LAWLINK – Creditor Crisis

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Q: During the last recession, I had major financial problems and needed to sell my home. I owed money to various suppliers and I had tax arrears. There were a lot of debts and I just couldn’t deal with them all. I downsized quite a bit and was able and lucky enough to work myself back into a position where I am starting to get back on a sound footing. Out of nowhere, I have received a demand for payment that I thought had been written off. They are threatening to have me committed to prison for failure to pay. What can I do?

A: From your outline of events, it is likely that your creditor has gone through the usual court system. This involves first of all obtaining a decree, which is a court judgement stating that you owe them money.

The next step would be them obtaining an installment order. This would be where the court would examine your means and order a sum to be paid on the basis of your income and outgoings. Only once an installment order is made, and not paid, can a committal summons to prison be issued.

Of course, if you failed to appear, it would be open to the court to make an order for the payment of the full sum at once. Generally, the courts would only do that in circumstances where there was no appearance by a debtor.

That said, you should consult with your solicitor. A creditor has 12 years from the date of the judgement to enforce decrees. Given that you have not heard from this particular creditor, it is possible that this date is fast approaching and the creditor is simply making a final attempt to draw in funds.

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It is also possible that you came to an arrangement with this creditor some time ago and that they are incorrectly asking for funds. You should check your own records in this regard.

You do not mention what the sum is but if it is a thing that you checked your records and you have not paid this sum and you are in a position to pay it now, obviously it is in your own best interest to do so.

You should consult with your solicitor – if possible, the solicitor that represented you at the outset. If timing is a factor, you may find that your creditor would accept a token or heavily discounted sum in full and final settlement.

The Money Advice and Budgeting Service (MABS) have a very useful service for people in financial difficulties. This may also be a useful port of call to deal with this problem.