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 help with your debts right now use our online advice tool Debt Remedy, or call us. StepChange Debt Charity can help.

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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 spending time with her two children, fundraising for charities, has spent time volunteering in Africa and takes part in organised races.

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Tags Bailiffs Client info Collection Process Debt Debt Law
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  • sarah

    I have just got a letter for council tax saying that i owe over £1000 over a period of 7years. Starting from 2008 to 2013. I have always paid my council tax and i was shocked when this arrived. The letter was threatening me with the bailiffs if i didnt pay the full amount in 7 days. I have not had any other letters or notification. I phoned the number on the letter and explained all this and they said they didnt have to give any notice as it was money i owed. They werent interested and kept asking when i was making the payment. As 1 of the debts is 2008 is this time barred and also do they have to provide the proof that i havnt paid all the other years as it is the council ? Please help as i havnt got that kind of money.

    • moneyaware

      Hi Sarah,

      Thanks for your message. If you want to dispute the debt, this isn’t something we can usually advise on. The first point of call to dispute a council tax bill is with the council itself. You mentioned you’ve been in touch with your council, but it might be helpful if you can also show them any proof that you paid council tax between those dates, for example bank statements.

      I would also suggest that you give our helpline a call and speak to an advisor. They’ll have a chat with you about your financial situation and will be able to put together a sustainable budget. Often the council and the bailiffs they send respond better if they can see that you’ve looked into ways to pay the money back. Our advisors will also be able to talk to you about what to do if a bailiff comes to your property, and any other concerns you may have.

      Our helpline number is 0800 138 1111. It’s free to call from landlines and most major mobile networks, and is open from Monday to Friday from 8am until 8pm and Saturdays from 8am until 4pm.

      I hope this helps.

      Kind regards,

      Laura

  • Nicky

    Hi there i wonder if you can help. i’ll cut a long story short here. but basically i lived in the Republic of Ireland for over a decade. i had an irish credit card. i moved back to the uk 7 years ago. i had always paid towards my credit card but when i moved backhere it became difficult. i had the debt written off in 2009. i had been honest about where i was moving to and informed the company of my address as to keep paying the card off. like i said the debt was written off in march 2009. that was the last i heard of it and i have not lived at the same address for 6 years. it was my sisters address and that is who i stayed with when i first moved back. i work away a lot and just this weekend 24/25 of Jan 2015 a letter was passed on to me from the credit card company saying that the debt was still owed. i was completely shocked. the first line of the letter says the debt was written off in 2009. so i dont know where i stand or what to do. and am looking for some advice as to my rights and if its even legal to do such a thing. wrote off a debt and say nearly 6 years later, we now want it. i should add there where fraud issues with the card that to my knowledge where never resolved. my card was cloned on holiday one year. and the total is over 4000 euro. i am in complete shock to say the least. what do i do. i know the debt originated in ireland. but what are my rights here? i have been advised not to contact the credit card company until i get some proper advice. the company has also been taken over by another company it is them who have sent the letter. What do I do? What can I do! Are they just trying it on with me? Thanks kind regards Nicky

    • moneyaware

      Hi Nicky,

      Thanks for getting in touch. Even though you’re living in the UK, as the debt is from the Republic of Ireland there are different laws that apply. We don’t currently offer advice in relation to debts owed in the Republic of Ireland, so I’d suggest you get in touch with the Money Advice and Budgeting Service (MABS) who will be able to offer you free advice. You can find their contact details and information on their website here: https://www.mabs.ie/

      I hope this helps.

      Kind regards,
      Laura

  • richard t pettybone

    Hi,

    I was recently contacted on my business phone line by my bank in Hawaii. I was paying off my credit cards, but moved to New Zealand and stopped paying them, because I started up a business in New Zealand and things are going very slow at the moment, but I am trying to persevere as I know it will work out in the long run, but my debt is piling up.

    What can they do, as I am in New Zealand and don’t see myself being able to pay back my Credit Card(20k) for some time. Thanks.

    SUSU

    • moneyaware

      Hi Richard,

      Thanks for your message. As we are a UK based charity, I’m not able to advise you on a debt that is owed in Hawaii. I’d suggest you contact your bank in Hawaii, explain the situation and they should be able to advise you on how best to proceed.

      Kind regards,
      Laura

  • Kelly Allcock

    Hi..ive brought a new car recently an thought our car tax was included..2 months later the car company rings me to tell me ive got a outstanding bill for the tax..I told them I thought it was included but they said no and its not down on any paper work to say it was, I told he I would ring back.now ive got a debt recovery ringing me! How do I stand with this matter?