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

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

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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
  • moneyaware

    Hi Roxy,

    You can only receive one default per debt on your credit file, so you shouldn’t receive any more defaults for this debt.

    However, it’s possible that payment history will accumulate on your credit file and if you break an agreement Lowell may report this on there.

    Payment plans only work when the payment you’re making is affordable and fits in with the rest of your commitments. If you’re finding the current payment unmanageable then I’d suggest getting in touch with Lowell and renegotiating.

    If you’d like a bit of advice and support before getting in touch then I’d recommend you speak to one of our debt advisors. Here’s our contact details: http://www.stepchange.org/Contactus.aspx.

    Kind regards

    James

  • Steve

    Hi
    Lowell portfolio purchased a credit card debt I had four years ago. I have recently received a summons through Bryan Carter solicitors. I have always thought that debt purchases were unable to take you to court and that could only be done by the original creditor

    • moneyaware

      Hi Steve,

      If a debt has been passed or sold on it becomes the responsibility of the new creditor for payments and also further action including county court judgements (CCJ).

      If you’re struggling or need help, then we’d be happy to offer our advice and support if you’re unsure what to do next.

      Details of how to get in touch with us are available at http://www.stepchange.org/contactus.aspx

      I hope this helps,

      Rory

  • Pingback: You’re in debt but what can your creditors actually do? | StepChange MoneyAware | LegalBeagles.info

  • Rach Pope

    Can creditors make you pay more than your paying if you say you cant afford more and can they take you to court if you havnt missed a payment

    • moneyaware

      Hi there, thanks for getting in touch.

      Your creditors cannot force you to pay more than what you can afford. Your living expenses (food, rent, mortgage, council tax, utilities etc) are most important and must be paid on time. You would then pay your unsecured debts from the money left over once you’ve accounted for your living costs.

      Your creditors don’t take you to court as such, but they can eventually apply for a county court judgment against you should you fall behind on payments. There’s always something that can be done to make things more manageable however, and you can request that the court puts a regular payment in place on the CCJ that is realistic based on your circumstances.

      If you feel that you need debt advice, our online Debt Remedy advice tool can help you put together an action plan in approximately 20 minutes: http://www.stepchange.org/debtremedy.aspx?domain=www.MoneyAware.co.uk

      Hope this helps

      Best regards

      Rachel

  • Rach Pope

    Thankyou for getting back to me, I had a payment plan put in place by the cab which I havnt fallen behind with but they keep telling me thst unless I up my payments they will take me to court so I just wanted to check if they could do this

    • moneyaware

      Hi Rach,

      The creditor is allowed to apply for a CCJ if you’ve defaulted on the agreement and they’re unhappy with how much you’re paying.

      As Rachel mentioned though, even if this did happen the court would normally consider your budget and put a realistic and fair arrangement in place.

      Rory

  • Timmy

    Hi,
    i was wonder could you give me advice on debt from abroad?

    I have unsecured debt, mainly credit card in Republic of Ireland but i have lived in UK for over 3 years.
    I have recently fallen behind on the last few months payments due to job change but will pay what i can when my finances are back on track.
    My UK commitments are my priority now as i will never return to live in Ireland.
    Can an Irish CC company do anything to me in UK? Take my house, CCJ or affect my UK credit rating? Nothing shows on my UK credit rating for Irish debt but can they if it went to court in Ireland?

    Thanks in advance

    • moneyaware

      Hi Timmy,

      Our debt advice covers England, Scotland, Wales and Northern Ireland but we’re not able to answer specific questions related to Republic Of Ireland because of the differences in debt law.

      It’s unlikely that debts can follow you to the UK though, as a debt based ‘abroad’ should not show on your on your credit report in the UK.

      If you’re looking for more specific advice then I’d recommend contacting MABS (Money Advice and Budgeting Service) based in the ROI. You can visit the website at https://www.mabs.ie/

      I hope this helps,

      Rory

      • Timmy

        Thanks Rory,
        Seems to be a very grey area… MABS are unsure also.

        It’s seems that they will chase you all over world but can not actually enforce anything without great difficulty. Most advise seems to be scare mongering “you will go to hell” etc if you are behind.
        I have spoke to bank and they were less than helpful.

