MONEY TRICKY TRICKS : WHAT'S THE WORST THAT CAN HAPPEN?

If you were to have had unmanageable debts in the Victorian era then you could have ended up in a debtors prison. Thankfully there are no debtors prisons any more. Unfortunately in this country there is still a great deal of stigma attached to having debt problems.

However, as already stated earlier, there are so many millions of people with debt problems today that it is really quite surprising that, apart from the real worry that having debt problems can cause, this is further compounded by being embarrassed or even ashamed of the situation. Don't be - being in debt is not a criminal offence - and whatever problems it causes, these can always be overcome with determination and effort.

If you don't get in touch with your creditors as soon as any payment problems become apparent, then there is every chance you will be served with a default notice. This is a legal notice which any creditor can issue in the event of the correct payments not being received by them. Default notices are recorded by credit reference agencies and are kept on record for six years. Having default notices can adversely affect any future applications for credit.

If you write to your creditors and make arrangements for a reduced schedule of repayments then it is unlikely that, provided that you make such arrangements early enough, you will not be served with default notices. These notices must be issued by any creditor prior to them taking any legal action through the County Court (Sheriff Court in Scotland).

If you receive a default notice and have not already entered into an agreement with the creditor where they will accept reduced payments then you must contact them immediately if you want to avoid the case going to court. They do not particularly want to have to take legal action because of the inconvenience it will cause them.

They also know that a court will nearly always allow a debtor time to pay - often by very small instalments over a very long period of time - so they are generally happier to make these arrangements with you directly, especially if it means that, should your situation improve, they can then begin to collect larger instalments and re-introduce interest on your account.

One distinct advantage of having your case heard in court is that there will definitely be no further interest added to the money owed and provided that you can keep up the very small instalments which you should be able to secure, you will hear no more about the case. You simply keep paying until the balance is cleared. This could take several years, but your debt is accruing no interest, so, apart from any personal desire to get the debt cleared you have little incentive to do anything other than to take the longest time to pay it.

If you find that you cannot keep up repayments which you are making under the order of a court, then you can apply, at any time to have these reduced. Write to the Clerk of Court and explain why you are unable to maintain payments at the level ordered. Providing you have a valid reason for requesting a further reduction there is every possibility that your request will be granted.

What you must never do is to simply allow yourself to miss payments ordered by the court. If you do this there is a strong possibility that bailiffs will be appointed to call at your home to collect payment. If you do not have the money to pay them they will then obtain a Distress Warrant from the court. This gives them authority to seize your personal property for sale at auction to raise money towards payment of the debt.

Bailiffs cannot force an entry into your home. If they do call, do not let them in. If you let them in once, then, when they return, they have authority to enter your home through unlocked windows or any way they can without forcing an entry. Once inside your home they have authority to force internal doors. They are allowed only to seize certain items. They cannot take fixtures and fittings. You are also entitled to keep the minimum of "essential" furniture - a bed, a table, a chair for each member of the household, a cooker, etc. They are also not allowed to seize your "tools of the trade", if you have these, since you are entitled to keep them to earn your livelihood.

They cannot take property belonging to anyone other than the debtor, but sometimes they will anyway, and then it will be up to you to try and sort the matter out with the owner. If the owner can show proof that goods belonging to him have been seized then he can claim them back. However, if proof is not available then it will be up to you to make amends with them for their loss.

Bailiffs also cannot seize goods which are on a hire purchase or similar credit agreement, unless they belong to the creditor who has made an application to get them back. You must be able to show documentation which shows that such items are still the property of the vendor, or the goods could be uplifted anyway.

Distress Warrants are issued only when all other methods of collection have failed. Provided that you co-operate with the court and make every effort to pay what you have been ordered to, there is no reason whatever to worry that a Distress Warrant will be issued for the seizure of your property.

Residents in Scotland should note that, under the Bankruptcy Scotland (1987) Act, bailiffs or Sheriffs Officers, once the relevant court order has been issued, can employ the services of a locksmith to gain entry to your home. They are obliged to give notice before taking this action, but even if you are at home when they call it can be difficult to stop them forcing their way past you, and taking your possessions. It is therefore of paramount importance that Scottish debtors make every possible effort to reach an agreed schedule for repayments with the court at the earliest, and to keep to this agreement.

Once you have cleared any debt, it is then said to be discharged. When a debt has been fully discharged you can apply to the credit reference agencies and request that they delete the record of it from their files. However, in the vast majority of cases the record will not be deleted, at least until the six year period has expired, but they will mark it as having been settled.

The first time a creditor of mine made an application to the court to try and collect money which I owed I was really upset when I heard. However, after the hearing I was delighted that I now had only a small monthly instalment to make and I was very relieved to know that the debt could get no larger by the addition of interest.

Although having court judgements against you does have an adverse effect on your credit rating, the way I see it is that, if you have had serious problems with debts, the last thing you want is to be borrowing money again anyway.