Debt Problems

When Should I Get Legal Help with Debt?

You should seek legal advice if:

- You are being threatened with court action by a creditor - Bailiffs have contacted you or visited your home - You are being chased for a debt you do not believe you owe - Your home is at risk of repossession - You are considering bankruptcy or an Individual Voluntary Arrangement (IVA) - You are a business owner facing insolvency

Free debt advice is available from organisations like StepChange, Citizens Advice, and National Debtline. These should be your first port of call for consumer debt. A solicitor becomes necessary when you face court proceedings, need formal insolvency advice, or have a complex situation involving business debts.

Your Legal Options for Dealing with Debt

**Debt Management Plan (DMP)** — An informal arrangement where you make reduced payments to your creditors. No legal protection, but creditors often agree. Free to set up through a charity like StepChange.

**Individual Voluntary Arrangement (IVA)** — A formal, legally binding agreement to repay a percentage of your debts over 5-6 years. Creditors cannot chase you once an IVA is in place. Typically used for debts of £10,000+. Costs around £5,000, which is usually taken from your payments.

**Debt Relief Order (DRO)** — For people with debts under £30,000, assets under £2,000, and a low income. Costs £90 to apply. After 12 months, your debts are written off.

**Bankruptcy** — A last resort for serious debt. Your assets may be sold to pay creditors, but after 12 months you are usually discharged and your remaining debts written off. Costs £680 to apply. Affects your credit rating for 6 years.

**Breathing Space** — A government scheme that gives you 60 days' protection from creditor action while you get debt advice. Interest and charges are frozen.

Your Rights When Dealing with Debt Collectors

Debt collectors and bailiffs must follow strict rules. You have the right to:

- **Not be harassed** — Creditors cannot contact you at unreasonable times, use threatening language, or contact you at work if you have asked them not to - **Dispute a debt** — If you do not believe you owe the money, write to the creditor asking them to prove the debt. They must stop chasing you until they provide proof - **Control bailiff access** — Bailiffs cannot force entry to your home on their first visit (with limited exceptions for criminal fines and tax debts). They cannot enter through a window or take essential items - **Claim statutory time limits** — Most debts become unenforceable after 6 years if no payments have been made and no court judgment has been obtained (the Limitation Act 1980)

If a debt collector breaks these rules, you can complain to the Financial Ombudsman Service or report them to Trading Standards.