You’re in debt but what can your creditors actually do?

posted by in Bailiffs, Client info, Collection Process, Debt, Debt Law

If you need debt help now, use our online counselling service Debt Remedy or call us. We’re a debt charity and we can help.

county court judgment letters

Received a CCJ? Click to find out more

There are a lot of misconceptions about what creditors (your lenders) can and cannot do. We hear from clients that are scared stiff of bailiffs or being sent to prison when they’ve only missed one or two payments or just received a default notice or a CCJ (county court judgment) through the post.

A lot of action by creditors will be scare tactics to encourage you to make extra payments, so it’s useful to know what your rights are to help to put your mind at ease.

Knowing what creditors can and cannot do and understanding the debt collection process can help to remove a lot of worry and uncertainty.

What can creditors do?

  1. They can chase you for the debt by phone or letters; see our blog about what to do if creditors keep phoning you.
  2. They can send doorstep collectors; it’s really important to realise that these are not bailiffs and have no more power than someone ringing you. It’s unusual for a high street lender to use doorstep collectors as it’s still cheaper and more effective for them to call you.
  3. They can continue to add interest and charges to your account in line with the original agreement, provided that you’re not in a legally binding solution (such as an IVA, DRO, administration order or bankruptcy).
  4. They can take money from connected accounts. For example if you have a credit card and a current account with the same bank they can dip into the current account and take what is owed on the credit card; they don’t need permission from you. This is called the right of offset.
  5. They can issue a default notice, usually sent after 3-6 missed payments. This is something your creditors are legally required to send once you have defaulted on the original agreement.
  6. They can pass the debt on to an internal or external debt collection agency. These don’t have any more legal powers than the creditor.
  7. They can apply for a county court judgment (CCJ). If you receive one of these you must fill in the paperwork and make an offer of repayment for the court to consider. The court will set a repayment and it’s important that you stick to this.
  8. Some collection agencies issue a statutory demand, a way of enforcing bankruptcy. However in most cases these are used as scare tactics and it’s very unusual for creditors to actually enforce these.

What can’t creditors do?

  1. They cannot harass you; you have a duty to keep your creditors informed of your situation but that doesn’t mean they can ring you every hour, day after day. Request that they only contact you in writing and make sure you open your mail. You can read more about debt collection guidelines on the Office of Fair Trading website.
  2. They cannot break data protection laws, so they cannot speak to your family, friends, neighbours or an employer.
  3. They also cannot stalk you on social media – see our blogpost 10 ways to stop debt collectors finding you on social media.
  4. They may threaten bailiffs but unless you have defaulted on a CCJ then what they actually mean is a doorstep collection agent. This is often used as a scare tactic and anyone who calls at your property has no more power than someone calling you on the phone. You can just ignore them (unless they are from the courts or the debt is for Council Tax).
  5. If you do get county court paperwork through the post and you make an offer to the courts that the judge accepts, the creditors have to abide by it as well.

What experiences do you have with creditors? Post a comment and let us know. And if you’re going through the mill with your creditors at the moment, get free debt advice from StepChange Debt Charity now.

Pavan Gata-Aura is a qualified debt advisor with 6 years of experience. She enjoys fundraising for charities, has spent time volunteering in Africa and takes part in organised races.

Written by

Tags Bailiffs Client info Collection Process Debt Debt Law
  • moneyaware

    Hi,

    MSE have a great article explaining the changes in reclaiming bank charges. You can find it here http://www.moneysavingexpert.com/reclaim/bank-charges

    The noise over reclaiming bank charges has died down of late but it is still very possible to have charges refunded – particularly in your case where you were charged a considerable amount for a relatively small initial charge.

    Download one of the template letters in the article and send it to the Financial Ombudsman. You could contact the collections company to inform them that you’ve registered a complaint with the Ombudsman and could they put things on hold until then.

    You are still liable to pay back the money, but if you receive a refund you can clear the debt with that amount. You can then have a note added to your credit file to explain this was an amount charged in error and it’s since been refunded. This would provide explanation to creditors who search your file.

    I hope this helps.

    Thanks,
    Jess

  • Michael Newlands

    Does a debt collector acking on behalf of Inland Revenue have the same powers as any other debt collector?

