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

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

Last updated: 5th September 2016

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There can be lots of misconceptions about what creditors (your lenders) can and cannot do. We hear from clients that are scared stiff of bailiffs (enforcement agents) 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 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 around debts.

Please note: the advice below talks about what creditors can do with unsecured debts. There’s more on our website about priority debts and arrears.

What can creditors do?

  1. They can chase you for the debt by phone or letters; see our article 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 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.
  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’s owed on the credit card. They don’t need permission from you, but they do need to warn you in advance. This is called the bank’s right of offset.
  5. They can issue a default notice. These are usually sent after 3-6 missed payments, and serve as a warning that your account is about to default. The default is usually granted if you don’t bring it up to date within two weeks. It’ll appear on your credit file for six years and will make it harder to get credit for that time.
  6. They can pass the debt on to a debt collection agency. These don’t have any more legal powers than the creditor, but they may be more persistent in contacting you.
  7. They can apply for a County Court judgment(CCJ). If you receive any court forms you must fill them in and make an offer of repayment. The court will set a repayment and it’s important that you stick to this, or the creditor can take further action
  8. They could issue a statutory demand. This is the first step they can take towards applying to make you bankrupt. This is only possible with debts over £5,000 and fortunately isn’t very common.

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. If you want, you can request that they only contact you in writing, but make sure you open your mail if you do this. You can read more about debt collection guidelines on the Financial Conduct Authority website (although this information is a bit dry). We also have more about your rights when dealing with creditors on our website.
  2. They cannot break data protection laws, so they cannot speak to your family, friends, neighbours or an employer without your permission.
  3. They cannot pretend to possess legal powers they don’t have, for example by making their letters look like court documents or claiming they can send bailiffs to your property without a court order.
  4. They cannot add excessive amounts of interest or charges. They can’t increase the rate of interest because you’ve missed payments. And they can’t add collection charges which are more than the costs to them, so for example a creditor couldn’t add £100 for sending a letter to you which will have cost them much less than this.
  5. They cannot stalk you on social media – see our blogpost 10 ways to stop debt collectors finding you on social media.
  6. Sometimes creditors may not be nice to speak to, but they can’t be threatening or abusive to you, and they can’t lie to you.

In practice, you’ll find many creditors are more reasonable than you might expect, especially if you explain your situation and let them know you’re getting help to try and sort it out.Save

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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
  • Norm_ski

    I have some debts over 6 years old. I’ve been paying small amounts to various collections agencies (some of whom have sold it on to other agencies) regularly. My question is: Do they still have a right to come after me for payments despite the original debt(s) being Statute Barred?

    • moneyaware

      Hi there,

      Certain debts become statute barred if you don’t:

      Make a payment to the debt for six years
      Contact the creditor about the debt for six years
      And if the creditor doesn’t start court action to retrieve the debt

      You can read more about statute barred debts and the criteria that makes them become statute barred on our website here:

      https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      If a debt is passed onto a collection agency, making payments to them will still count as payments to the debt. This means it won’t be statute barred if you’ve been making payments to it regularly.

      I hope this helps,

      Jen

      • Norm_ski

        Thanks Jen. Totally cleared that up for me.

  • kitchenloren2

    Hi,

    I moved out of my apartment last year and now have tenants in there. When we moved we forgot to let the agency who deal with our ground rent know we had moved. We have just let them know now and the company who dealt with it dont anymore and transferred all details onto the new company. The new company have therefore sent letters to our property in regards to the payment of the ground rent but we obviously have not seen them and our tenants never told us about them.
    We have now been hit with various fees in regards to sending out legal letter, final notice letters and now solicitors fees, all things we never knew about as we would have paid straight away.
    As soon as we found all this out I have paid the fee to make sure it didnt rise in cost but I have told them I will be contesting the fee as no one tried to phone us or email us using other forms of contacts that was transferred over from the first company. Am i right in doing this?

  • Me and my wife own an end terrace upstairs flat. We have allways had problems with our neighbours who live downstairs for a few years. (We share a front door and lobby with two seperate inner doors inside leading to both flats).

    We constantly recive letters stating “to the occupiers of 25” with huge debts, baylif letters and misspayments from downstairs. They pay zero bills and tend to put the address 25 and not there flat no.

    Recently they have been reciving letters saying that they are going to try to gain access through the courts to our property by force to sieze goods. We are worried that although we owe nothing that they will break our joint front door and try to take our stuff.

    Should we be opening some of there mail to set them clear that we are seperate flats and actually not one property? I know that we shouldnt really open there mail and I have only been opening mail sent to the occupier.

    They theow there mail in the trash before we get home and ignore there doorbell during the day. We work during the day so we miss most of the door calls and mail.

    • moneyaware

      Hi Jonathan,

      Thanks for your comment. I can see that this must be a concern.

      I wouldn’t recommend opening your neighbour’s mail. I can understand the temptation but it could potentially be against the law.

