Release 22.7Debt Advice Handbook (13th edition)PrelimsThe authorsAcknowledgementsForewordContentsHow to use this handbookAbbreviationsIntroductionChapter 1: Debt advice: an outline1. Professional debt adviceEnsuring good practiceThe client's best interestsA professional attitudeA commitment to social policyA sound knowledge of law and proceduresA commitment to developing the serviceA systematic approachAn ability to involve the client in informed choices2. The debt advice systemStages of the debt advice processInformation to clientsMonitoring creditor practicesCredit reference agenciesRecording defaultsIf the information held is incorrect3. AdministrationThe triage interviewMaking appropriate referralsCase recordingCorrespondenceReviewsClosing casesChapter 2: Key skills1. Interviewing2. NegotiatingCASHflow3. Letter writingFormat of a letterUse simple languageAssume nothingHolding lettersUse a framework4. Representing clients in courtType of hearingChambersOpen courtUseful techniquesPlan wellBe briefSummarisePrepare clear documentsTell the storyQuote precedents and powersAdmit ignoranceUse court staffAddress the judge or magistrateLook smart, be polite, speak clearlyKnow your own limits5. Changing policyThe Financial Conduct AuthorityOfgem, Ofcom and OfwatTrade associationsLocal councillors and MPsOmbudsmenThe Parliamentary and Health Service OmbudsmanLocal Government and Social Care Ombudsman/Public Services Ombudsman for WalesThe Adjudicator’s OfficeThe Financial Ombudsman ServiceOmbudsman Services: EnergyLegal OmbudsmanMonitoring local courtsLocal liaison groupsUsing the media6. Ensuring good practiceDealing with harassmentThe Consumer Credit SourcebookCodes of practiceClients with mental health problemsGuidance on dealing with clients with mental health problems7. Budgeting adviceThe financial statement’Luxury’ itemsThe client’s non-dependantsFinancial inclusion: MoneyhelperCredit unionsChapter 3: Stages of debt advice1. Exploring the debt problemObtaining information from the client2. Dealing with urgent issues3. Listing creditors and minimising debtsThe creditorsThe debtsThe threatsAction to be taken4. Listing and maximising incomeWhose income to includeWhat income to includeCapitalMaximising the client’s income5. Listing expenditureItems of expenditureHousingChildcareFuelFurniture and beddingHealth costsTransportHire purchaseFinesLaundry and dry cleaningTelephone, television and broadbandOther household items, toiletries and foodClothing and shoesGifts, charitable donations, and religious and cultural activitiesOther costsBank accounts6. Dealing with priority debts7. Drawing up a financial statementThe common financial statementThe standard financial statement8. Choosing a strategy for non-priority debts9. Implementing the chosen strategiesChapter 4: Consumer credit1. Introduction2. Authorising traders3. Regulated agreementsExempt agreementsHigh net worth borrowersLoans for business purposesBuy-to-let mortgagesSecured loansThe form of the agreementPre-contract informationAgreements made on or after 1 February 2011Information that must be in the agreementAgreements made before 31 May 2005Agreements made on or after 31 May 2005Agreements made on or after 1 February 2011Improperly executed agreements made on or after 6 April 2007Electronic communicationThe right to cancel: cooling-off periodDistance contractsSecondary contractsAgreements made on or after 1 February 2011Post-contract informationAnnual statementsArrears noticesDefault sum noticesDefault noticesHome-collected creditInterest after judgmentInformation sheetsChapter 5: Types of debtBank overdraftThe legal positionSpecial featuresChecklist for actionBill of saleThe legal positionSpecial featuresChecklist for actionBudget accountThe legal positionSpecial featuresChecklist for actionBusiness debtsThe legal positionChecklist for actionCharge cardThe legal positionSpecial featuresChecklist for actionChild support paymentsThe legal positionSpecial featuresChecklist for actionCivil recoveryThe legal positionSpecial featuresChecklist for actionConditional sale agreementThe legal positionSpecial featuresChecklist for actionCouncil taxProperty elementPeople elementLiabilityChecklist for actionCredit cardThe legal positionSpecial featuresChecklist for actionCredit sale agreementThe legal positionSpecial featuresChecklist for actionFinesThe legal positionSpecial featuresChecklist for actionGas and electricity chargesThe legal positionSpecial features of electricity and gas arrearsChecklist for actionHire purchase agreementThe legal positionSpecial featuresChecklist for actionIncome tax arrearsThe legal positionSpecial featuresChecklist for actionInterest-free creditThe legal positionSpecial featuresChecklist for actionMail order catalogueThe legal positionSpecial featuresChecklist for actionMaintenance paymentsThe legal positionSpecial featuresChecklist for actionMortgageThe legal positionSpecial featuresChecklist