“HAVE YOU NOTICED HOW FAT THE BAILIFFS ARE GETTING ?” THE ENFORCEMENT INDUSTRY GETS RICHER WHILST ENFORCEMENT FEES LOOPHOLE NOW PUSHES DEBTORS DEEPER INTO DEBT

William Shakespeare, Julius Caesar (1599):

[Cas.] Upon what meat doth this our Caesar feed, That he is grown so great? (Act 1.2.149-50)

[Caesar] Let me have men about me who are fat (Act 1.2.194-95)

Ealing Council’s  use of bailiff  to enforce debts has increased over the last 2 years.

 

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It is a deservedly better-known fact that Britain’s top bailiffs are paid far more than Britain’s top judges. The reason for this are the record levels of judgment debts now being collected by enforcement agents who operate the recovery system as a profit-making business.

Britain’s domestic debt burden is growing – and high enforcement fees demand by bailiffs and High Court Enforcement Officers are making a lucrative industry even richer whilst pushing many of the poorest deeper into debt.

Typically these debts arise from rent arrears, council tax, maintenance payments, student loans, fines, penalties, court judgments and benefit recovery actions which fall predominantly upon people in poverty. Once judgment is obtained the task of enforcing judgments is passed on to the privatised enforcement industry which has grown rich in the past quarter of century on the business of recovering debts owed to institutions and the state.

Much of modern debt law was originally written on the assumption that deliberate evaders and would-be evaders of debts i.e. ‘Won’t Payers’ will be coerced into paying up by the prospect of extra charges being add to the sums owed in enforceable debts.

In reality, this notion fails to appreciate that many people in debt are simply ‘Can’t Payers’ whose incomes have been squeezed by benefit cuts and rising rent and fuel costs. Since the beginning of the 1990s millions of people have caught in a twin downward spirals of debt and falling incomes which inevitably result in the commencement of automated forms of debt recovery and the computerised issue of legal proceedings.

The recovery of fees is complex area and widely misunderstood and if anything the Tribunals Courts and Enforcement Act 2007 and the regulations made under it – which was intended as a reform of the system – has actually added to the problem.

HIGH COURT ENFORCEMENT OFFICERS….A CASE IN POINT

Let us take the fees imposed by High Court Enforcement Officers as an example. This is a branch of enforcement which is increasingly well-known from a number of TV programmes highlighting their use in debt recovery.

HCEOs are private recovery officers, often attached to firms of solicitors and the fees charged by them are regulated by statute. Their work as expanded massively since 2004. In theory the High Court Enforcement Officers come round to the debtor’s home, seize goods and – if the debtor does not pay – sells the seized goods at public auction. The fees are meant to be paid by creditors and landlord, but all too often the enforcement fees are passed on to debtor by the way in which the system has operated since 2014.

As the law stands, with High Court enforcement Officers the level of fees before 6th April 2014 is determined by the High Court Enforcement Officers Regulations SI 2004/400. After this date they are subject to the Order (as amended and the scheme of the Tribunals Courts and Enforcement Act 2007 Schedule 12 and SI 2014/600, art 2 and art 7).

The regulations as amended state that under Regulation 13 (Miscellaneous Matters) before 6 April 2014 fees may be charged against either (a) ‘the person upon whose application the writ was issued’ (i.e. the creditor) or ‘the person at whose instance the execution is stopped’ (i.e. the debtor who pays up). This meant the fees were payable by either the judgment creditor or the judgment debtor.

After 6 April 2014 these rules are amended for the Schedule 12 procedure with Regulation 3A providing that fees must be paid by the person on whose application the writ was issued (that is the creditor) where the proceeds of the auctioned good can’t cover the debt.

“[(3A) Where an enforcement officer uses the Schedule 12 procedure and the proceeds, if any, are insufficient to enable the enforcement officer to recover the compliance fee, that fee (or the balance of it which remains outstanding) that fee (or the balance of it which remains outstanding) must be paid by the person on whose application the writ was issued.” [ITALICS ADDED]

This effectively means that after enforcement action has been commenced and the goods taken into control and sold, the HCEO is expected to be paid from the proceeds of the sale of goods at auction.

After that he creditor or landlord is ultimately liable for the High Court Enforcement Officer’s fee if the sums have not been satisfied by the debtor in some capacity. Liability to pay fees is on the judgment creditor unless the sum has been recovered from the debtor by way of an agreement to pay.

Broken down into plain English that means the creditor or landlord should pay the fees.

Except it’s not happening.

It’s the debtor who is having to pay the fees without the enforcement officer having done even half the work they are employed to do.

