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
  • Samantha

    I am now resident in the UK and having a credit check carried out. Can they access my ongoing debt in the Republic of Ireland.

    • moneyaware

      Hi Samantha,

      Thanks for posting.

      In this case it’d probably be worth getting in touch with one of the main credit reference agencies in the UK for example, Experian, Noddle or Equifax.
      They should be able to help you with your query and offer more specific advice about your credit file.

      I hope this helps,

      Jen

  • Ash

    We own a limited company and myself, brother and mum are named directors. My brother has personal debt and an enforcement agent came to the business premises from the courts. Are the allowed to force entry and collect debts from the business premises?

  • Sam

    I have a default on my credit file for £198.00 from Lowell Portfolio. I believe the debt was sold to them by another debt collectors agency who bought it from Orange in March 2012.
    When looking at my credit report the account with Orange and the other debt company is satisfied. However Lowell’s is in default from 12/03/13. Can Lowell put my account with them in default if Orange has settled? I also have not received any letters stating they had taken control of my debt or any letters stating a default would be applied.
    The first contact I had with them was last Monday when I found the default on my credit score. Realizing this must stem back to orange (which I thought had been resolved with Orange…then with the first debt collection agency due to an unfair cancellation charge),
    Stupidly i paid a settlement fee there and then (Stress from exams the next day and the fact I had had a failed application in principle that morning for the mortgage I need to get ASAP) I thought settling the debt meant it was removed from my credit score but later realized this was not the case at all.
    After more research and days that have passed I am completely stressed out over that fact i paid them anything.
    Need to try my best to get this removed from my credit score as i needed a mortgage approval yesterday?!

    Any help would be massive!
    Thank you!!
    Sam

  • Lucy

    A relation has debt from varied places (from payday loans, to store cards, to unpaid fines, parking penalties, etc). He currently lives with his mum, who is widowed. She is scared that bailiffs will come and take her belongings, because they live at the same address and he has no belongings except his clothes and a few bits and bobs.
    From reading the above, I suspect he has had more than one doorstep collection agent arrive, and there are multiple letters unopened in the house, which could be anything including CCJ requests. (This has been happening for a long time and from experience it easily could be, but as his mum is not allowed to open his post she can’t be sure)
    As a result of all of this, she frequently makes payments for him – which she cannot afford. I really want to be able to reassure her that even though they are in the same house, none of this can come back to her, as it isn’t her debt and bailiffs wouldn’t take her things.
    Please could you advise?

  • Peter Wilcox

    Hi,
    My flatmate is being chased for alleged council tax arrears. This is for a property he owned but that I lived in. The tax was either paid by me or via housing benefit. But it was paid.
    The council obtained a liability order by sending the paperwork to an address they knew he was not at. Therby he was unable to defend himself in court.
    He since wrote to the court and sent a Stat Declaration to the court stating his case. The court did not respond to either.
    Now debt collectors have the matter.
    We now share a flat in sheltered housing. He has no assets beyond a bed, small tv. Other things belong to me.
    He does work.