for actionMortgage shortfallThe legal positionSpecial featuresChecklist for actionNational insurance contributionsThe legal positionSpecial featuresChecklist for actionNon-domestic ratesThe legal positionSpecial featuresChecklist for actionPawnbrokerThe legal positionSpecial featuresChecklist for actionPayday loanThe legal positionSpecial featuresChecklist for actionPersonal loanThe legal positionSpecial featuresChecklist for actionPrivate parking chargesThe legal positionSpecial featuresChecklist for actionRentThe legal positionSpecial featuresChecklist for actionRevolving creditSecured loanThe legal positionSpecial featuresChecklist for actionTax credit overpaymentsThe legal positionSpecial featuresCourt actionChecklist for actionTrading cheque or voucherThe legal positionSpecial featuresChecklist for actionTraffic penaltiesThe legal positionSpecial featuresChecklist for actionValue added taxThe legal positionSpecial featuresChecklist for actionWater chargesThe legal positionSpecial featuresChecklist for actionChapter 6: Minimising debts1. IntroductionInaccurate calculations2. Using contract lawJoint and several liabilityGuarantorsAgentsThe wrong personForged signaturesLiability after a deathJointly owned propertyUnder-18-year-oldsContracts made under ’undue influence’Misrepresentation of the terms of the contractCapacity to make a contractHousing disrepairFaulty goods and servicesMistaken payments into bank accountsDefault chargesWhat is an unfair termWhat action to take3. Using the Consumer Credit ActRequests for informationWhen to make a requestPossible responses from the creditorIf the creditor does not complyUnauthorised creditorsEarly settlement of a credit agreementUnfair relationshipsWhat is an unfair relationshipIdentifying potential unfair relationship situationsPayment protection insuranceRemediesProcedural irregularitiesChapter 7: Maximising income1. Introduction2. How to use this chapterWhich benefits and tax credits can a client claim3. A–Z of benefits and tax creditsAttendance allowanceBereavement support paymentBest Start grants and foodCarer’s allowanceChild benefitChild tax creditDisability living allowanceEmployment and support allowanceGuardian’s allowanceHealth benefitsHealthy Start food and vitaminsHousing benefitIncome supportIndustrial injuries benefitsJobseeker’s allowanceMaternity allowancePension creditPersonal independence paymentRetirement pensionSocial fund paymentsStatutory adoption payStatutory maternity payStatutory paternity payStatutory shared parental payStatutory sick payUniversal creditWorking tax credit4. Calculating entitlementMeans-tested benefitsApplicable amountsEmployment and support allowance componentsMortgage interest loansCapitalIncomeUniversal creditElementsIncomeCapitalThe benefit capOverlapping benefit rulesDeductions from benefitsTax credits5. Other helpCharitiesChild maintenanceCivil compensation for damagesCouncil tax reductionEqual pay rulesFood banksFree school lunchesGuarantee payLocal welfare assistance schemesNational minimum wageNotice payPayments for war injuryPrivate and occupational pensionsRedundancy paySchool clothing grantsSchool transportSocial servicesSpecial funds for sick or disabled peopleStudent supportTax allowancesTax rebateTax reliefsTrade unionsAdditional support during the coronavirus outbreakChapter 8: Dealing with priority debts1. Deciding on prioritiesRecognising priority debtsSecured loansRentGround rent and leasehold chargesCouncil taxFines, maintenance and compensation ordersChild supportUtility chargesTV licenceTax and value added taxHire purchase, conditional sale agreements and bills of saleNational insurance contributionsTax credit overpayments2. The general approach to priority debtsPrioritise the debtsConsider the optionsPoints to note3. Strategies for dealing with priority debtsInterest-only payments (for mortgages and secured loans)When applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionReduced paymentsWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionCapitalise arrearsWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionScheduled payment of arrearsSecured loansRent, fuel and council taxWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionChange to a repayment mortgageWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionMortgage rescue schemesMortgage rescue and bankruptcyWhen applicableAdvantagesDisadvantagesChecklist for actionSale and rent-back schemesWhen applicableAdvantagesDisadvantagesChecklist for actionSale of the propertyNegative equityWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionRefinancingWhen applicableWhen refinancing is not applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionTime ordersWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionVoluntary chargeWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionDeductions from benefitsFactors to considerAdvantagesDisadvantagesChecklist for actionGas and