In some cases this is not a problem so long as the debt is manageable and not immediately due. Many people have credit cards which allow them to use money they do not have and thus fall into debt.
However, so long as the individual is able to pay the minimum amount due in accordance with the credit agreement then the debt is not imminently due and there should be no concern.
There are, of course, many other forms of debt and the ones that are imminently due are a cause of serious concern.
If you owe somebody money and you do not pay, they may well take you to court and seek a judgment for the amount due. If successful, this would lead to a court order against you for the amount due.
A creditor will often seek a default judgment for the money owed. If you do not file an acknowledgement or a defence to the claim, then a default judgment for the amount due will be ordered without you attending court.
What having a court order against you will mean
You could face the following difficulties should you have a court order against you:
- You will find it very difficult to get credit in the future and may, therefore, struggle to get a mortgage
- In addition to this, the creditor can apply for a charging order over your property or an attachment of earnings from your employer to get the money back
- Worse still, an individual can be subject to a bankruptcy order, this can be done by a petition from a creditor owed at least £750, or alternatively a debtor can apply for their own bankruptcy if they show the court that they are unable to pay their debts
Bankruptcy has been increasingly common under the petition of the debtor in recent times due to uncontrollable debt and the stress that comes with it.
There are many negative connotations of being declared bankrupt. Anybody considering applying for their own bankruptcy or who is the subject of a petition for bankruptcy should seek legal advice from a solicitor to view all possible options available.
An individual may decide that petitioning for their own bankruptcy is the best cause of action if they are being hassled for payment and feel there is no way they can meet their debts. Bankruptcy can, therefore, be seen as attractive; this is because a trustee in bankruptcy will be appointed, and it will be the trustee who becomes accountable to the creditors for the debtor’s debts (although obviously the trustee will use the debtor’s assets to try to do this).
A lawyer may be able to help avoid bankruptcy by working out payment plans with the individual creditors to warn off a petition or by agreeing, with the help of an insolvency practitioner, to enter into a voluntary arrangement with creditors, which normally involves either the creditors accepting a lesser sum (but more than they would expect in a bankruptcy), or by allowing the debtor a longer period in which to repay the debt.
As a bankruptcy order can affect an individual for the rest of their life, particularly in relation to obtaining a mortgage in the future, an individual should look at all the possibilities before becoming subject to an order. Legal advice from a solicitor is, therefore, strongly recommended at an early stage.
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