Minimise other debts

Sometimes the security is not enforceable if the agreement was entered into as a result of undue influence or misrepresentation by the creditor or another client. This may occur if a person, who is not the borrower, is asked to agree to a charge (security) being made on a property that they either jointly own or have an interest in (perhaps because they live with the owner).

In one case, it was decided that a charge was not enforceable when a client’s wife had signed it but had not been recommended to take separate legal advice and had been told that her husband’s business would be closed down by the bank if she did not do so.1Royal Bank of Scotland v Etridge [2001] UKHL 44, reported as [2002] HLR 4 The law is complex in this area.

If undue influence or other wrongdoing occurred when the security was signed, specialist or legal advice should be obtained.

The debts owed by a self-employed person may include tax debts. If a client is unsure whether they have taken into account all the allowances available to them personally and to the business, signpost them to an accountant or bookkeeper for specialist advice. You will also need to refer the client for specialist help (eg, from TaxAid2taxaid.org.uk) if they have failed to submit tax returns.