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Personal Loan, Credit & Store Card Debt

Such debts are called unsecured. That is, while creditors can take legal action to enforce payment; they have more risk of not getting their money back than if the debt were secured on an asset.

I can’t afford my unsecured debts

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Important: You should in the first instance contact your creditors to try to reach an agreement if you’re having problems making repayments.

An unsecured creditor cannot rely on seizing an asset to reclaim their money – they tend to shout first and shout loudest compared to secured creditors.

From a legal (and your) point of view; such debts are not considered to be priority debts. A priority debt is one where non-payment has more serious consequence for example your mortgage and hire purchase agreements.

Creditor Action

Should you fall into arrears on such debts and are not able to make alternative repayment arrangements, a sequence of events involving some of the below is likely to follow.

  1. Solicitor Letters – While letters from solicitors should be taken seriously – they usually are no more than a collection tactic from your creditors.
  2. Final Demand – A letter sent by a creditor demanding payment – usually within 7 days before they take further action.
  3. Default Notice – You must be sent a default notice at least 14 days before any legal action is taken to enforce repayment on a debt regulated by the consumer credit act.
  4. Home visits from debt collectors – All a creditor or their collection agents at your door can do is ask you to pay money. They are not bailiffs.
  5. Statutory Demands – A formal written request for the repayment of a debt which can be the first step towards bankruptcy.
  6. County Court Judgment (CCJ) – A creditor can apply for a Court order help enforce payment of a debt in arrears.
  7. Charging Order – This turns an unsecured debt into a debt secured on your property or other asset.
  8. Order to Obtain Information – This forces you to disclose details of your assets and financial affairs to a creditor.
  9. Warrant of Control This authorises a county court bailiff to try to take control of your possessions to be sold at auction to pay the debt.
  10. Attachment of Earnings This allows the Court to take money from your wages – directly from your employer.
  11. 3rd Party Debt Order This allows a creditor to get the money you owe them directly from your bank or whoever is holding your money for you.

From Unsecured to Secured?

When taking out unsecured credit – many people do not take into account the powers creditors have to enforce payment.

If the debt goes to court and a CCJ is issued and you’re a homeowner, the creditor can apply for a charging order which secures the debt on your property. This is even if you have not broken the terms of the CCJ.

My Partner and I share a credit card

Who is liable to repay the balance?
Often there is confusion about who is liable for credit card debts. Credit cards are never issued in joint names. The credit agreement is with a primary cardholder, who may have requested an additional card for their spouse/partner. Any additional cardholder is simply given the facility to use the the primary card holder’s credit, in others words to spend their money. All debts are in the primary cardholder’s name. It does not matter which card is used, who has benefited from the money spent or who has contributed to repayments.

How Swift Can Help

If you’ve debts of over £5,000 we can look at the possibility of an IVA . An IVA allows you to clear you debts by making affordable payments for a fixed period after which the remaining debts are written off.[show-iva-cta]