Saving Your Credit Score from Unforeseen Court Judgments
Is your creditworthiness at risk?
Your ability to borrow in the UK can be jeopardised easily without you even knowing.
Since the UK’s government lockdown in March, several individuals and business have reported that they have had a judgment registered against them in the courts and that they had not been notified of this until it was technically too late to be removed from the Register. With businesses abandon-ing their presence in the UK, or lapses in communication between parties due to the pandemic, some have not received requests for payment or invoices directly and only found out about a judg-ment when it was too late.
The problem is that even if you pay off the judgment debt, it may not be removed from your credit report. This would affect your ability to borrow and conduct business in the UK in future. Unless a CCJ is paid in full within 30 days of receiving the judgment, it will be entered on your credit record at the Register of Judgments, Orders and Fines. This record will remain there for six years and can seriously affect your ability to get a mortgage, a credit card or even a bank account in the future.
What to do
The best way forward in such situations is to get the other side to negotiate an agreement to settle the matter, and remove the judgment from your record by way of consent order. In our experience, most judgment creditors will agree to do so with some additional fees being paid across to them as after all, they have no desire to actually affect your credit score. The consent order is submitted to the judge for approval and in most cases, the courts are reluctant to intervene in the parties’ agreement and will approve the order to set aside the judgment by consent.
In certain circumstances however, especially where the judgment debt is of a high value, it may be best to obtain the creditor’s agreement to set aside the judgment by way of Tomlin Order. A Tomlin Order keeps the details of the settlement in the form of a confidential schedule e.g. the payment of the judgment debt and additional settlement fees. While the Judge may have access to the schedule, as the contents are technically not to be considered by the courts in its decision to approve the order. The judge would there-fore be less likely to query whether and why the judgment should be removed from the Register.
Thereafter, key credit agencies should be contacted and where appropriate, the process for removal of the judgment from your credit report should be undertaken in accordance with the agencies’ rules.
We have helped our clients to negotiate a settlement with their judgment creditors for the removal the judgment from the Court Register and clear their credit score quickly and efficiently. We can help you with the delicate process of setting aside and contacting key credit reference agencies so as to restore your creditworthiness and not further jeopardise your credit score.
Please contact our solicitors Michael Chan if you would like us to help in your case.
Recovering unpaid or late rent against your tenant, what are the options?
As a landlord with mortgage payments, service charges and related bills (amongst other things) to pay it is important for prompt payment of rent from your tenants. However, of course, things do not always run smoothly therefore there are legal paths and remedies that can be sought in order to seek recovery. This article examines the options open to landlords when problems arise.
Payment Agreement
This is probably the simplest and cheapest solution in order to recover any rent arrears from your tenant. It is of course always easier to talk to your tenant to agree some sort of payment plan without having to undertake legal recourse. It would be recommended that if a payment plan is arranged with your tenant that a letter of agreement is drawn and signed by all parties. This is less formal document than a contract but still carry some legal weight and the tenant should be aware that failure to abide by the terms will result them being in breach of two legal contracts. The tenant may agree to use his deposit as payment (or part payment of the outstanding debt) this is acceptable but it is recommended that if this agreed that the agreement is put in writing.
Issuing Legal Proceedings
If the tenant is unable or unwilling to sign a letter of agreement then as a landlord you are able to issue legal proceedings against them personally. The outstanding rent arrears can be treated as a regular outstanding debt and County Court proceedings, after a letter of claim has been sent, can be issued for recovery of the same. If the court summons isn't responded to within the specified time limits then as a landlord you will be able to obtain Judgement in Default against the tenant and then take steps to to instruct Bailiffs. The disadvantage to this route is if the tenant still resides in your property then it is going to be negligible whether they are going to own enough assets to be recovered by the Bailiffs and sold at public auction to recover the debt. However, the advantage to this route from a landlord perspective is that any Default Judgment, if not paid within a certain time period, is going to seriously affect not only the tenants credit history but also his ability to secure another tenancy when he leaves the property. The tenant is likely to be aware of this and, in our experience just the threat of issuing county court proceedings, will be enough for the tenant to make the necessary efforts to pay the arrears before further action is required. If the tenant has vacated your property their current contact details will of course be required before the issuing of proceedings. If these are unknown we are able to take steps to search for the tenant so we have up to date details before issuing proceedings.
Pursuing a Guarantor
If the tenant has already left the property and they had a guarantor counter signed the tenancy agreement, you are able to pursue the guarantor for the outstanding rent. This route will only be successful if the guarantor has signed a Deed to say that they will be responsible for any unpaid rent. If this is in order then a ‘letter before action’ should be sent to the guarantor and a copy of the letter sent to the tenant. If no response is received, and the contact details for the guarantor are in order, then as with the above legal proceedings can be issued against the guarantor for recovery. Assuming that the guarantor would either be a close friend or, more likely, a family member of the tenant then this would be a course of action that should yield a positive result as far as recovery of outstanding rent is concerned.
Taking Steps to Evict the Tenant
The steps required to evict a tenant haven’t changed since the beginning of the Coronavirus pandemic however the notice periods that you have to give to your tenant have done. If as is common your tenant has signed a fixed term assured shorthold tenancy (AST) and your tenant has stopped paying rent during the fixed term then it is necessary to serve them with notice. This is done by serving either or both a Section 21 Notice and a Section 8 Notice, both are in effect ‘Notices to Quit’ and inform the tenant what date they need to vacate the property by. Should they fail to comply with the date in the notice then as a landlord you are about to apply to the court for an order of possession and, if still necessary, execute the order and instruct Bailiffs to do this for you in order to regain possession of your property. You can then decide which notice you intend to enforce, both have their advantages and disadvantages. A s21 Notice is more straightforward for the landlord as the tenant is unable to file a Defence to the action and as long as the possession is valid then possession will be granted, the issue is of course this only provides possession of the property. A s8 Notice can, if granted, also provide a money order against the tenant for any unpaid rent which is an option not open to the landlord under s21. The one disadvantage to a s8 Notice is the tenant, should he so wish, is able to file a Defence. This may cause serious delays in gaining possession of your property and, should the court consider the Defence valid, could result in a costs order in the tenants favour against the landlord. It is also worth pointing out that if a s8 or s21 Notice is served after 29th August 2020 then 6 months’ notice must be given by the landlord, the reason for this is as a direct result of the pandemic. Prior to the 26th March 2020 the notice period was just 2 months, as things hopefully returns to normality over the coming months it is expected that the notice period needed to give by landlords will go back to ‘pre pandemic’ periods.
Should you wish to discuss anything further mentioned above or instruct our civil litigation team please email mchan@cnsolicitors.com or sangel@cnsolicitors.com