Rent Arrears CCJ but amount is too high - now what?

[dpac123]

A CCJ has been ordered against my wife for rent arrears relating to her business. She received the court paperwork but sent in her defence 2 days late, so a judgement was awarded against her. She has been told by the court that she can appeal, so we are currently looking at forms N244/5 and wondering what to do.

 

The reason for her returning the court defence late is that she mistook 28th Feb for 28 days after the summons was served - it was dated 26th January. She has been suffering from mild depression and is on medication for this - one of the symptoms being an inability to deal with matters in a timely fashion!

 

The other factor is that the amount of rent stated is too high. The statement from the claimant omits certain payments and we have bank statements to prove this.

 

My wife has communicated several times with the claimant by letter apologising for the situation and asking if she can arrange a payment plan, but her proposals have been rejected. Instead, the claimant instructed a solicitor. At this point, my wife agreed a payment plan, but was unable to make the first payment (because our house was about to be repossessed!). The next thing she received was a court summons. My wife again wrote to the claimant with a copy of the court summons about repossession (which thankfully we have managed to avoid) asking for time to pay and a payment proposal. This again was ignored.

 

Finally, I have been looking through the rental contract between the claimant and my wife and one of the claimants obligations is to have insurance cover for "full rebuilding, site clearance, professional fees, value added tax and three years' loss of rent."

 

Does this mean that the claimant has already recovered the rent my wife owes and does this have any bearing to our defence?

 

My wife can prove ill health and that the amount being claimed is wrong. She can also prove that she has tried several times to settle the matter out of court.

 

As the CCJ is "forthwith", my wife is scared that the bailliff will come round to our house any day. Also, as we are having little joy negotiating a payment plan with the claimants' solicitors, we are very much open to suggestions...

 

Thanks, D

[AndyOrch]

Hi Dpac

 

N245 to vary the payment or N244 to set a side the CCJ ( if valid).

 

Andy

[dpac123]

Thanks Andy. How do we halt "forthwith" action in the meantime?

[AndyOrch]

N245 to vary, submitting an I&E and a payment proposal.If its your intention to set a side and you have a valid reason then that should be submitted first.

 

Andy

[dpac123]

OK thanks. Does any of this halt bailliff action to attempt to obtain the full amount?

[AndyOrch]

Bailiff action would only be considered as a last means they would attempt AoE or a charging Order firstly to secure payment.N244 application to set a side would stay matters until resolved.N245 would resolve the forthwith and agree monthly payment.

 

Andy

[dpac123]

Many thanks Andy - we'll get cracking on the N244.

[sick of thames credit]

 

Finally, I have been looking through the rental contract between the claimant and my wife and one of the claimants obligations is to have insurance cover for "full rebuilding, site clearance, professional fees, value added tax and three years' loss of rent."

 

Does this mean that the claimant has already recovered the rent my wife owes and does this have any bearing to our defence?

 

 

Doubt it, if they had then the rights of the claim would have been subrogated to the insurer anyway, so basically the the debt the debt doesn't dissapear if it is paid out.

 

Typically rent insurance policies usually come as bundled product called LERG, which stands for Legal Expenses and Rent Guarantee.

 

If there is a default on the rent , then the insured has to chase up the claim themselves, however the insurance will cover their costs. Hence the "Legal Expenses" part of the policy.

 

If they then win but you are unable to pay, the insurance company then pays up. Hence the "Rent Guarantee", however the rights to the claim will then pass to the insurance who will chase for payment. This is the subrogation of rights.

 

I use to price these policies so is actually area I'm quite familiar with. One of the key problems with a LERG policy is that creates a high level of moral hazard. e.g. the insured becomes complacent about chasing the debt expecting the insurance company to cough up, thus reducing the chance of successfully chasing the debt.

 

To prevent this moral hazard, there are strict procedures the insured must adhere to in chasing the debt. If they are to have a successful claim on their insurance if you can't pay. It's likely that your claimant is being difficult in order for them to be able to claim on their insurance if they end up in the position of needing to.

 

In terms of helping with the actual legagl aspect of the problem, I'm here learning myself!

 

good luck, hope you sort things out.

[notmeguvhonest]

The three years loss of rent cover would only pay out to the policyholder in the event of an insured event occuring. If the property burns down, is flooded etc the owners would receive the rent they would have received if the event had not occured. Loss of rent cover does not guarantee rent in the event of the tenant being unable to pay.

[asokn]

What is the difference between the sum claimed in rent and the sum you believe is owed?

[dpac123]

About £500. They say £2,500, we say about £2,000.

[asokn]

If your sole reason for applying to the court would be to vary the amount of the judgment down by, at best, £500 it would be worth giving serious consideration to whether the application is actually worth making (of course, if you have a more substantial defence then things would be different). It is unfortunately your fault that the defence wasn't entered in time and therefore even if you succeeded in having the judgment amount adjusted you would in all likelihood be ordered to pay the costs of the application which could easily be £500 or more.

 

Just a pragmatic thought to consider.

[dpac123]

Point taken. It's not our only consideration - the other points being my wife's poor health and inability to cope with daily tasks and the fact that she has contacted the claimant to arrange a payment plan and each time her offer has been rejected.

[asokn]

But those won't amount to a defence, that's the problem; if you're going to defend the claim itself you need more and if you're just defending the £500 then you may end up shooting yourself in the foot.

 

Thats my view anyway, you can take it on board or not as you see fit