THE LOOPHOLE

The reason the system is failing is basically the whole of enforcement of goods is a legal con trick. The system of seizing goods and taking them away to sell at public auction to pay a judgment debt has probably not worked as the way it is imagined since before 1970.

Goods sold at public auction fetch a pittance. Alan Murdie, Chair of Nucleus comments “In nearly 30 years I never come across a case where the price of the goods at auction ever exceeded the debt; most cases don’t even cover the auctioneer’s fee.”

The only cases where enforcement against goods sold at auction actually pays are case involving high value cars, valuable heavy plant equipment, helicopters or aircraft. These are not possessed by the average person in rents arrears or appearing on the council tax debt list.

But to circumvent this problem, High Court Enforcement Officers (and other enforcement agents such as those collecting council tax) get the debtor to agree to pay up the money instalments, including the costs of the enforcement fees which otherwise would be the responsibility of the debtor. In most cases, the last thing that the High Court Enforcement Officer wants to do is actually take away goods to sell.

Effectively the fees are being demanded and paid before the actual step of enforcement, by the threat of action, rather than taking any actual enforcement action. All too often it is the enforcement officer who demands the terms of any payment, despite there being no specific power to make such an arrangement.

CONCLUSIONS

In short, the whole system is an organised bluff. Debtors pay up simply imagining they are required to pay, under threat of having goods seized. In most cases this accomplished by the High Court Enforcement Officer just standing on the doorstep. But it means with the inclusion of fees for the process that debtors may risk borrowing at rates they cannot afford or simply fail to pay other liabilities, including priority debts. The result is that they fall deeper into debt,

create new debts for themselves, whilst members of the enforcement industry enrich themselves further and the cycle continues.

PREPARING FOR THE IMPACT OF UNIVERSAL CREDIT – FEBRUARY 2018 LOCAL AUTHORITIES AND NGOs MUST PREPARE NOW FOR RENT ARREARS

In 1698 it took six weeks for Sir Christopher Wren to undertake a full damage survey on a stately home (amounting to £162, the equivalent of £19, 430 today) and for it to be processed and paid in full by the Treasury to the claimant writer John Evelyn in compensation.
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In 2017, 321 years later the DWP was taking 5-6 weeks or more to process a claim for £72 for a claimant entitled to Universal Credit.

Universal credit is due to be rolled out in Ealing and other boroughs in West London in February 2018

Recent findings

Evidence accumulated by Parliament showing the failings of the scheme and pilot areas was presented to MPs on 15 November 2017, leading to members of both the House of Commons and the House of Lords calling for reform. That is five years after the first UC legislation was passed; seven years after it was conceived.

Three days later on 18 November 2017, the personal finance programme Money Box on BBC Radio 4 revealed that claimants could be waiting for a month in December before they get any payment, apparently because it is a five-week month, something the programming of the system was not designed for.

Preparing for UC

This does not bode well for claimants in West London where the benefit is to be rolled out from February 2018.

Public bodies, advice agencies, charities and foodbank providers in West London need to start planning ahead.

So if you’re going to be affected

· Be prepared for this system not to work;

· Start saving money now if you have any spare and put some money aside as it is likely your income will fall;

· Identify which creditors to contact (most important payment are your housing costs in rent and mortgage)

· You may have to use the appeal system to get any payment you are due;

· Keep a record of what is happening.

Universal credit was created under section 1 of the Welfare Reform Act 2012. Some difficulties being recognised now were apparent as long ago as the Welfare Reform Bill stage in 2011, and certainly apparent by the time the regulations were enacted between 2012-2014. So it was foreseeable – see an article from 2015. http://benefitslegalgroup.org.uk/2014/01/doom-awaits-universal-credit/

The fact that this may only be dawned on people on so many in Parliament and public life is highly regrettable; worse still, this slow response time does not suggest that the problems ahead in the winter of 2017-2018 will be fixed speedily. Ultimately, there may be compensation claims for the mess that universal credit threatens to be. In the meantime, local government organisations are already sounding warnings about the situation, the key one being:

“If the growing crisis of UC-related rent arrears is not resolved, then there will be serious consequences for tenants and for housing providers.”

This comes from Insight, in ‘Credit Notes’ by Geoff Fimister of the Institute of Revenues, Rating and Valuation (IRRV) December 2017.

Indeed, the IRRV Chief Executive David Magor stated in an editorial on Universal Credit (UC) and housing benefit (HB) in the October 2017 issue:

‘This situation must be addressed immediately before it’s too late – and at the top of the list of recommendations should be the removal of HB from UC!’