  • Emily

    Hi there

    we took a car on finance last September and it was riddled with problems. In the nd the finance company agreed to take the carback and supply us with a new one but only if we signed a new agreement. We went to their head office and signed for the replacement vehicle (in december).

    my husband lost his job in april and I contact them to arrange lesser payments. They set the reduced payments which we still too high so we said we would prefer to return the car to them.

    the last email from them was april 30th and they have not replied to any email or call even though we have the email received responses. The only letter received was one advising ofhthe missed payment for April.

    will they still repossess the car? Or will they assign the debt to a collectiom agency to seek the full amount?

    we are aware they can take the car without a court order so are further confused by their lack of communication and action!

    all advice appreciated! Thank you

  • Zara

    If creditors turn up to repossess car due to none payment of tax can they take your car or demand £950 if in iva

    • moneyaware

      Hi Zara,

      If this debt was included in the IVA then this shouldn’t happen. If the debt isn’t included in your IVA then there is a possibility your car could be taken by a bailiff (now called enforcement agents) but it would depend on the circumstances.

      I’d recommend calling your IVA provider for some emergency advice on dealing with this debt.

      Kind regards

      James

  • Mr Adviser

    Debt Collection agencies will in almost all instances write to you and use red and colourful letters to scare you into paying up. They will either add charges, or offer discounts if paid within a certain number of days. They can if they want make a money claim against you using in the County Court. In such cases, you will be given ample opportunities to respond accordinly to the court either to defend admit, partially admit, defend the claim or counter claim from date of service (date you receive the court letter) and so on… Check the money claim procedure on http://www.adviceguide.org.uk, http://www.nationldebtline.co.uk or google StepChange.
    If you are unsure whether they are acting on CCJ’s – ask them to send you a copy of the County Court Judgement and then verify the document with the Northampton County Court. Give them a quick call and quote the claim number.
    Alternatively, obtain a credit report for yourself from Experien and check whether a CCJ was made against you and when that was made. That should clarify the situation.
    Hope I have answered your question.

  • scott

    I am in debt with a catalogue and have fell into financial difficulties. They are threatening to send bailiff ‘s at the end of the week to remove things from my home can they do this.

    • moneyaware

      Hi Scott,

      Catalogue companies don’t have the power to send bailiffs – they have no way of taking your goods. Only a county court can send bailiffs.

      If you’re struggling to pay the debt give us a call on 0800 138 1111 – one of our debt advisors will go through a budget with you and advise the best way to clear the debt. We’ll give you a reference number to give the company so they know you’re getting the help you need.

      If you’d prefer to get the advice online – you can use our Debt Remedy tool.
      http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

      Put in your budget details and it will recommend the best solution.

      I hope this helps.

      Thanks,

      Jess

  • moneyaware

    Hi,

    I would write to Orange directly explaining the situation and asking them to cease contact. Send copies of any proof you have that the phone was broken into. If they persist in attempting to collect the debt you can escalate the complaint to The Financial Ombudsman http://www.financial-ombudsman.org.uk/consumer/complaints.htm

    It’s important you complain to Orange before you ask the Ombudsman to investigate. In the meantime I would keep the collection company who has the debt in the loop.

    I hope this helps.

    Thanks,
    Jess

  • moneyaware

    Hi,

    The simplest way is probably to cancel the standing order and set it up again for the correct amount. You could also ask to pay by another method – you could pay with a paying in book manually at your bank. You may not prefer this option.

    I DON’T recommend that you use a Direct Debit – that would allow the creditor to directly take the incorrect amount from your bank.

    If all else fails, complain to the creditor in writing and then you can escalate it to the Financial Ombudsman if it’s not resolved. Here is how http://www.financial-ombudsman.org.uk/consumer/complaints.htm

    I hope this helps.

    Thanks,
    Jess

  • Stacey

    Hiya, PLEASE HELP ME…in 2010 I took out a car on hired purchase for 3 years and decided to give the car back at the end of the agreement (September 2013) which was a valid option. I paid the £60 end of contract fee and the car was handed back in good condition. I was told I would receive a report from the collection company of any refurb work needed on the car but received no report or calls. However, a month or so later I received a bill from VW finance stating I owe £1965 of refurbishment works which shocked me as I hadn’t received any report or breakdown and the car had only valid ware and tear (stated by the collector when I gave the car back) It has been 9months, I still have not received a report of these refurb work and now noticed VW finance have put the debt on my credit report. Please advise if I can fight this claim of money I owe? as I had taken over 100 pictures (just encase), I did not receive the report plus the car was fine. Also, please advise what VW finance can do to me if I refuse to pay them as I am appealing against their claim of how much I owe? More so, i cannot afford to pay the full amount if I lose my appeal, what can happen then? I had planned to buy a new car next year on a much better finance deal will this affect that happening greatly?

    • moneyaware

      Hi Stacey

      It might help to contact the hire purchase (HP) provider and ask for a breakdown of the £1965 they are asking you to pay.

