Step 6: Defending Your Position
Bank and Credit Card
Are you in time?
General information applicable to most Court proceedings
If it is not possible to settle a dispute amicably via mediation, then it may be that your bank or credit card provider’s only option is to initiate Court Proceedings against you to recover whatever is owed to them. If so, it is often tricky as a Litigant in Person (“LiP”) to know where to begin or how to defend yourself. diyLAW aims to alleviate these difficulties.
We cover here some basic information which is generic to most claims.
Where there is no relevant pre-action protocol, the parties should exchange correspondence and information. Thereafter the steps will usually include:
(a) the claimant writing to the defendant with concise details of the claim. The letter should include the basis on which the claim is made, a summary of the facts, what the claimant wants from the defendant, and if money, how the amount is calculated;
(b) the defendant responding within a reasonable time - 14 days in a straight forward case and no more than 3 months in a very complex one. The reply should include confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why, together with an explanation as to which facts and parts of the claim are disputed and whether the defendant is making a counterclaim as well as providing details of any counterclaim; and
(c) the parties disclosing key documents relevant to the issues in dispute.
Are they in time to bring a claim?
The guidance for this is set out in the Limitation Act 1980.
If the timeframes set out have expired, no further action can be taken. The claim will be considered as time-barred.
We recommend that if a claim is instituted against you, you ensure that you have collected all your evidence as soon as possible so that when the matter goes to court, you have everything you need available to assist you.
Small Claims Court
Where the claim has a value of £5,000 or less
Where the claim has a value of £25,000 or less; or a value of up to £50,000 and the issues in dispute are not complex and it is not a matter of public interest.
If the value of the claim is between £25,000 and £50,000 where the issues are complex and the outcome is of importance to the general public; or the value of the claim exceeds £50,000.
The High Court has three divisions as follows:
Queens Bench (Deals with breach of contract or tort)
The Queens Bench Division also includes the Admiralty Court and the Commercial Court
Chancery (Deals with trusts, contentious probate, partnership claims, land disputes and landlord and tenant disputes)
The Chancery Division also includes the Companies and Patents Courts
Various useful guides are produced by the separate divisions of the High Court (see the following link: https://www.judiciary.gov.uk/you-and-the-judiciary/going-to-court/high-court/)
Tips for the drafting of any documents that you submit to a court.
It is very important to produce clear and concise documents for use in the Court proceedings to assist the Judge and for the smooth running of proceedings.
Tips About Evidence
It is extremely important to ensure each claim is supported by all relevant and necessary documentation. Essentially anything can form evidence so long as it has been witnessed or documented in some way. The evidence should:
Prove/be relevant to particular facts or issues disputed
Be collated in chronological order
Be paginated/labelled for ease of reference
Be collated as soon as the decision to initiate Court proceedings has been made
Requests for copy documents from banks, authorities, etc should be made as early as possible
Examples of evidence are (not an exhaustive list):
Proceedings are transparent and therefore supporting evidence upon which a claimant / defendant wishes to rely must be disclosed early on or as requested at specified times throughout the proceedings.
Any evidence which is not openly disclosed usually cannot be relied upon.
If evidence is produced for the first time at trial it is likely the Judge will either:
not allow the information to be used; or
if the documents are considered as crucial evidence, it is likely the trial will be re-scheduled.
This will be to allow the other party(ies) to the proceedings time to respond to the late evidence. Such action, however, will probably lead to a ‘Wasted Costs Order’ being made against you to pay the other party(ies) costs of the wasted trial day.
Be warned! Disclose all evidence early.