This followed an alarming piece The Observer (17.10.17) detailing the scale of the problem: ‘Ministers are coming under intense pressure to put the brakes on the government’s flagship welfare reform programme, following damning new evidence that it is leaving thousands of low-paid workers unable to pay their

rent and at risk of homelessness.’ It revealed rent arrears are ‘running at three, four or even five times the level of those on the old system’.

No-one can say that we have not been warned, these problems will start to become acute as early as April 2018 as rent arrears pass pass the two-month mark.

Alan Murdie, LL.B, Barrister Chairman, Nucleus.

Refund for employment tribunal fees

Until recently all employment applications had to be accompanied by fee (or a wave). We have just found out that  the government has finally issue details for  a scheme for clients to reclaim fees at the next paid.

The scheme is due to be launched in the next four weeks, however the government has committed to contact you in the next few weeks.

For more information please go to  https://www.gov.uk/government/news/opening-stage-of-employment-tribunal-fee-refund-scheme-launched .

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Housing disrepair case study

Landlord disrepair Case Note: Jan and Rik (Pseudonyms) were Image result for housingsuccessfully re-housed in a property owned by a housing association. Unfortunately, their second baby was born with a serious condition and had to spend months in hospital after birth. Their baby was in need of sterile and clean conditions. However, the problem was the bathroom in their new home. They pointed out to the housing association that it had severe problems with mould, condensation and damp. They asked for urgent repairs as their baby was coming home from hospital. However, the housing association told them that they could not treat the repairs as a priority and showed no interest in doing the work quickly. The housing association also refused an offer by Rik (who is a qualified builder) to repair the bathroom himself and forbade him from doing so. Jan and Rik came to Ealing Advice for help.

Under the tenancy agreement the landlord was liable for disrepair as well as under the Landlord and Tenant Act 1987 and at common law. However, it would take a considerable time and possible expense to use the County Court procedure. Because the condition of the bathroom was so bad, the couple were informed that the housing association as an owner could be prosecuted under environmental health legislation. Under section 79 (1)(a) of the Environmental Protection Act 1990 it is a statutory nuisance for any premises in such a condition as ‘to be prejudicial to health or a nuisance.

Under the Act local authorities may inspect such premises and issue abatement orders. Prosecutions can also be brought under section 80 following service of such an order. It is also possible to bring a private prosecution under these provisions, and the owner of premises can be prosecuted through the magistrates’ court and fined up to £20 000. Various forms of evidence can be used including witness statements, photographic or video evidence, surveyors reports and medical evidence. Reminding the housing association of its potential liability under the EPA led to the problem with Jan and Rik’s bathroom being speedily being resolved.

Fees for Employment Tribunal claims – now ruled unlawful

The system of fees for bringing employment tribunal claims was ruled unlawful by the Supreme Court on 26th July 2017. Fees are not payable for claims brought now, and fees paid in the past should be repaid.Image result for tribunal

Nucleus has argued that the fees deter people from exercising their rights. There is also an argument that the government was profiting from proving access to justice. The decision is based primarily on UK constitutional law: that the rule of law requires people to have access to the courts unless Parliament has clearly said otherwise.

Submitting a tribunal claim now

As at 28th July:

  • claims can be submitted without a fee, either by post, or in person to those tribunal offices which accept service in person: see www.gov.uk/employment-tribunals/make-a-claim
  • the facility for making claims online is temporarily unavailable while it is changed.

Past claims, including repayment of fees

Employment tribunal fees paid in the past should be repaid. The government will announce details of a refund scheme.  WE are keeping a eye on what happens if the tribunal ordered the employer to reimburse the fee to the claimant, including if the tribunal ordered this but the employer failed to pay; or if fees were reflected in an amount paid by the employer under a settlement agreement.

The government have issued this press release

THE PRE-ACTION PROTOCOL FOR DEBT CLAIMS FROM 1 OCTOBER 2017

A new Protocol for creditors bringing debt claims will operate from 1 October 2017, issued by the Master of the Rolls under  the Rules of Court.

Prior to this date there is no specific Pre-Action Protocol for debt claims, although parties are expected to comply with the existing Practice Direction for Pre-Action Conduct.

WHEN THE PROTOCOL WILL APPLY

The Protocol applies to ‘any business’ including sole traders and public companies.Related image

The Protocol sets out the conduct the court will normally expect of those parties prior to the start of proceedings, including a template Information Sheet and Reply Form to be provided to debtors in all cases.