      If you’re not satisfied with the charges then you can make a complaint in writing and mention that you’ll escalate this to the Financial Ombudsman if necessary.

      If the charges are deemed to be fair and you’re struggling to meet the payments then try not to worry as we can help you. We can
      put together a budget with you and use this to offer you advice and solutions on how best to deal with the debt.

      You can contact us at http://www.stepchange.org/contactus.aspx Alternatively you can use our free, confidential Debt Remedy tool available at http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

      I hope this is helpful

      Rory

  • Stacey

    Hiya, PLEASE HELP ME…in 2010 I took out a car on hired purchase for 3 years and decided to give the car back at the end of the agreement (September 2013) which was a valid option. I paid the £60 end of contract fee and the car was handed back in good condition. I was told I would receive a report from the collection company of any refurb work needed on the car but received no report or calls. However, a month or so later I received a bill from VW finance stating I owe £1965 of refurbishment works which shocked me as I hadn’t received any report or breakdown and the car had only valid ware and tear (stated by the collector when I gave the car back) It has been 9months, I still have not received a report of these refurb work and now noticed VW finance have put the debt on my credit report. Please advise if I can fight this claim of money I owe? as I had taken over 100 pictures (just encase), I did not receive the report plus the car was fine. Also, please advise what VW finance can do to me if I refuse to pay them as I am appealing against their claim of how much I owe? More so, i cannot afford to pay the full amount if I lose my appeal, what can happen then? I had planned to buy a new car next year on a much better finance deal will this affect that happening greatly?

  • moneyaware

    Hi,

    The should not do that no. If you request your creditor not to contact you at work they should not persist in contacting you there. You should firstly ask them not to, then complain to them in writing. If they persist, you can escalate your complaint to the Financial Ombudsman http://www.financial-ombudsman.org.uk/consumer/complaints.htm

    If they are breaking data protection by revealing the nature of the call to your work or your family you can complain to the Information Commission http://ico.org.uk/concerns

    If you’re struggling to repay the payday loan we can help. We can go through a budget with you and recommend the quickest way to cleat the debt. You can contact us http://www.stepchange.org/Contactus.aspx

    Or you can use our confidential online Debt Remedy advice tool http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

    I hope this helps.

    Thanks,
    Jess

  • moneyaware

    Hi Kate,

    I’m sorry to hear you’ve been having trouble. The nursery can suspend the service and send the child home. If you feel uncomfortable you can place your child in another nursery.

    But the man visiting you is not a licensed bailiff or debt collector. The nursery should not be able to add on £200 each time he visits you – they may well have their own admin fees or late payment fees but they cannot charge to visit your home.

    The nursery would have to go through a small claims court to reclaim the money – they CANNOT make you repay the money at a higher rate than you can afford.

    We can go through a budget and recommend the quickest way to clear the debt. We’ll give you budgeting advice to prioritise the debt. To speak to a debt advisor call 0800 138 1111.

    You can also get a budget assessment and personal action plan online using our confidential Debt Remedy advice tool http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

    I suggest you contact your local Police station and speak to them about the visits. They can give you advice on what action they can take if you want to register a complaint.

    Your nursery manager’s brother has no right to visit your home or add on collection fees. He is intimidating you. We can give you the debt advice you need to clear the debt and the Police will be able to help if you ask their advice.

    Take care Kate,
    Jess

  • Christopher Keenan

    Hi i took out a loan with Provident Personal Credit i have used this company many times and never had a problem until now. They suddenly dropped the my credit book off at my uncle’s and never came to my door ever since i then had a letter from them saying i owe them £2304.00 and now i am getting letters from scotcall about it saying that they will send debt collectors to my door i dont know what to do.

    • moneyaware

      Hi Christopher,

      Scotcall are a debt collection company, they are attempting to collect the Provident debt that was unpaid. Don’t worry, Scotcall are not bailiffs, they probably wouldn’t send anyone to your door but if they did you’re under no obligation to let them in or give them any money – I would recommend that you send them away.

      The debt is unsecured – that means it is a non-priority. You should only be offering them a monthly repayment that you can afford after you’ve covered your priorities like rent, bills, food, travel, living costs.

      We can help you work out how much you can afford and the quickest way to clear the debt. We can look at your budget and see what debt solutions are open to you.

      To get the advice you need you can either call 0800 138 1111 (Mon to Fri 8am to 8pm and Sat 8am to 4pm) to speak to a debt advisor or use our confidential online Debt Remedy advice tool http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

      Scotcall will know you are getting the debt help you need and will clear the debt as quickly as you can.

      I hope this helps.