Serving documents on the other side
If the other side has instructed a solicitor to act on their behalf and the solicitor is authorised to accept service of documents then the Claim Form/other documents should be sent to the solicitor. Where there is no solicitor authorised to accept service of a Claim Form / other documents then the following applies:
|Person to be served with Claim Form/documents||Where?|
|Individual||Usual or last known home address|
|Individual being sued in the name of a business or of a partnership||As above or the principal or last known address of the business / partnership|
|Limited Liability Partnership ("LLP")||Principal office of the LLP, or any place of business of the LLP within Jurisdiction which is connected with the claim|
|Corporation incorporated in England and Wales (not a company)||Principal office of the corporation; or any place within Jurisdiction where the Corporation carries on its activities which has a connection with the claim|
|Company registered in England and Wales||Principal office of the company; or any place of business of the company within Jurisdiction which is connected with the claim|
|Any other company or corporation||Any place within Jurisdiction where the activities / business of the company / corporation are carried out|
Service of documents in practice
Of course, you cannot know precisely when the Claim forms / documents are actually served. Accordingly the Civil Procedure Rules provide for when service of a Claim Form / other documents are deemed to have occurred. Claim forms are deemed as served on the second working day after any method of service has taken place. Please note the following:
‘Working day’ is any day except: – Saturday, Sunday, a Bank Holiday, Good Friday, Christmas Day
Electronic method of service – If serving the documents to a solicitor representing the other party it is important to obtain confirmation from the solicitor that they are authorised and do accept electronic service of documents. Otherwise electronic service may not be valid.
|Deemed Service for Non-Claim forms|
|Personal Service||Personally served before 4.30pm on a working day then it is deemed as served on that same day. Otherwise, documents are deemed as served on the next working day after personal service occurred|
|First class post||Documents deemed as served on the second working day after being posted|
|Courier / other service providing delivery on the next working day||Documents deemed as served on the second working day after being provided to the courier / other service providing delivery|
|Delivery of documents to / leaving documents at a permitted address||If the documents are delivered to / left at a permitted address before 4.30pm on a working day they are deemed as served on that same day. Otherwise deemed service will be on the next working day|
|Fax||If the fax transmission completes before 4.30pm on a working day, service is on that same day. Otherwise service is deemed on the next working day after the fax transmission|
|Other electronic method||By email or other electronic transmission before 4.30pm on a working day deemed service is the same day; otherwise deemed service is the next working day after it was electronically transmitted|
Respond to a Court Claim for Money
How to respond
You will be sent a form by a court if someone claims you owe them money. You must respond to it within 14 days.
You can respond by:
paying the full amount outstanding
paying the amount that you think you owe
defend the claim (if you have already paid or do not believe that there is a valid claim against you)
They may get a judgment against you if you do not respond in time.
If you need more time to respond
You can ask for more time to respond (an additional 14 days) if you are going to defend the claim or pay only what you think you owe.
You must complete an acknowledgement of service form and send it to the address of the court that is listed on the claim form.
Pay the full amount
Send your payment to the person or company that you owe money to. Their details will be on the claim form. Ensure that you keep proof of the payment that you have made.
If you are not able to pay the full amount at once
You can make an offer to pay the amount you owe in instalments or by a specific date.
In order to do so, download and fill in the relevant court forms. Either:
You must set out how you want to pay and how much you want to pay (eg £100 per month) and send the completed form to the address on the claim form.
If the claimant does not accept your offer, the court will decide how much you will have to pay and how to pay it.
If you have already paid the amount that has been claimed
You must defend the claim against you if you have already paid. This is to ensure that the claimant does not take a judgment against you. You may still be liable for court fees if you only paid in full after court proceedings were started against you.
Pay a portion of the amount claimed
If you do not agree with the amount that is being claimed from you, you can make an application to court so that you only pay what you think you owe and not the full amount that is being claimed. You need to send an admission form to the court that sets out how much you will pay plus a document that sets out why you do not owe the full amount that is being claimed (ie your defence).
Defending a claim against you
You can defend a claim against you if:
you do not think that the claim is valid and that you do not owe any money
you have already paid them
the amount that they are claiming is not what you think you owe them.
If you think that they owe you money then you can submit a claim against them (a counterclaim).
Attending a hearing at court
If there is a court hearing you can either:
represent yourself; or
pay for a barrister or solicitor to represent you.
The court hearing will either be held in the judge’s chambers or in a court room. If the claim is higher than £10 000 there will usually be a more formal court hearing.
What happens after the hearing has taken place?
The court will give you a decision on the day of the hearing. It will also send you a copy of its decision by mail.
Appeal the decision
You can appeal the decision if you think the judge made a mistake during the hearing. Please see the section called “Appealing a Judge’s Decision” for more information on this.