The Protocol applies to any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader). The business will be referred to as the “creditor” and the individual will be referred to as the “debtor”. It does not apply to business-to-business debts – commercial debts – unless the debtor is a sole trader. The Protocol operates in accordance with any specific regulatory provisions (which take precedence in the event of any conflict).

The Protocol is intended to complement any regulatory regime to which the creditor is subject.

The Protocol should also be read in conjunction with industry and government guidance relating to good practice in the recovery of debt and does not apply when there is another protocol in place e.g. mortgage arrears and HM revenue and Taxes.

Under the protocol the creditor will be required to send a Letter of Claim to the debtor before proceedings are started.

The Letter of Claim should –

(a) contain  key information

(i) the amount of the debt;

(ii) whether interest or other charges are continuing;

(iii) where the debt arises from an oral agreement, who made the agreement, what was agreed (including, as far as possible, what words were used) and when and where it was agreed;

(iv) where the debt arises from a written agreement, the date of the agreement, the parties to it and the fact that a copy of the written agreement can be requested from the creditor;

(v) where the debt has been assigned, the details of the original debt and creditor, when it was assigned and to whom;

(vi) if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered;

(vii) details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options;

(viii) the address to which the completed Reply Form should be sent;

 

Nucleus will be providing further bulletins and updates on the Protocol and its implications.

 

Key benefit cahnges April 2017

The Government is currently bringing in a number of changes to benefits, some of the key changes are listed below. Full details can be found here.

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  • * The minimum wage has gone up. The main wage is now £7.50, and all of the rates can be found here.
  • * The rate for the ESA work-related activity group (WRAG) has been reduced from £102.15 to £73.10 per week for new claims made from the start of April. Previously, claimants only received £73.10 during the initial “assessment period” of around 13 weeks, and then the amount went up once they were placed in a group. Now, if placed in the WRAG, the amount will not be increased.
  • * Child Tax Credits will no longer cover third (and subsequent) children, if they are born after 5th April. There are exceptions if the additional children are due to multiple births or rape.
  • * In addition, Child Tax Credits will no longer include a “Family element” (i.e. an extra amount for the first child), a reduction of £545 across the year.
  • * Bereavement payments are becoming significantly less generous for widowed parents whose spouse dies after 5th April. The widow(er) will now only receive weekly payments for 18 months. Previously, payments lasted until the earliest of the following: them reaching retirement age, them moving in with a new partner, or the youngest child no longer qualifying for child benefit. Further details here.
  • * There have also been a number of changes to Universal Credit (including the exclusion of most under 21s from the housing element).

The Big Issue …Wipe out: The tax debt scandal forcing people from their homes. A special report by Nucleus Chair Alan Murdie

Council tax arrears are now the single biggest issue clogging up British courts, as fees and fines cause the original debt to spiral. The result is often homelessness. In a special Big Issue report, barrister Alan Murdie describes a chaotic and faceless system.Big issue

STUDENT LOANS AND DEBT COLLECTORS

On  6th February 2017  the Government announced plans to sell the collection  of 12 billion pounds of outstanding student loans to private debt collectors. These are debts which have arisen from the failure to repay student loans taken out before 2006, which otherwise were normally recovered when a certain threshold in earnings was reached direct to the Student Loan Company and the Government.

LOANS IN THE LATEST SALE

The first part of the transfer covers loans which became liable for repayment between 2002 and 2006. The sale is being undertaken in accordance with the Sale of Student Loans Act 2008.

Normally, student loans become repayable when graduate income reaches a certain income threshold. The previous sale in November 2013 of £890 million in outstanding loans went to Erudio Student loans who paid £160 million for the right to recover this money arising from loans taken out between 1990-98. The conduct of the company led to numerous complaints and an apology when it tried to recover excessive amounts from students whose income fell below relevant thresholds.Displaying image.png

The latest announcement  means that many students or former students from the period  prior to 2002 may find themselves contacted by debt collection companies who will be seeking to collect the outstanding money.

For more information see:

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866911&_dad=portal&_schema=PORTAL

THE SALE OF STUDENT LOANS ACT 2008

Of particular concern is that section 3 of the Sale of Student Loans Act 2008 allows the purchaser to transfer the right to collect the loans to another debt collector. So the debt may end up with a different company to that the Government has selected. Under section 1(6) of the Act transfer can be made without the borrower’s consent.

Claims by debt collectors for student loans are already known to Nucleus and caution has to be taken with any claim or contact coming from a debt collector. Claims may arise not just for student loans but also for   unpaid fees arising from college accommodation or unpaid utility bill claims. Private debts collectors are also used for store cards and some  utility debts and many former bank debts.