      Thanks,

      Jess

  • Suelander63

    Hi
    I have had a ccj since 2010 for a loan with Northern rock I was paying £25 and month I up the payments to £50 about 5 months ago I have received and letter today stating the payment plan is up for. Renewal and I have e asked to complete a means form am I obliged to do this? The letter was from a solicitor

    • moneyaware

      Hi Sue,

      Northern Rock can ask you to do this. There may be court costs associated with changing the CCJ amount. Before you fill in the means form I would contact Northern Rock and ask to arrange something directly with them.

      Failing that you should fill in the means form and return it to the creditor – if £50 is all you can afford they should accept that as a payment. If they ask you to up it you can ask for a re-determination (with an N245 form) – the court would then decide – that form would cost £50.

      (It’s a side-point but the solicitor has no more power than Northern Rock, creditors use solicitors so people respond quicker)

      I hope this helps.

      Thanks,
      Jess

  • wmoor

    Good Morning
    i have agreed to pay an outstanding Council tax debt for my previous house to A Bailiff company-”Rundles’, i do this Monthly via the net. However, if i lose my job and money is very tight, can i suspend payment or right it off???

    • moneyaware

      Hi wmoor

      Council tax is always considered a priority payment and can’t be suspended or written off. As long as you stick to any agreement you’ve made then it shouldn’t cause you any further problems. If you stop payments with the enforcement agent (bailiffs) this may lead to further action.

      If you’re struggling to pay your debts or council tax or need help then please don’t hesitate to contact us and we’ll be happy to help. You can visit http://www.stepchange.org/contactus.aspx for information on how to get in touch.

      I hope this helps,

      Rory

  • Daniel Hawken

    Hi, I had a car insurance policy but had to pay for a box to monitor my mileage, As I didn’t really use the car the battery in the box would die and I would get a message saying I was not insured, So I cancelled the policy but they have passed on the debt to a debt collection agency for the cost of the box plus a bit more
    Can I demand the court settle this instead and can they do this

    • moneyaware

      Hi there Daniel

      We wouldn’t be able to fully advise on any liability you may or may not have in this situation. It might be worth having a chat to Trading Standards and see if you can get some guidance on where you stand: http://www.tradingstandards.gov.uk/

      Best regards

      Rachel

  • linda clayton

    one of my creditors wants to no how much I owe other creditors. am I obliged to give them this information

    • moneyaware

      Hi there Linda,

      You’re not obliged to provide this information to them, but showing your creditors what expenses you have via means of a budget should better help them understand your situation.

      Our online advice tool Debt Remedy can help you put a budget together in just 20 minutes. It can also provide debt advice and solutions for you moving forward: http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

      Best regards

      Rachel

  • moneyaware

    Hi Amanda

    We would need a little more information before we could offer our advice. Is this a UK or Northern Ireland based debt? Could you also explain the term ‘VA’ for us?

    Thanks

    Rory

  • Joanna Robertson

    HI I wonder if you can help me I requested a copy of the original legal agreement from a barclaycard account I defaulted on under my rights of the consumer credit act 1974. I did this on the 13.2.14 requesting a true copy of the agreement a full statement of account and a true copy of the deed of assignment to mkdp along with any other relevent documentation.
    I did this as since the debt passed to mkdp my name is wrong on the credit bureau they have it as Joanne . I have never used an incorrect name so I fail to see how this can happen?
    I have received a recorded delivery letter on the 18th July 14 with copy statements feb09- feb10 a blank Barclaycard agreement without my details or signature on it & barclaycard conditions dated 22.9.09.
    My question is is this debt enforceable without a copy of the original legal agreement through a court of law and because I have not been sent a true copy of my legal agreement should my account be in default as they have not responded within the 12 working days as per the consumer credit act?
    Many Thanks

    • moneyaware

      Hi Joanna

      The creditor should be able to provide a copy of your credit agreement for your reference. This doesn’t have to be an original signed copy, just one that has the same information as the original.

      If they aren’t able to provide this then you can make a complaint in writing and if you still aren’t satisfied with the response you can then escalate this to the Financial Ombudsman.

      The incorrect name on your credit file may be a mistake so it might be a good idea to check with the creditor to make sure this is changed.

      If you do recognise the debt as something you owe you should repay the money. If you’re finding yourself struggling with the repayments then we can help. You only need to repay the debt at a rate you can afford.

      You can use Debt Remedy available on the StepChange website to put together a budget with us and find a solution to help you deal with your debts. If you’d prefer to speak to a debt advisor in confidence you can also contact us

      I hope this helps answer your question.

      Rory