electricity pre-payment metersWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for actionWriting off debtsWhen applicableAdvantagesDisadvantagesUseful argumentsChecklist for action4. Emergency actionPreventing fuel disconnectionPreventing the home being lostPreventing goods being taken control of by magistrates’ court bailiffsPreventing goods being taken control of for council tax arrearsPreventing the local authority taking bankruptcy proceedingsPreventing goods being taken control of by county court bailiffsPreventing goods being taken control of by High Court enforcement officersPreventing goods being taken control of by tax bailiffsPreventing imprisonmentWarrant with bailWarrant without bailCommittal hearingAfter imprisonmentChapter 9: Dealing with non-priority debts1. Choosing a strategyAvailability of incomeInsuranceAvailability of capitalRealisable assetsEquity in the homeChange of circumstancesThe amount owedType of debtRepayment periodEnforcement issues2. The general approach to non-priority debtsWhen debts may need to be treated differentlyDebt management plans3. Strategies for dealing with non-priority debtsRequest a write-offAdvantagesDisadvantagesUseful argumentsChecklist for actionRequest a partial write-offAdvantagesDisadvantagesUseful argumentsChecklist for actionRequest that interest be frozen or reducedAdvantagesDisadvantagesUseful argumentsChecklist for actionOffer a reduced capital sum in full and final settlementAdvantagesDisadvantagesUseful argumentsChecklist for actionOffer payment by a capital sum and instalmentsAdvantagesDisadvantagesUseful argumentsChecklist for actionHolding tactics (moratorium)AdvantagesDisadvantagesUseful argumentsChecklist for actionOffer token paymentsAdvantagesDisadvantagesUseful argumentsChecklist for actionEquitable distribution of available income (pro rata payments)AdvantagesDisadvantagesUseful argumentsChecklist for actionConsolidate the debtsAdvantagesDisadvantagesEquity release loansAdvantagesDisadvantagesChecklist for actionSelling the homeAdvantagesDisadvantagesUseful argumentsChecklist for actionVoluntary charge4. Court-based strategiesGeneral stayAdministration orderBankruptcy and debt relief ordersIndividual voluntary arrangementTime order5. Debt respite schemesBreathing space schemeStandard breathing space moratoriumMental health crisis moratoriumEnd of the moratoriumStatutory debt repayment plansChapter 10: Action in the county court: general1. Introduction2. Before starting court actionPre-action protocolsPre-action protocol for debt claimsAlternative dispute resolutionUsing the Financial Ombudsman Service3. Taking court actionTypes of claimApplications: Form N244Clients with mental health problems4. Court feesRemission of fees5. Time limitsAcknowledgementsPart payments6. Appeals and adjournmentsAppealing to a judgeAdjournmentsChapter 11: Action in the county court: money claims1. Starting a money claimDebts regulated by the Consumer Credit Act 1974Default noticeWhich court deals with the claimAutomatic transfersThe claim formThe particulars of claimResponding to the claim formFiling and serving documents2. Admitting a money claimThe admission and statement of means formCompleting Form N9A3. The judgmentThe creditor’s responseHow courts calculate instalment ordersThe amount is not more than £50,000If the amount is more than £50,000Redetermination by a district judgeDefault judgmentInterest charges after judgmentStatutory interestDiscretionary interestContractual interest4. Defending a money claimThe defence and counterclaim formChallenging the creditor’s costsAllocating the case to the appropriate trackThe tracksSummary disposal5. Enforcing a judgmentInformation orderWarrant or writ of controlCharging orderInterim charging orderFinal charging orderObjecting to the orderConditions attached to a charging orderSuspending a charging orderJoint ownership of propertyOrder for sale of propertyAttachment of earnings orderRequesting a suspensionHow the order is madeThe effect of an attachment of earnings orderConsolidated attachment of earnings orderThird-party debt orderHardship payment orderEnforcing foreign judgmentsScotland and Northern Ireland6. Preventing enforcementSetting aside a judgmentServing the claim formApplicationsSuspending a charging orderVarying payments due under an orderSuspensions and staysSuspension of a warrant of controlInsolvency optionsChapter 12: Action in the county court: possession of goods and propertyDebts regulated by the Consumer Credit Act 19741. Recovering goods on hire purchase or conditional saleThe client’s responseNegotiating before the hearingDecisions the court can makeWarrant of delivery2. Recovering propertyNegotiating before the hearing3. Recovering owner-occupied propertyGuidance to lendersPre-action protocolThe claim form’Possession claim online’After the claim form is issuedResponding to the claimCompleting Form N11MPowers of the court to deal with possession