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

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

Last updated: 20th February 2015

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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 unsecured debts.

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 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’ve 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 Financial Conduct Authority website.
  2. They cannot break data protection laws, so they cannot speak to your family, friends, neighbours or an employer.
  3. They 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 don’t need to talk to them if you’d prefer to talk over the phone or by letter (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.

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 there,
    Thanks for your message. I’m sorry to hear you’re finding it hard to cope financially, but it’s good that you’ve started to take steps to deal with your debt.

    It’s also good to hear you’re in the process of getting a new bank account to protect your money – this is often something we suggest to people when they get in touch with us and have debts with the same bank as their salary goes into.

    Your bank shouldn’t be able to take money from your salary at source at this stage. Often the only time a creditor would do this is when they have already taken court action against you and are still unable to recover the money.

    You are able to get in touch with your bank and offer them a revised payment per month. As you’d be offering them less than the amount you originally agreed to pay back each month, they don’t have to accept your offer. However they may be more
    likely to accept your offer if they understand more about your circumstances and see that this is realistically what you can afford to repay.

    We have over 20 years of experience in dealing with creditors and putting together budgets for our clients. Many creditors trust that the budgets and payment offers we put together are realistic and sustainable, and may even decide to stop or reduce the fees and charges they add.

    As a charity our advice is free and professional, and we can help you put together a budget and recommend the best way to deal with your debts. There are a couple of ways you can get in touch with us – either by giving our helpline a call to speak to an advisor, or using our online Debt Remedy tool if you’d prefer. You can find
    out more about how to contact us here: http://www.stepchange.org/contactus

    I hope this helps.

    Kind regards,
    Laura

  • KENNYBOY

    As a former Bailiff for Equita how we earnt a wage was to force people into paying by using bullying tactics especially clamping cars or gaining entry into homes and listing goods to be removed, This is how we got trained and made to work as we had to meet a monthly quota of collecting full payments, the office had a daily routine of making false visits on to cases and therefore putting on false charges, a small debt of say £100 would end up approx £350 this was routine. If clients had more than 1 debt as long as 1 was paid in full that was the only time an arrangement to pay the outstanding was made, even then we had our charges on the debt and made them pay approx £100 per month to clear, the only time it got sent back to the council was if a complaint was made other wise the council left us alone to collect in any manner possible.

  • moneyaware

    Hi Louise,

    Debts nornally only show for a maximum of 6 years on your credit report, so debts that you’ve repaid for longer than this sometimes won’t show on your credit report.

    This doesn’t affect your responsibility to repay the debt and the debts aren’t written off if they don’t show on your credit report any longer.

    I hope this helps,

    Rory

  • Lib2015

    Lib2015

    Hi

    Me & my hubby has personal loans & credit cards to pay but will leaving UK permanently to work abroad. But willing to pay monthly. How to? Any suggestions please. Thanks!

    • moneyaware

      Hi Lib2015,

      If you can keep a UK bank account open then you can make payments via Direct Debit like you would based in the UK. If you don’t have a UK bank account it can be trickier but still possible.

      If moving abroad is going to leave you struggling to keep up with payments then I’d suggest getting in touch with us for advice. Call our Helpline and we’ll talk you through the options: http://www.stepchange.org/Contactus.aspx.

      Kind regards

      James

  • moneyaware

    Hi Claire,

    Parking fines can be tricky to negotiate payment plans as (depending on the type of fine) they can have more powers to collect the debt than something like an overdraft or credit card.

    It may help with the negotiations if you show them your workings out for the £60 a month offer. If they see your income and outgoings won’t allow any higher payments then they may be more willing to co-operate.

    If you’d like more in depth advice about dealing with this debt then you could give our Helpline a call: http://www.stepchange.org/Contactus.aspx. We can do a full debt advice session with you and see if there are any angles you’ve not yet explored.

    Kind regards

    James

  • susan

    Hi. I live in Scotland and would like to understand my debt.
    1- I created a debt at a previous address and moved never heard anything then a year later moved again I was in the property for 1 month so wasn’t registered on the voters roll and I got a letter for this debt – how did they find me ?
    2- the debt was originally £400 now £750 what’s the likely hood of this been took to court ?

    • moneyaware

      Hi Susan,

      Thank you for posting.

      It may be that your new address appears on your credit report and this is how your creditor has managed to find your new details. This could happen if you’ve updated your address with a different creditor or have taken out new credit at your most recent address.

      We’d always recommend you keep your creditors updated about an address change, as it is your responsibility to let them know of any changes to your contact details.

      There are several different actions your creditor can take to try to get you to repay your debts – court action is expensive and tends to be a last resort,
      but it’s likely to be a course of action your creditors can consider taking. However if you get in touch with your creditor to set up payment arrangements for the debt, they may be less likely to resort to court action to retrieve it.

      You can find out more about what actions your creditors can take to retrieve a debt
      here:

      http://www.stepchange.org/Debtinformationandadvice/Whatyourcreditorscando.aspx

      If you’ll struggle to repay the debts, I’d suggest you get in touch with us for free and impartial advice. We’d be happy to take a look at your situation and discuss any possible debt solutions with you to help you repay
      your debt.

      So that we can give you the best possible advice we need to be fully aware of your current financial situation. To do this we’d to put together a budget using your income, household bills, living costs and a list of your debts. Once we have this information we can offer specific advice and debt solutions that are tailored to your situation.

      There are two ways you can get in touch with us:

      You can use our free, online Debt Remedy tool on our website at http://www.stepchange.org/debt-remedy. This is an anonymous tool that is available 24 hours a day; it will guide you through the process of completing the budget and then offer you the best advice for your situation. If you get stuck or have any questions, you can call us or web chat with us.

      If you’d prefer to speak to someone you can call our Helpline department which is free from landlines and most UK mobiles. Please call us on 0800 138 1111 and we’re here Monday to Friday 8am to 8pm and Saturday 8am to 4pm. It would be helpful to have some information about your budget when you speak to us as this will save you some time.

      If you have any further questions please don’t hesitate to get in touch.

      Jen

  • Caroline Crothers

    Hi, I live in Northern Ireland and I’ve got myself into some debt. I have a personal loan of £6.5k and an overdraft of £1.5k with the bank my current account is with and credit card debt with two companies for £6k. I am up to date with payments but can no longer afford to pay. I’m not sure what the best thing to do is as I don’t want to get into further debt or debt collectors calling.

  • anthony

    My wife and I are oaps and are debt free, however a debt collection agency has been calling about our son who apparently owes past community charge he only resides with us on occasion when he breaks up with his partner etc , he is thirty five years old . He gives our adress out for his mail. The collection agency have been told this but they have infomed me that they will attend my property to remove goods , when I infomed them that all the goods at my property were my wife and mine they said that l would require receipts to that effect can they do this ?

    • moneyaware

      Hi Anthony,

      No, the collection agency shouldn’t be trying to recover a debt from an address they know is incorrect.

      It’s probably best to ask your son to update the addresses on his accounts to his current address so he can deal with these issues.

      It’s quite rare that any debt is collected by goods being removed, there’s lots of opportunity to get arrangements set up before it comes to that. If your son is struggling financially he could contact us and we can give him advice: http://www.stepchange.org/Contactus.aspx.

      It’s also worth pointing out that normal debt collection agencies don’t have the power to take goods themselves. It’s only enforcement agents (sometimes referred to as bailiffs) that can remove goods and that would involve some sort of court action first.

      Kind regards

      James