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Readers Questions

1. 

   Terry

   Hi there, Sara from Debt Camel has sent me here. I have £16.5k of unsecured debts. I can get partial settlements on them for around £10.5k. All my debts have defaulted with the last default coming 2 years ago. I now have money to pay at the partial settlement rates however i also owe a family member £10k. My question to you is if i don’t pay my debts what happens after the 6 years? I live in Scotland so a court decree could be issued against me (none as yet) but from what i understand this is unlikely due to all my individual debts being under £3k. I would like to get a mortgage in the next 5 years. My partner entered into a minimal asset process (MAP) 6 months ago so she is debt free now. I would really like to pay off my family member but am i better paying off my debts first for my future mortgage prospects? When my defaults expire can a mortgage provider still see these debts?

   1. 

      Scottish Adviser

      Hi Terry

      Thanks. Basically, from the point of view of getting a mortgage, I think you would be better paying off your consumer debts first, but you need to speak to your family member about whether they are willing to wait. I am sure they have been patient and the question is can they afford to wait a bit longer (they may need the money too).
      The first point is if all your debts have been defaulted, then they should disappear from your Credit file after 6 years from the date of Default. This doesn’t mean you don’t owe the debt, but creditors doing a credit search won’t see them.
      As for whether you owe the debt, this is known as prescription in Scots Law and covers when a debt becomes Statute Barred from being recovered.
      It is normally 5 years in Scotland (but maybe 6), and it begins to run from the date of Default, but every time you make a payment it begins running again from the start.
      Also if Creditors do take you to Court and obtain a Decree (court order), then the Prescription period changes to 20 years (though in certain circumstances you could argue 12). The point is it can still be recovered for 20 years, maybe 12.
      A Court Order will also go on your credit reference file for another six years, even if the debt which it was for, has come off.
      I wouldn’t place too much faith on the belief you won’t be take to court for less than £3,000. I have seen plenty of court actions for less. Some for only hundreds.Then you get legal fees added and also interest can accrue.
      A mortgage provider is ideally wanting to see, even if you have had a bad credit history, you debts have been settled or satisfied and that you have turned a corner. That won’t happen if you pay the family member off.
      However, if you do have to pay the family member first, you could look at other debt options such as a Debt Arrangement Scheme. The problem with this is you won’t get the rebate your being offered and will probably have to pay the full £20k.
      I would be carefully about using Bankruptcy or a Trust Deed if you are going to give a family member £10,000 as this could seen as a gratuitous alienation and could mean the Trustee in Bankruptcy or Trust Deed taking the family member to Court to try and get the £10,000 back to put into the Bankruptcy/Trust Deed for all the Creditors.
      Even if its not seen as a Gratuitous Alienation, it could be seen as an Unfair Preference (where you pay one Creditor before another because you like them) and challenged for six months after the transaction.
      You can get help if you want to do the Debt Arrangement Scheme from your local advice agency.

2. 

   Emma

   Hi

   £196 of my benefit money was arrested by Stirling Park and I oinly received £320 for the month. I had no idea what this was for as I already pay £30 a month towards my council tax arrears.

   I call the the bank then Stirling Park and they said I have £725 in unpaid parking tickets and almost 1000 in council tax arrears (but like I said I have alreadyy set up a payment plan for this).

   I requested a break down of when these fines where from etc. and go as far back as 2014.

   I was declared bankrupt in 2019. Could I have these written off also as my council tax arrears are from 2015.

   The Stirling bank gentleman I soke to was very rude on the phone and tried to put the fear of God in me, so I’d rather know what I’m talking about before going futher with this.

   I only have until the 16th of February or the bank will give most of my monthly Universal Credit payment to them.

   Please help.

   1. 

      Scottish Adviser

      Hi Emma

      Thanks for getting in touch. I have found your Bankruptcy from the information you have given me and emailed you a copy of the Extract from the Register of Insolvencies.

      It shows on it when you Bankruptcy was and what your date of discharge was. All debts you owed up to the date of award or Sequestration was included in the Bankruptcy and cannot be recovered.

      You don’t say how the money has been taken, but I am assuming it was a bank account arrestment. This normally means you must be left with £529.90 in your account, but sometimes if the Bank are slow in applying it, they take off the money you had in your account when it should have been arrested, but if they are late in applying it and you have spent some money, you may be left with less than £529.90. I do not believe when banks do this, that this is the correct procedure. My view is when they execute it they must leave you with £529.90 in your account.