actionAdjournmentsSuspended possession ordersPostponing possessionThe warrant of possessionArguing against a possession orderTime ordersWhen a time order is appropriateApplicationsThe amount dueHow much to offerVarying other termsReviewsAfter property has been repossessed4. Recovering rented propertyGuidance to social landlordsThe claim formResponding to the claimWhat counts as rent arrearsPowers of the court to deal with possession actionAssured tenantsThe warrant of possessionTenants of properties with mortgage arrearsArguing against a possession orderArrears because of non-payment of housing benefitPostponing possession5. Preventing enforcementSetting aside a judgmentSuspending a warrant of deliveryVarying the terms of a suspended or postponed possession orderSuspending a warrant of possessionAppealing to a judgeAdjournmentChapter 13: The magistrates’ court1. The magistrates’ courtThe role of the adviser2. Financial penaltiesCompensation ordersPaymentsTransfer of finesRemitting finesLodging finesMeans enquiryFixing a return dateVarying and setting aside a financial penaltyRegistration of the financial penalty3. Enforcing a financial penaltyCollection orderIf the client is an existing defaulterIf the client is not an existing defaulterAttachment of earnings ordersDeductions from benefitsVarying the terms of a collection orderIf the attachment of earnings order or deductions from benefits failsIf the client defaults on the collection orderAppeals and referralsWarrant of controlThe use of bailiffs (enforcement agents)Clamping orderMoney payments supervision orderImprisonmentShort local detentionAttendance centre orderHigh Court and county court orders4. Council taxLiability ordersIssuing an orderAfter the liability order is madeSetting aside a liability orderCommittal to prisonOutcome of the committal hearing5. Wilful refusal and culpable neglectChapter 14: Bailiffs1. Introduction2. When bailiffs are usedCivil court judgments and ordersHigh Court judgmentsCounty court judgmentsRoad traffic penaltiesCommercial rent arrearsOther debtsLocal taxesDebts to HM Revenue and CustomsMagistrates’ court ordersChild support maintenance3. How bailiffs are instructedHigh Court writ of controlCounty court warrant of controlRoad traffic penaltiesCommercial rent arrearsIncome taxVATLocal taxesMagistrates’ court order4. Bailiffs’ powersCourts and the enforcement processThe enforcement noticeBinding the client's goodsEntering premises and identifying vulnerabilityTimePlaceMethod of entryIdentificationTaking control of goodsTime and placeWays of taking control of goodsWhich goods can be takenInventoriesSelling goodsRemoving goods for saleThe saleFinal accountsFees and expensesFeesExpensesCosts of selling the goodsExceptional costsMultiple warrantsVulnerable clientsIf a client disputes the fees5. Complaints about bailiffsTaking court actionComplaining to the bailiffComplaining to creditorsComplaining to a professional organisationComplaining to the OmbudsmanCourt proceedings6. Emergency actionRefuse the bailiff accessGet the warrant withdrawn from the bailiffRaise a lump sum to clear the debtChapter 15: Personal insolvency1. Insolvency options: summary2. Administration ordersCompleting the application formThe proposed orderComposition ordersThe court hearingReviewing an administration orderRevoking an administration order3. When to use bankruptcy and individual voluntary arrangementsRisk to current assetsRisk to future assetsEffect on future creditEffect on employment or officeEffect on housingEffect on reputation and stressCosts4. Individual voluntary arrangementsWhen an individual voluntary arrangement is appropriateStraightforward consumer individual voluntary arrangementsThe individual voluntary arrangements protocolThe client’s homeStandard terms and conditionsAdvantages and disadvantagesAdvantagesDisadvantagesApplying for an individual voluntary arrangementThe proposalAfter the proposal is madeInterim ordersThe creditors' decisionAfter the meetingClients at risk of violenceChallenging an individual voluntary arrangementCompleting the individual voluntary arrangementComplaints against insolvency practitioners and individual voluntary arrangement providers5. BankruptcyWho can become bankruptAdvantages and disadvantagesAdvantagesDisadvantagesIf a client wants to make her/himself bankruptThe debtor’s bankruptcy applicationThe adjudication processIf a creditor wants to make a client bankruptServing a statutory demandChallenging a statutory demandResponding to a statutory demandSetting aside a statutory demandThe creditor’s petitionThe bankruptcy hearingIf a supervisor of an individual voluntary arrangement wants to make a client bankruptAfter a bankruptcy order is madeThe role of the official receiverClients at risk of violenceThe role of the trusteeProvable debtsRestrictions during bankruptcyPre-discharge restrictionsPost-discharge restrictions: bankruptcy restrictions orders and undertakingsHow