Enforcing non-priority debts
This fact sheet covers England & Wales. You will need different advice if you live in Scotland.
This fact sheet gives you an overview of the actions a creditor could take if you do not pay your non-priority debts on time.
Use this fact sheet to:
- find out how you could be affected if you miss payments;
- understand the ways a creditor could recover money from you without going to court; and
- learn about what could happen if you don’t pay a court judgment.
We have more detailed information about enforcement in some of our other fact sheets.
What is enforcement?
Enforcement describes the actions your creditor could take to try to make you pay if you fall into arrears. Some actions can be taken by your creditor without the need to go through a court process. Some types of enforcement can only be used if your creditor first takes court action against you and gets a court judgment. If you don’t pay a court judgment on time, your creditor may then choose to use court enforcement to recover money from you.
Court action should be a last resort for creditors. Enforcement can often be avoided by negotiating affordable repayments with your creditor or with the court. Contact us for advice if you are worried about enforcement.
What your creditor can do without going to court
This section covers the actions your creditor could take without starting court action, if you don’t pay your non-priority debts.
Credit referencing
Many types of non-priority debts are registered on your credit reference file. If you miss several payments, your creditor may record a default. This information will stay on your credit reference file for six years. It may be taken into account if you make an application which requires a credit check, such as taking out more credit. Read our Credit reference agencies fact sheet for more information.
Bank account
If you owe money to your bank or building society and miss a payment, they can take money from your account to pay the debt. This is called the ‘right of set off’ and includes taking payments for debts such as credit cards and loans, as well as overdrafts. If money is taken from your account that you haven’t budgeted for, it may mean you don’t have enough money left to pay other important bills.
If you are banking or saving with a bank you owe money to, you should consider opening an account elsewhere to have your income paid into before negotiating with the bank. Our Safe bank accounts fact sheet has more information.
Debt collection agencies
Your creditor may pass or sell your debt to a collection agency. This will usually be before court action has been taken against you. A collection agency has no greater power than the creditor. They are not bailiffs and have no right to come into your home or take your belongings.
You can negotiate payments with the collection agency in the same way as your other creditors.
Pre-action protocol
Before your creditor can start a court claim, they should follow court rules called the pre-action protocol. The court is keen to see you come to an arrangement with your creditor without court action.
Your creditor should send you a letter before they start court action called a letter of claim. The letter of claim should give you details of how much you owe and how the amount has been worked out. The letter should also tell you how to pay and how to contact the creditor to discuss your repayment options.
Court should be a last resort for your creditor and avoided if possible. If you come to an arrangement with your creditor and stick to it, they should not continue with making a court claim.
Find out more in our Pre-action protocol in the County Court fact sheet.
What a creditor can do if they go to court
The following sections cover what a creditor can do if they take court action to recover a non-priority debt. They explain that you might get a court judgment against you, and show the options your creditor could use to enforce the judgment if you do not pay.
County court claim
If you haven’t come to an arrangement with your creditor about how you are going to pay, they may make a county court claim against you. This is a civil court process, rather than being a criminal matter. You wouldn’t normally need to go to court if you agree that you owe the debt, and the process is often completed in the post or online. For an overview of the process read our Replying to a County Court claim fact sheet.
If the court makes an order to confirm that you owe the money, you will receive a county court judgment, sometimes known as a CCJ. The court will either say the debt needs to be paid back by a certain date, or they can set affordable instalments if you provide details of your income and outgoings.
A CCJ will show on your credit reference file for six years and will make it harder for you to get credit.
If you are up to date with the payments on your CCJ
If you are up to date with the payments on your CCJ, this stops your creditor from using most forms of enforcement.
Charging order
If you are a homeowner and the court makes a CCJ your creditor can ask for a legal charge (called a charging order) on your home, even if you are up to date with the payments. The charging order means the debt is secured on your home like a mortgage.
Your creditor cannot try to make you sell your home as long as you are up to date with the payments on your CCJ. There are different rules if your creditor applied for your CCJ before 1 October 2012. Read our Charging orders fact sheet for more information.
If you miss a payment on your CCJ
If you don’t pay a CCJ as ordered by the court, your creditor could apply to use enforcement through the court. There are a number of ways of enforcing debts in the County Court.
Bailiffs (also known as enforcement agents)
Your creditor can ask the court to instruct bailiffs to collect the debt from you by taking control of your belongings if you don’t pay them. Bailiffs are not allowed to take certain basic household goods. They could clamp or remove your car if it is parked on your drive or in a public place. If the bailiffs have not been into your home before, you can refuse them entry. Bailiffs collecting county court judgments will be working for the County Court rather than a private company. Find out more in our County Court bailiffs fact sheet.
Attachment of earnings
The court can order your employer to make deductions from your wages to clear your debt. The court will take some account of your essential bills and circumstances when working out how much you have to pay. The court may agree to suspend the attachment of earnings order if they think you have a good reason. For example, this could be that you may lose your job or promotion prospects if your employer finds out you are in debt. You would also need to make the payments ordered by the court. Read our Attachment of earnings orders fact sheet for more details.
Third party debt order
Your creditor can apply for a third party debt order which would allow them to take the money you owe from someone else who has your money, or owes you money. Normally this would be a bank or building society account, but it could be any organisation which is holding your funds or is due to pay money to you. It is rare for creditors to use a third party debt order to recover money.
Order for sale
If you are a homeowner your creditor may have a charging order against your property - see the earlier section called If you are up to date with the payments on your CCJ.
If your creditor has a charging order and you miss payments on your CCJ, your creditor may be able to apply to court for permission to sell your home. If the court agrees to this they would make an order for sale. However, this is rare as most creditors are prepared to wait for you to sell your home at some point in the future, and to be paid out of the proceeds of the sale.
There are different rules if your creditor applied for your CCJ before 1 October 2012. Read our Charging orders fact sheet for more information.
High Court
In some cases your creditor may be able to make a money claim against you in the High Court, or enforce a CCJ through the High Court.
The High Court is a civil court, similar to the County Court, but can only be used for certain types of debts. The High Court is most likely to be used by creditors for claims over £100,000. Claims for debts regulated by the Consumer Credit Act 1974 cannot be started or enforced in the High Court. Most overdrafts, credit cards, store cards and loans are regulated by the Consumer Credit Act 1974.
If you do not pay a high court judgment your creditor can apply to use similar types of enforcement as those listed in the earlier County court claim section. They could use:
- High Court Enforcement Officers (high court bailiffs);
- an attachment of earnings (by transferring the matter back to the County Court);
- a charging order (only if the debt is over £5,000); or
- a third party debt order.
Transferring a CCJ to the High Court
Your creditor may be able to enforce a CCJ against you in the High Court by using High Court Enforcement Officers (HCEOs) if the debt is not regulated by the Consumer Credit Act 1974 and you have missed a payment. For an overview of the process, read our High Court enforcement fact sheet.
Bankruptcy
Your creditor can make you bankrupt if you owe them £5,000 or more and you have not been able to agree how to repay the debt. Creditors can club together to make you bankrupt but this is rarely done. Bankruptcy would mean that most unsecured debts that you owe would be written off, but any assets that you have might be used to pay off your debts. Read our Bankruptcy fact sheet for more information.
Other fact sheets that may help you
Attachment of earnings orders fact sheet
County Court bailiffs fact sheet
Credit reference agencies fact sheet
High Court enforcement fact sheet
Pre-action protocol in the County Court fact sheet