      However, it could be the money has been deducted from you benefits before it was paid to the bank. This is different and its actually be Department of Works and Pensions that are deducting the money.

      I am not clear from what you have told me has occurred.

      However, as I say any debt that dates before the award of the Bankruptcy cannot be recovered.

      I would say take the Extract I have emailed you and send that to Stirling Park and ask them what debts arose after the Award of Sequestration date that is showing on the extract. Only these debts can be recovered. If they orginate from before this date they cannot be recovered.

      I would also email the Extract to your local council and ask they withdraw the debts included in the Bankruptcy from the Sheriff Officers.

      I have also emailed you details of your local authority money advice service. Can I suggest you contact them and ask for their assistance.

      I know them and they are very good.

      I hope this helps.

      Alan

3. 

   Margaret

   Hi, I need advice, please.
   In November 2020 a Sherrif officer arrived at my door while working from home to serve me with an outstanding Council Tax bill from 2004/5. I think the bill was £61 but with the bill being served at my house it was £81. It was for a property that I sold in 2003, and I moved into council property as I had left nursing due to ill health. I lived there until 2007 when I moved in with my mum (bigger flat, same building) and became her carer. Mum died in 2014 and I got the tenancy and lived there until August 2018 when I moved to my current address.
   I emailed the Council disputing that I lived in that property at that time and that I had had no letters to ask me for the money. This was quite out of the blue to me and after all of this time quite unnecessary.
   I didn’t hear anything back from the Council and assumed with Christmas, and COVID everyone was just busier than usual. However, yesterday I received a notice that they will arrest my wages (NHS) and the bill is now at £257.81 and I am worried sick as I have never had anything like this happen to me before.
   Unfortunately, after so long and several house moves I don’t seem to have anything to prove where I lived at that time. I now don’t know what to do about this and I can’t afford all that amount of my salary in one go. This seems quite unreasonable to me.

   What can I do?
   Thanks
   Margaret

   1. 

      Scottish Adviser

      Hi Margaret

      When you left the property you owned in 2004/2005, you say you moved into a Council property. You will have had a council tax liability for this property. This may be the easiest way to prove you were no longer liable for the property they are pursuing you for. I would make a formal complaint to the Council and inform them where you were living during the period they are pursuing you for Council Tax. They should be able to check whether you had another liability at that time.

      If they don’t resolve your complaint to your satisfaction, you can then take your complaint to the Valuation Appeal Complaint Tribunal. You can also make a complaint to the Scottish Public Service Ombudsman.

      A sample letter you may want to send or email is:

      Dear Sir or Madam

      Re: Formal Complaint – Council Tax Reference Number: xxxxxxxxxxxxxxxxxxx

      I am writing to complain that you are holding me liable for Council Tax for the following address, [insert old address], for the period [insert period they say you are billing you for].

      I sold this property on [insert date you sold property] and during the relevant period was living at [put the address you were living], where I was liable for Council Tax.

      I ask, therefore, you correct your records to show that I was not liable for Council Tax for this address, during this period.

      If you do not believe you can revise your decision, please provide me with information on how I can appeal your decision to the Valuation Appeal Committee. I would also be grateful if you can advise me how I can raise a complaint with the Scottish Public Service Ombudsman.

      I hope this helps.

4. 

   Pauline

   My sequestration started in 2018. A Debtor Contribution Order (DCO) was initially set up for £58 month then reduced to zero two weeks later as I had initially forgotten to include an expense.

   I had been providing proof of income and expenses every six months until September 2020. The DCO was continually zero and so in November 2020 the trustee quashed the DCO, trustee was discharged and my case was closed in January 2021.

   My question is, now that the case is closed, can I now access a lump sum from my private pension (which the trustee was aware of), without the money vesting with trustee?

   1. 

      Scottish Adviser

      Hi Pauline

      You have to be careful here, as although you have now received your discharge and your Trustee has also had their discharge in January 2021, there is a rule in Bankruptcy called the Acquirenda rule.

      Basically, the Acquirenda Rule states any assets that you acquire within 4 years of your Sequestration in Scotland can vest with your Trustee. Now in your case your Trustee is out of office, but it is possible to reopen a Bankrutpcy in Scotland.

      The relevant provisions are contained in section 86 of the Bankruptcy (Scotland) Act 2016.

