Introduction to Debt

1. Introduction to Debt April 2015 Roni Marsh 1

2. Reference Materials 3

3. Feelings and Reasons • Redundancy • Literacy • Death • Business Failure • Over indebtedness • Creditor action • Shame • Fear • Anger • Distress • Anxiety 4

4. Financial Statement 5 and 6

5. Benefits? Children – Child Benefit, Child Tax Credit Disabilities – Disability Living Allowance, Employment and Support Allowance Caring Responsibilities – Carer’s Allowance Rent – Housing Benefit aka Local Housing Allowance Mortgage – Support with Mortgage Interest Council Tax – Council Tax Benefit Benefit Cap and Bedroom Tax 8

6. Creditors List 9

7. Bank Accounts Account Fee Overdraft Setting Off Basic Bank Accounts First Right of Appropriation Continuous Payment Authority Financial Ombudsman Service Lending Code 11

8. Financial Ombudsman Service and Money Advice Service 12

9. Why not liable? • Not in client’s name • Not taken out by client • Council Tax – Not liable person or property exempt 13

10. Priority Creditors 18

11. Council Tax Enforcement Bailiffs Attachment of Earnings Order Attachment of Councillor’s Allowance Attachment of Benefit Order Third Party Debt Order Charging Order Bankruptcy Prison 21

12. County Court Judgment Claim and Admission 23

13. County Court Judgment Defence and Counterclaim 24

14. Money Claim Fees 24

15. Statutory Demand 24 and 25

16. FSA leaflet 27

17. Non-Priority Debts 30

18. Non-Priority and Debt Options Take No Action Write Offs Payment Holiday/Moratorium Negotiated Agreement with Creditors Debt Reorganisation/Consolidation Loan Debt Management Plan (DMP) Full and Final Settlement Voluntary Charge 30

19. Big Four Debt Options Administration Order Debt Relief Order Bankruptcy Individual Voluntary Arrangement 32

20. 36 and 51

21. 36 and 51

22. Credit Rating 36

23. Leaflets 36

24. Exercise 1 – Ms Sawyer Does she have a spare room she can rent out? Is she on a water meter because as a single person it might save her money? Free university or other courses She is on an estimated bill and as a result she should give them her correct meter readings to get a correct bill. 38

25. Exercise 2 – Mr Luthor The possible debt options are: Take No Action Bankruptcy Negotiated Agreement with Creditors – Pro-rata offers Debt Management Plan 43

26. Exercise 3 – Mrs Lane She could claim Job Seeker’s Allowance She could claim Support with Mortgage Interest through Income Based Job Seeker’s Allowance She could claim Council Tax Benefit She should ring her mortgage, gas, electricity and local council about Council Tax and explain the situation and ask for time to pay whilst she applies for benefits She could apply for a grant from CHARIS to clear her gas and electricity arrears. Once she is on Job Seeker’s Allowance she could ask for an Attachment of Benefits Order for her Council Tax debt 43

27. Exercise 4 – Mr Kent The Debt Options are: Write Off Take No Action Debt Relief Order Negotiated Agreement with Creditors for Token Amount Also to be considered are: Direct deduction for gas and electric to reduce the debt repayments or application to CHARIS to get the debts written off. If there were things they needed they would probably be able to apply for grants due to Mr Station being long term sick. Free School meals, School Uniform grant, bus and tram discount 43

28. Exercise 5 – Miss Jor-El You could tell her it is a priority debt You could tell her that Council Tax most likely has a Liability Order and the enforcement options they now have available You could suggest an Attachment of Benefits Order might be the cheapest option You could also inform her about grants, Disability Living Allowance, free or low cost education as she is on benefits. 43