      There is some useful advice on the Citizen’s Advice website about dealing with post that isn’t addressed to you: https://www.citizensadvice.org.uk/consumer/post/stop-getting-someone-elses-post/.

      If correspondence is coming to you because it’s not correctly addressed you could put it back in the post with the right address written on. If you were on good terms with your neighbour it would usually be easier to just pass the post on and ask them to update their address but it sounds like that might not work in your situation.

      If companies are writing to “the occupier” then you could try contacting that company to make it clear how the property is divided up to avoid any confusion. They won’t be able to discuss details of any accounts for privacy reasons, but you may be able to ask them to add a note to their records.

      I don’t know if this will help, but there may be changes you can make to the signs on the property to make it as clear as possible that there are two separate flats within the property.

      Kind regards

      James

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  • Laura Harris

    Hi,I don’t know if this is the right forum but I am owed money by someone and am considering taking them to small claims court. I have looked them up on the insolvency register and can see that they entered into an insolvency agreement back in Jan 16. They have got into debt with me since then.
    I have also looked them up on Registry Trust Limited and can see they currently have 7 court orders against them for money. 1 of which is ‘satisfied’ but 6 of which aren’t. One of them is dated since the IVA commenced.
    Im not sure what to do. They owe me about £3k which I had saved. They say they don’t currently have a job. Im just not sure what is the best route to go about trying to get some of my money back? Through small claims (and just adding another court order..)? Can you recommend who it might be best for me to speak to?

    • moneyaware

      Hi Laura,

      Thanks for posting. We tend to give advice to people in debt rather than those owed money, but I’ll do what I can to help.

      Generally speaking it’s better to try and deal with debts without involving the courts. Trying to help the person that owes you money come to a reasonable agreement to repay is usually a good first step. However, I suspect you wouldn’t have posted your comment here if this tactic was likely to work.

      There’s some good advice about ways to get back money you’re owed on the Gov.uk website: https://www.gov.uk/options-if-youre-owed-money.

      Kind regards

      James

  • wasim

    hi i have a small debt with a loan company i had a direct debit set up with them but cancelled it can they still come in my account to take money out in different methods
    way

    • moneyaware

      Hi Wasim,

      They would need a way to access your bank account. If your loan is with the same bank as your current account they could just go in and help themselves, otherwise they’d need your permission.

      If you’re struggling to pay your loan it may be a sign that you need debt advice. We can help, there’s more information on our main website: https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx.

      Kind regards

      James

  • Ryan Baz Willetts

    Hi I have a morgage shortfall debt that hasn’t been acknowledged or any contact with creditor for 6 years in about 5 months. I applied for a loan at my current address and about a week later had a letter from the creditors demanding payment. I haven’t heard a thing from them in over 5 years. When would be the barred limit on this debt? Thanks

  • Clare Rush

    My son is at uni however his credit cards are both registered to our home address. He is behind with both and ignores their letters to get in touch to sort it out. They’ve sent several default notices. The late payment charges and his failure to pay anything at all has taken 1 over the limit so there are further charges for that too. One account has now been passed to debt collectors. Are we liable as parents for this debt? Can they come to our house and take goods to the value of what he owes?

    • moneyaware

      Hi Clare,

      I’m sorry to hear about this situation.

      These days, debts are linked to the individual that took them out rather than the address used.

      Unless you and your son are financially linked, for example you have a joint account, you shouldn’t be liable for the debt.

      If your son ignores the debt the creditor could begin court action to get him to repay it through a County Court judgment (CCJ). If the CCJ is ignored the creditor may use bailiffs. However, they’d only be able to take belongings owned by your son.

      We have a section on our website about the debt collection process. You may find it useful to read:

      https://www.stepchange.org/debt-info/debt-collection.aspx

      If you can, I’d suggest you encourage your son to deal with his debts. We have an online debt help tool that he may find useful:

      https://www.stepchange.org/Debtremedy.aspx

      I hope this helps but if you have more questions please let us know.

      Kind regards,

      Jen

      • Clare Rush

        Thank you so much for the swift response. That is very reassuring. I will check out the links. Much appreciated

  • Michael Mc Donald

    I have been paying minimum payments on my credit card and never missed a payment , my bank is now saying they want me to pay £460 by the end of the month for some reason (payments are normally £79 odd ) – i only get £280 a month as unemployed due to illness and have an appeal lodged – so no way i can give them that kind of payment , can my bank do this if i am paying what i am suppose to ?

    • moneyaware

      Hi Michael,

      I think it would be worth getting in touch with the bank to clarify why they want such a large payment. The minimum payments for credit cards are usually a percentage of the amount you owe. I wouldn’t expect a huge jump unless the balance on the card had gone up by a similar proportion.

      Talking to them and working out why they’re asking for so much should help you to understand the next steps. If there’s a good reason for them wanting such a high payment then you can explain that you’re not in a position to make that payment and see if they can negotiate something more affordable.

      If you’d like some advice about dealing with your debts I’d recommend getting in touch with us for in depth advice. Here’s more information about how we can help: https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx.

      Kind regards

      James