      What this states is:

      (4)Subsection (5) applies where any estate, wherever situated—
      (a) is acquired by the debtor on a relevant date, and
      (b) would have vested in the trustee in the sequestration if it had been part of the debtor’s estate on the date of sequestration.

      (5)The estate vests in the trustee for the benefit of the creditors as at the date of acquisition.

      The relevant date is defined in s79 of that Act that states

      (5) In this Part “relevant date” means a date after the date of sequestration and before the date which is 4 years after the date of sequestration.

      Although Pensions are protected, this is providing you don’t draw them down during your Bankruptcy. If you do draw them down, then they can vest (although the Trustee cannot force you to draw them down).

      Now in a practical sense, you are out of your Bankruptcy and your Trustee has also received his discharge, so they may never discover if you do draw down a lump sum from your Pension, but legally, there is an argument that if you did, it could vest in the Trustee as Acquirenda.

      Now that doesn’t mean they would decide to reopen your bankruptcy, but I would be cautious.

      I would maybe contact the Trustee and ask if they can give you an assurance if you draw down the lump sum they will not try to claim an interest in it. Remember, they can’t make you draw it down, so if you tell them and they don’t give you such an assurance or state they would seek a contribution from it, you can decide to just leave it until the 4 years are up.

      I appreciate you may be reluctant to do this, but equally I am sure you don’t want to lose any money. The only other suggestion I would make is to take legal advice from a solicitor before you proceed any further.

5. 

   Shona

   I have been having problems with my energy company. Since 2017 I’ve had no issues with them, until this year when I tried to get my credit reimbursed. I checked their reviews and they’re now at 2 stars on Google reviews and 3.5 on Trust Pilot.

   My refund has now failed 5 times and they keep making ridiculous excuses. So, I cancelled my direct debit which worked in the sense that they have started emailing me directly (though, despite my requests, they haven’t called me back or put my through to management when I call them) . They then argued that they cannot refund unless I have an active DD, saying they cannot access my bank account any other way. They have since changed their mind (again – they have u-turned on a lot of things!), telling me I will be refunded in 3, 5, 10 or 15 days (this varies). In addition, they want to refund me random amounts (the latest was £100, a fraction of what is due to me). Everything I’ve read (legally) suggests I need to keep paying my direct debit and fight but I’m reading reviews where customers have switched suppliers and are owed up to £1k and haven’t heard anything from the energy company for 6+ months. It feels like I’ll just be literally giving them money, I have no hope of receiving a refund and want to just cut my losses. As it stands, I have enough credit in my account to potentially last 8 months. But since cancelling my direct debit, they are threatening to put me on a higher tariff, which is approximately double.

   I have started the process with the Ombudsman, but it’s a long process to getting refunded and financially I am in a precarious situation as a result of the pandemic. It’s clear the company is struggling.

   Where do I sit, legally with cancelling my direct debit and asking them to deduct my direct debit from my credit until it is resolved or balanced? Will this impact my credit rating?

   I’m not sure if you publish this information but the energy company is Tonik. They are based in Birmingham but the call centre suggests they are further away.

   1. 

      Scottish Adviser

      Hi Shona

      This sounds really bad the way you are being treated and on top of that, what is exacerbating matters is your supplier appears to have very poor customer service, making it hard for you to get a resolution.
      There are obviously a number of issues here. First how you ended up in a credit in the first place, why you don’t appear to be able to get a refund and their treatment of you throughout this process.
      If you don’t want to pay by Direct Debit, thaf is fine, however, the problem is alot of the tariffs you get access to lower prices through, require you to have a direct debit set up, so my cancelling it, the Firm appears to be saying they are taking you off that tariff.
      The Problem is I totally understand why you don’t want a direct debit set up as this firm should not be making monthly deductions whilst you have a credit. They should be offsetting your credit against your bill. They, however, are not allowed to just hold onto that credit for that purpose, it is your money, you dont owe them it, so it should be refunded.
      All I would say is taking this to the Ombudsman is the correct thing, but it does take time and you understandable want a resolution.
      Have you considered switching suppliers? You are in credit, you have no arrears. This doesn’t stop you pursuing your complaint and also demanding your fund back? Is there a penalty? There can be sometimes if you are in a fixed price deal, but it doesn’t sound like you are.
      The only additional advice I would give is contact the Citizen Advice Consumer Helpline, if you haven’t already.

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