bankruptcy can affect a clientProtected goodsBank accountsUtility companiesMotor vehiclesIncome payments ordersIncome payments agreementsPensionsInsurance policiesStudent loansOwner-occupied homesRented accommodationTransactions at an undervalue and preferencesEnforcement action by creditorsDischargeProvable debtsContingent debts and liabilitiesAnnulment6. Debt relief ordersDebt relief orders and bankruptcyWho can apply for a debt relief orderQualifying debtsIssues with particular types of debtQualifying conditionsIssues with particular types of expenditureIssues with particular types of propertyIssues with particular types of propertyMaking the applicationAfter the application is madeReporting changes in circumstancesThe effect of a debt relief orderPayments to creditorsThe role of intermediariesThe role of the official receiverOffences and restrictionsChapter 16: Business debts1. Introduction2. Types of small businessSole traderPartnershipLimited companyCo-operatives and franchisesLimited liability partnership3. Stages of debt adviceCreate trustList creditors and minimise debtsMinimising debts because of COVID-19Minimise debts by ceasing to tradeMinimise other debtsList and maximise incomeCOVID-19 helpList expenditureDeal with priority debtsServicesNon-domestic ratesRent arrearsLeased premisesOther leasesVAT debtsIncome tax debtsDraw up a personal financial statementChoose a strategy for non-priority debtsChapter 17: Student debt1. Financial support for studentsAdvising students2. Stages of debt adviceExploring the debt problemList creditors and minimise debtsList incomePeriod to be usedList expenditure3. Types of debtBank overdraftSpecial featuresDebts to the educational institutionAccommodation chargesFines and other chargesTuition feesRecovery of debts to the institutionGraduate loanThe legal positionSpecial featuresIncome-contingent student loanScheme one loansScheme two loansMortgage-style or fixed-term student loanThe legal positionSpecial featuresChecklist for actionOverpaid grant for living costsThe legal positionSpecial featuresOverpaid income-contingent student loanSpecial featuresProfessional and career development loanSpecial featuresProfessional studies loanThe legal positionSpecial features4. Minimising debtsReducing council tax bills5. Maximising incomeBank loansBank overdraftsBenefitsUniversal creditChild tax creditHealth benefitsHousing benefitIncome supportIncome-based jobseeker’s allowanceStudents taking time out from their studiesBursariesCharitiesEmploymentTax refundsGrantsMaintenance grant in EnglandWelsh government learning grantTravel allowancesCare leaversSocial work coursesHardship fundsLoans for living costsIncome-contingent student loansLong courses loanStudying abroadChange in circumstancesNHS bursariesPart-time supportPostgraduate supportProfessional studies loansResearch councilsSupplementary grantsDisabled students’ allowanceAdult dependants’ grantChildcare grantParents’ learning allowanceTeacher training incentivesHelp with tuition feesAdditional funds to assist students6. Dealing with priority debtsAppendix 1: Useful organisationsTrade bodiesAssociation of British InsurersAssociation of Chartered Certified AccountantsBritish Insurance Brokers’ AssociationCivil Enforcement Association (CIVEA)Consumer Credit AssociationConsumer Credit Trade AssociationConsumer Finance AssociationCredit Services AssociationFinance and Leasing AssociationHigh Court Enforcement Officers AssociationInsolvency Practitioners AssociationInstitute of Chartered Accountants in England and WalesLending Standards BoardR3 (Association of Business Recovery Professionals)UK FinanceUK Payments AdministrationOmbudsmen and regulatory bodiesThe Adjudicator’s OfficeDepartment for Business, Energy and Industrial StrategyDepartment for EducationDepartment for Education and Skills WalesFinancial Conduct AuthorityFinancial Ombudsman ServiceInformation Commissioner’s OfficeThe Insolvency ServiceThe Law Society (England and Wales)Legal Ombudsman (England and Wales)Local Government and Social Care OmbudsmanMinistry of Housing, Communities and Local GovernmentOfcom (Communications Regulator)Ofgem (Office of Gas and Electricity Markets)Ofwat (Water Sector Economic Regulator)Ombudsman Services: EnergyParliamentary and Health Service Ombudsman (England)The Pensions OmbudsmanPublic Services Ombudsman for WalesWelsh governmentOrganisations giving advice or representing advice networksAdviceUKAssociation of British Credit UnionsBusiness DebtlineCitizens AdviceInstitute of Money AdvisersLaw Centres NetworkMoney Advice ServiceMoney Advice TrustNational DebtlineNational Union of StudentsShelter's Specialist Debt Advice TeamTaxAidUCAS (Universities and Colleges Admission Service)UKCISA: UK Council for International Student AffairsAppendix 2: Useful publicationsDebtIncreasing resourcesCourts and the lawSkillsPeriodicals and ebulletinsAppendix 3: Abbreviations used in the notesIndex