If someone claims that you owe them money they can go to court and get a judgment against you if you do not respond to the court claim in time or at all or if the court finds that you do owe them the money.
Please remember that you only you have 14 days to respond to the claim.
If someone takes a judgment against you, this means that the court has formally decided that they do have a claim against you and that you owe the money.
The judgment will come in the post and will explain:
the exact amount that you owe (which may include interest and costs)
how you need to pay (in full or in instalments)
by when you have to make payment
who you need to pay.
Judgment records are kept for six years unless you pay the full amount within a month - this can make it hard to get credit.
If you do owe the money, you must make arrangements to arrange to pay as much as you can afford.
If you do not owe the money and someone has taken judgment against you you can ask the court to set the judgment aside (cancel the judgment). You can do this if you did not receive the original claim from the court saying you owed the money or if the claim is wrong.
To have a judgment set aside, you will need to complete the relevant form (application notice N244) and submit it to the court. There may be a court fee that you will have to pay in the amount of £255.
When the court notifies you of the hearing, you will have to attend and set out why you do not owe the money. If you fail to attend the court hearing, your application will be rejected and you will be liable to make payment of the amount of the judgment.
If you do owe the money you will need to pay it – either to the person, company or their solicitor. Have a look at the form that you have been sent as it will provide you with the relevant details.
Keep a record of your payments and make sure you pay on time.
If you pay the full amount of the judgment within a month you can get the judgment removed from the register. This will mean that there will be no record of the judgment against you and no potential negative impact on your credit record.
If you pay the full amount more than a month after the judgment was taken, you can get the record of the judgment marked as ‘satisfied’ in the register. It will remain on the register for 6 years but people searching the register will see that you it has been paid. You will need to contact the court to tell them that you have made payment so that they can record it accordingly and you will need to give them proof that you have made the payment.
If you’re paying by instalments, ask the person or business you owe the money to what the best way to pay is.You may want to set up a standing order to pay the money directly from your bank account.
If you do not make payments when you are supposed to you could be taken back to court and then be responsible for extra costs.
You can request that the instalment amount be reduced. You will need to complete the relevant form and set out how much you earn, how much you spend and how much you can afford to pay. You will need to provide this to the court. If they are not happy with your proposal then the court will decide on what you need to pay.
The person or company you owe money to may use bailiffs to collect it from you. Before they do, they will have to apply to court for a warrant which will authorise the bailiff to come to your home. You will get time within which to pay before they come – usually 7 days.
If you have other judgments against you or more debt you can make arrangements to pay these off in a single weekly or monthly payment and this will stop your creditors taking further action against you. This option is only available if the total amount of your debt is less than £5000.
If someone takes a judgment against you it remains on the Register of Judgments, Orders and Fines for 6 years. Banks and credit card companies will access this register and then use this information to decide whether to give you credit or loans.
Paying Off Your Debt
If you owe people money you can make arrangements to pay off your debts - depending on how much you can afford to pay.
There are various ways of doing this
You can pay your debts in instalments if you can afford to, by setting up:
an administration order when you’ve had a county court judgment (CCJ) or a High Court judgment (HCJ) against you for debts that are less than £5,000; or
a debt management plan which is an agreement with your creditors managed by a financial company; or
an individual voluntary arrangement which is managed by an insolvency practitioner.
Where you do not have enough money or any assets you can sell to settle your debts, you can apply for a debt relief order (DRO) or an order for bankruptcy. You might even be able to reach an informal agreement with your creditors.
This is used where you have a judgment against you and you are not able to settle the judgment in full. The amount of the debt must be less than £5000.
Essentially what happens is that you make a payment once a month to your local court. The court will then take this money and divide it amongst your various creditors. Any creditors that are listed on the administration order are prohibited from taking any further action against you to claim payment, without the court’s consent.
Complete an application for an administration order on the specified form and return it to your local court. The court will then decide:
what portion of your debt you will need to pay back eg all or just a portion of the debt
what the amount of your monthly instalments will be
the duration of the administration order
You will have to pay a fee to the court every time you make a payment but this can never be more than 10% of the debt amount.