SOME RULES FOR STUDENT DEBTS AND OTHERS PASSED TO DEBT COLLECTORS

  1. Everyone liable to repay a student debt included in this sale should receive a letter within 3 months from the Student Loan Company. The SLC will write to all customers, at their registered address, advising if their loans are included.2.Student loan related debts are not priority debts. They should not be placed ahead of paying rent, council tax and essentials such as food or utilities.
  1.  Debt collectors have no right to force or demand entry to your home – even if they suggest that they have. As a basic safeguard people should keep their doors closed and beware of bogus callers and people impersonating debt collectors.
  2. If telephoned or texted by someone purporting to be a debt collector do not share personal information or data – it may be a bogus caller. If the company is serious it will put details in writing.
  3. Anyone contacted about student loan debts should seek advice, particularly if a document from a court or purporting to be from a court is involved. It is important not to ignore anything that resembles a court claim but debt collectors have been known
  4. Liability to repay these debts cannot be transferred from the student to spouses, parents or third parties.
  5. A check should be made to see any paperwork is genuine, particularly to check if any right to recover the debt has been properly transferred in law to the debt collecting company,
  6. If an alleged debt is old – i.e. over 6 years it may be statute barred. This does not apply to alleged social security payments which since 2012 have no time limit on recovery (but may not be recoverable for other reasons).
  7. Any repayment agreement reached over a student loan should be one that is affordable, based upon ability to pay. If you have other debts then a payment plan needs to be worked out.
  8.  The amount being claimed should always be checked. With so many claims involved, the possibility of errors is considerable.

Social Tariffs are being phased out – what to do…

Home energy bills are one of the biggest expenses faced by many households.

But if 10% or more of your income goes on paying for your gas and electricity, the government classes you as being in “fuel poverty”.

And this means that you can qualify for grants and cheaper tariffs – called social tariffs – to help you cope.

What is a social tariff and who is it for?

Energy suppliers have been offering their most vulnerable customers cheaper tariffs for some time now.

Called social tariffs, they offer cheaper gas and electricity prices – regulator Ofgem’s rules state that they must at least match the cheapest deals available – and extra free services to certain customers.

You may qualify for a social tariff if you are over 60, on means-tested benefits, are living in fuel poverty or are on a low income.

How can I get on to a social tariff?

If you are not already on a social tariff, there is little point applying for one now as they are currently being replaced by the Warm Home Discount.

This is an annual credit the suppliers will subtract from your overall bill, currently worth £120.

There are currently two distinct groups that can benefit from the Warm Home Discount.

These are:

  • Households that are in receipt of the guaranteed element of Pension Credit
  • People on low incomes, living in fuel poverty or in receipt of benefits – in other words, the same people who qualify for social tariffs.

Most social tariffs have been phased out already

British Gas’ Essentials Combined, npower’s Spreading Warmth Tariff, Scottish Power’s Fresh Start Tariff and SSE’s Energycare Plus tariff, for example, have now all been closed to new applicants, while existing customers on these tariffs are being moved on to the Warm Home Discount.

It charges all customers the cheaper direct debit rate, even if they use another payment method and also offers an annual discount of £75 for dual fuel customers.

Other features of the tariff include free energy efficiency advice and free or discounted energy efficiency measures.

However, only EDF Energy customers who spend more than 10% of their income on household energy costs each year, or receive either Income Support and/or the Pension Credit, qualify for Energy Assist.

What else do suppliers do to help vulnerable customers?

Gas and electricity providers offer advice on everything from managing energy debts to improving your home’s energy efficiency.

Even if your provider no longer offers a social tariff, it is therefore worth contacting it to find out more about how it could help you cope with your bills, and whether you can benefit from the Warm Home Discount.

There may even be a fund to aid those really struggling to cope.

EDF, for example, operates an Energy Trust fund for its customers, from which it can draw funds to help vulnerable consumers clear their gas or electricity debt.

Is there any help available from the government?

The government provides energy efficiency grants, which can fully or partially cover the cost of home improvements such as installing loft or cavity wall insulation, for vulnerable customers in England, Wales and Scotland.

If you are at least 60 years of age, you may also qualify for a Winter Fuel Payment of between £125 and £400.

The Energy Saving Trust can give you more details about what grants may be available to you, while information about the Winter Fuel Payment and how you can apply for it can be found on the DirectGov website.

The ‘Home Heat Helpline’, which is funded by energy companies, also offers advice about social tariffs, grants for energy efficiency improvements, and benefits.

You can call it free on 0800 33 66 99.