      • moneyaware

        Hi Timmy,

        I’ve made some changes to your previous answer based on some more information we have on this subject.

        I hope this helps.

        Rory

  • moneyaware

    Hi Tony,

    This sounds like it’s quite a stressful situation. There are a few different issues, so I’ll try to seperate them out and offer some guidance.

    Issue 1) – The costs involved with the minicredit loan. It’s not uncommon for these types of debts to became much larger than the amount originally borrowed. Whether they’ve acted fairly in this case will depend on what was signed up to in the original agreement.

    The best thing to do would be to make a written complaint to mini credit, laying out exactly what you’re unhappy with and giving them a chance to respond.

    If they reply and your still unhappy (or they don’t reply within 8 weeks) you can then ask the Financial Ombudsman to investigate. This means you can get an independent decision on whether the account has been dealt with fairly withotu involving the courts.

    2) Not being told about the fees on your debt management plan. I’d expect any debt management plan provider to be very clear about the fees they are charging. If this hasn’t happened then you should make a complaint to your provider.

    Again, if your unhappy with the response to this complaint you can refer it to the Financial Ombudsman to investigate.

    3) Paying for a debt management plan(DMP). It is possible to get a DMP free of charge, which means all the money you pay goes towards debts.

    We here at StepChange Debt Charity are one of the place you can get a free DMP, but we’d only recommend it after we’ve gone through your details and are sure it’s the right thing for your situation.

    If you’d like to find out about whether a DMP is your best option or if there’s another solution to deal with your debts, then I’d recommend using our online Debt Remedy tool: http://www.stepchange.org/Debtremedy.aspx.

    Kind regards

    James

  • Sue Smith

    Hi, I wonder if you can help me. We owed our landlord arrears but agreed that I would do some work for him in return for clearing the debt. (He’s in prison so doesn’t have access to a lot of information that he wanted). We’ve now been given notice to quit our property by the trustees of the house and the landlord says we still owe him a larger sum than was originally claimed but we have no idea, nor has he ever offered to provide, how much he has reduced the debt by for my helping him. How much can he claim if he doesn’t have an exact figure of how much he says we owe him?

    • moneyaware

      Hi there, thanks for getting in touch

      Unfortunately we wouldn’t be able to competently advise on this matter. The best people to talk to about this would be the housing and homelessness charity Shelter: http://www.shelter.org.uk/

      Best regards

      Rachel

      • Sue Smith

        No problem, thank you Rachel

  • Welsh_Patriot

    Just on a note here, looking through StepChange’s site seems to drum up images that every debt MUST be paid. This may be just a bit of casual advice, or it could just be a rouse to trick you into believing that is actually so.

    I am in NO way advocating dodging any debts you may have, after all many of us encounter problems and are unable to meet our commitments, and that is no one’s business but our’s unless we choose to share the details.

    In my personal experience, creditors have sold the debt’s onto 3rd party Debt Collection Agencies, who then churn out the usual threatening PAY UP OR ELSE malarky, yadda yadda yadda. if I had known what I know now, I would never have got StepChange involved in the first place, as when a payment is actually made to a DCA, it constitutes responsibility for the alleged debt!

    if the debt is sold to a 3rd party, then advice given here or not, that debt, (wheather actual, or in one case of mine, actually made up!), you can ask the DCA to provide the PROOF the debt is actually owed, that proof must include any statements so far of payments, address and name of the alleged owner at the time etc. Within 8 days. There is a small charge of £1 (postal order) for this information, but template letters are available to send with this if you are not confident writing your own.

    BUT my friends, if the debt is passed to a DCA, technically it becomes theirs, therefore if you actually owed it, technically it is null and void, and nowt is owed.

    YouTube is an invaluable source of information, many people put up videos showing phone calls to DCA’s, and generally pointing out what I have just said, just watch as the DCA “agents” or whatever they call themselves, struggle when confronted with just a few simple points.

    no doubt (if this even get’s online), StepChange will chirp up saying this is just total nonsense, but if you DO have DCA’s who have contacted you, just YouTube dealing with uk debt collectors BEFORE you make a payment to them, or feel threatened or intimidated into asking StepChange for help.

    Sorry for the long winded post, just wanted to share what I have learned over the months with you good people.

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