If two people jointly enter into a credit agreement, they are both liable
for the whole amount of the debt. This is known as 'joint and several
liability'. For an agreement to be joint and several, it must be signed
by all parties in the form required by the Consumer Credit Act. So, if
you have not signed such an agreement, you are not liable for your
partner's debts.
However, joint and several liability can also apply to rent arrears on
joint tenancies, or arrears on joint mortgages, to council tax payments
for couples and to water/sewerage charges on properties which are jointly
occupied. You need to talk to the individual
creditor to obtain a clear understanding of the liability for the debt.
Any debts become the liability of your estate. If there were sufficient
assets in your estate to settle your debts then this would be done by
the executors.
Creditors may sometimes attempt to claim payment from a partner or relative
of the deceased, particularly if they lived with them, but if the estate cannot
settle the debts, partners or relatives are not obliged to do so.
There are several possible exceptions to this rule:
-
Debts for which someone had
joint and several liability with the deceased.
-
A mortgage remains on a property even if this passes to a new owner by
inheritance (although it may be paid off by an insurance policy at death).
-
Taking over tenancy from the deceased by succession, which may
involve taking over rent arrears if these cannot be paid by the estate.
A tenant by succession can lose their home if the arrears are not paid.
-
For married couples, there is joint liability for rates. In the
event of a spouse's death, the surviving partner will become liable
for payment of rates but not for any arrears owed by the deceased spouse.
It is always worth checking to see if there is payment protection or
other insurance in place to clear the debts on death.
The steps which a
creditor must take to have a debt enforced are as follows:
-
Notice of intent to enforce a
money judgment
-
Application to enforce a
money judgment
-
Issuing a
custody warrant
-
Examination of means of
debtor
-
Report of examination issued to
creditor
-
Enforcement decision made by Enforcement of
Judgments Office (EJO)
-
Enforcement decision issued to the
creditor
(This is a basic summary and debts can be dealt with in a
slightly different manner in some circumstances).
Notice of intent to enforce a money judgment -
This proves that you legally owe the money. The notice gives you 10 days
to comply with the terms of the
judgment. At this stage there still remains
the opportunity for you to come to some sort of arrangement with the
creditor.
Application to enforce a money judgment -
An application to enforce a
money judgment has to be lodged within 3 months
of the date of issue of the notice of intent, unless the
creditor obtains an extension of time from the Chief Enforcement Officer.
Issuing a custody warrant -
When the EJO has accepted an application for enforcement, a
custody warrant is issued and served to the debtor. As a result, your
possessions with the exception of bedding and goods used in the ordinary
course of your business, are deemed to be in the custody and possession
of the EJO. This is usually delivered by post, however, sometimes a member
of the EJO may visit your home and compile a list of the items which are
subject to the custody warrant. The items listed are not removed from the
property and in most cases are not seized. If your goods are subject to a
custody warrant you must not interfere with or dispose of them - such
removal is an offence.
Examination of means -
After the service of a
custody warrant, the EJO will conduct an investigation into the
debtors financial circumstances. In practice,
information is acquired through an interview by an enforcement officer
and / or the serving of a summons requiring you to attend for an
examination of means. These hearings are held in Bedford Street in
Belfast or at centres in Armagh, Ballymena, Londonderry, Enniskillen
and Omagh. It is important to attend this hearing and failure to attend
without a reasonable excuse can lead to you being arrested and taken
directly to the EJO.
The hearing is conducted in private and is very formal. The purpose
of the hearing is to allow the EJO to compile a report on your
financial circumstances. You may bring a lay representative or a
solicitor to the hearing.
The report or notes of evidence of the enforcement -
The report is sent to the
creditor who can then further assess the chances of recovering the debt.
Enforcement decision made by the EJO and issued to the creditor
The EJO uses its discretion as to which methods to use, taking the individual's financial
circumstances into consideration.
Judgments are recorded on the Credit Reference Files maintained by Credit Reference
Agencies. The entry on your file may affect your ability to obtain further credit as most lenders check these files
to help them decide whether or not to grant credit.
Creditors record only factual information on individuals such as missed or reduced payments and the general
'blacklisting' of families or addresses is a misconception.
You can obtain a copy of your credit file by contacting one of the credit reference bureaux direct.
There is a small fee for this information.
Click on any of the links below to obtain more information.
www.uk.experian.com
www.equifax.co.uk
www.callcredit.co.uk
If you do not make payments under an
instalment order, the EJO will
issue a default payment letter asking you to update the arrears.
If you fail to do so they will inform your
creditors who will go back to the High Court where committal proceedings
can be taken. If your circumstances change and you cannot maintain the terms of
the order you should contact the EJO immediately, to reassess your means to pay.