In order to qualify for an administration order:
the debt must be less than £5,000 (including interest and costs);
you must owe money to at least 2 creditors;
you will need to prove that you can afford regular repayments
there is a county court or High Court judgment against you, which you are unable to pay in full
It is your responsibility to ensure that you keep making your payments every month. If you do not then the court can:
request that you employer take money every month from your salary/wages to settle your obligations (this is known as an “attachment of earnings order”); or
cancel the arrangement.
Register of Judgments, Orders and Fines - Records available to the public
Your administration order is added to the Register of Judgments, Orders and Fines.
It is usually removed 6 years after the date the order was made.
Your entry is marked as ‘satisfied’ if you repay your debts in full. You can also ask the court for a ‘certificate of satisfaction’.
Debt Management Plans
A Debt Management Plan is an agreement between you and your creditors to pay off all of your debts. Debt management plans are usually used either when:
you can only afford to pay creditors a small amount each month; or
you have debt problems but will be able to make repayments in a few months
You can put a debt management plan in place with your creditors yourself or through a licensed debt management company for a fee. If you choose the latter then it means that:
you will make regular payments to the company; and
the company will share the money out between your creditors.
Put a debt management plan in place with a debt management company that is authorised by the Financial Conduct Authority. Use this link to the Financial Services Register (https://register.fca.org.uk) to search for an authorised company. It will then work out how much you need to pay each month based on the information that you have provided to them about your financial position (such as your assets, debts, income, who you owe money to and how much you owe).
They will then contact your creditors and ask them to agree to the proposed plan. If they agree then an agreement will be entered into. It is important to have an agreement put in place as if there is nothing in an agreement your creditors can still ask you to pay what you owe them and proceed with court action to recover their money even if you are making payment to them.
There may be costs involved in this as some of the debt management companies may charge a fee to you when you set up the arrangement and may also charge you a fee every time you make a payment to them.
Individual Voluntary Arrangements (IVA)
This is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an insolvency practitioner, who will then allocate the funds to your various creditors. In order to get an IVA put in place you will need to contact an insolvency practitioner who will assess how much you can afford to pay and how long the IVA should be in place for. Your insolvency practitioner will contact your creditors and if 75% or more of them agree to the IVA, it will then start. It will apply to all your creditors, even those that did not agree to it and will stop them taking any action against you to collect their debts.
There will usually be costs associated with setting up an IVA – these will be a fee to set it up and an administration fee each time you make a payment.
You need to ensure that you keep making payments – if you do not, the IVA can be cancelled and the insolvency practitioner can apply to court to have you declared bankrupt.
Details of your IVA will be included on the Individual Insolvency Register. They will be removed 3 months after the IVA has terminated.
Debt Relief Orders
Where you owe less than £20 000 in total you can get a Debt Relief Order (DRO). These are used where you do not own property and have little income left over to use to settle such debts (usually less than £50 per month). Once you get a DRO, your creditors may only recover their debts with the courts permission and you are released from your debts after 12 months. This means that a DRO freezes your debit repayments and interest for a period of 12 months. If your financial situation has not improved then your debts will be written off.
In order to qualify for a DRO you must:
owe less than £20000;
have less than £50 per month to allocate to repayment of your debts;
have less than £1000 in assets;
have lived or worked in the UK/ Wales for the past 3 years;
not have previously applied for a DRO.
There are certain restrictions that apply if you get a DRO. You may not:
borrow more than £500 unless you have told the lender about the DRO;
be a director of a company;
create, promote or manage a company without a court’s consent;
open a bank account without advising the bank about the DRO.
These restrictions are usually in place for 12 months but can be extended.
You can get a DRO from the official receiver who is an officer of the bankruptcy court but you have to apply through an authorised debt adviser. You can find a list of businesses that can help you find an authorised debt advised on the www.gov.uk website (https://www.gov.uk/government/publications/getting-a-debt-relief-order).
When you have a DRO you are still responsible for paying for your rent and bills, certain debts such as a court fine or student loan. It can be cancelled if your financial position improves or you fail to co-operate with the official receiver. If you acquire more debt after your DRO has been put in place, you can get a bankruptcy order and be prosecuted if you fail to advise your new creditors about your DRO. Details of your DRO will be included in the Individual Insolvency Register. It is only removed 3 months after your DRO has ended but it stays on your credit record for 6 years.