Over commitment and financial hardship may mean missing a repayment instalment. Within seven days this can rapidly escalate to a default notice being issued demanding payment of the total amount outstanding on the balance by a set date, as well as contractual interest and recovery costs.
Seeking help with your debts at this stage may help prevent further enforcement action. However, we often find that our clients wait to receive a claim form or warrant before approaching us for debt consolidation advice. Whilst we are still able to negotiate at this stage, or even submit a defence to the County Court Judgment, action needs to be taken within 14 days of the date of service. This may be extended if there is a case to have the judgment set aside.
The advantage to a County Court Judgment for Consumer Credit Act claims is that interest and statutory interest is not charged unless instalment payments are missed.
Problems arise where a creditor applies to court for contractual interest to be added to the judgment debt. The conditions, amount and application of contractual interest are contained in the original finance agreement signed by the client and the creditor when the loan agreement was signed. This must be requested in the particulars of claim and the creditor has to apply for a judgment called Interlocutory Judgment.
Although post Judgement creditors have the right to purse interest, it must be noted that such claim for interest must be independently pursued in the court via fresh proceedings and that: ‘The Office of Fair Trading (OFT) position is, the contractual interest after judgement condition can be activated but that it is an unfair contract term’ (Mary Sullivan, 1999, Quarterly Accounts).
Specialist advice has been sought from Sally Coles on this subject, who informs us that ‘post judgement creditors have a right to pursue interest, but unless you choose to pay them they can’t enforce it’.
If you have recently received a County Court Judgment, or are struggling to manage your finances, contact one of our specialists today. They will be able to advise you on the best programme for you, whether that be debt management, bankruptcy, debt relief orders, administration orders, remortgages or individual voluntary arrangements (IVAs).