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
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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

    • Sarah

      Hi there
      Iv just had a year from hell due to council tax they deducted 400 a month from my husbands wages even though the debt wasn’t his. I then had a second outstanding debt the bayliffs added 235 on top to deal with it when I contacted them they suggested I pay 30 a week which I really struggled with I contacted them and was told an agent was in my area he would come discuss my options he certainly did unbeknown to me he was a bayliff he gained entry made a note of everything in my house then told me my payments were now 60 a week over less time and added another 235 on top I was mortified. My partner has since borrowed and paid it for me.
      My advice is if you can get a repayment plan in place don’t default as the debt will never go away especially a council tax bill. You would be best to go to court and make an offer to the judge.

  • 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?

    • moneyaware

      Hello Kelly,

      Thanks for getting in touch.

      If you’d like to dispute that you owe the debt, this is outside of our specialism and isn’t something I can advise you on. However whether or not you owe the money is likely to depend on what was in the original agreement, so I’d suggest you have a look back through the paperwork you have to see whether the tax was included. You could also make a complaint to the company if you think you were misled.

      I understand it can be distressing to have debt recovery companies
      contacting you, but I’d like to reassure you that unless you’ve had legal
      action taken against you they don’t have any more power to make you pay than
      the car company. Sometimes debt recovery companies will threaten to send
      someone to your home, but this is something they only do as a last resort as
      it’s expensive. You can read a bit more about the powers debt collectors have
      here: http://www.stepchange.org/Debtinformationandadvice/Whatyourcreditorscando/Homevisits.aspx

      If it turns out you owe the debt and would struggle to pay it back, I’d suggest you get in touch with us. We can take a look at your financial circumstances and give you free advice on how to deal with the debt. You can find our contact details here: http://www.stepchange.org/Contactus.aspx

      I hope this helps.

      Kind regards,

      Laura

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  • Sarah

    I have received a note through my door from resolvecall saying they had been to my property yesterday when orang they said they were on behalf of Arden. I was connected roar den who said I owe £341 to dixens but couldn’t tell me anything else. I have no recollection of this debt at all. Are either of these company’s bayliffs? What can I do ?

    • moneyaware

      Hi Sarah,

      From what you’ve mentioned, it sounds like the visit you’ve had is from a doorstep collector and not a bailiff, however I can’t say for certain if this is or not.

      A doorstep collector has no more legal powers than someone calling you about a debt and they aren’t bailiffs (enforcement agents) and don’t have the power to enter your property and take goods. It’s often easier for creditors to call you or send letters rather than send someone round, but this does sometimes happen.

      I can’t say for certainty if the company was a bailiff or not, but I’d recommend getting in touch with them and asking them exactly what’s happening and what the debt is for. Sometimes debts are passed or sold on to third-party debt collection companies and this can sometimes be confusing as you might not recognise the debt.

      If you contact the creditor they should provide you with information about the debt or the details of the company that’s now dealing with it. From there you can find out if the debt is something you owe and then take steps to deal with it.

      If you recognise the debt after you’ve spoken to the company and think you’ll struggle then we can help. As a charity we offer free, impartial and confidential debt advice and solutions to anyone struggling with problem debts.

      You can visit our website http://www.stepchange.org for more information on how we can help.

      I hope this helps, please get in touch if you need help from us.

      Rory

  • Joseph Boardman

    hi i have recently come a cross debts were i was not credit checked and was really missed sold the loan so i ask the debt collection agency for a copy of my loan agreement as well as the loan company and they are so different
    example time and date of signature i signed the apr is wrong the amount i should pay back is wrong now what can i do about this i have already complained but am i in a good position to fight this ????

    • moneyaware

      Hi Joseph,

      Thanks for your message. If the original debt collector and the
      debt collection agency are showing copies of the agreement that don’t match, this is something you will need to speak to them about. If you lodge a complaint, they should be able to investigate it and send through an accurate copy of the agreement. If you’re unhappy with the response you get, the next step would be to make a complaint to the Financial Ombudsman Service. You can find out how to make a complaint to them here: http://www.financial-ombudsman.org.uk/consumer/complaints.htm

      The only way the debt could be considered unenforceable would be if you took the debt out before 6 April 2007 and no one can provide an accurate copy of the agreement and terms and conditions, including APR. This doesn’t have to be a copy of the original agreement or show your signature, it just has to be the text that was included in the original document.

      I hope this helps.

      Kind regards,
      Laura

  • bubbles

    Hi, in 9 months’ time a debt default should be removed from my credit report due to the 6 year rule. How likely – or how often – do debt collectors go for CCJs at this stage/the 6 year expiration? I have had no contact with the debt collector and I am at a new address. Thanks.

    • moneyaware

      Hi bubbles, thanks for posting.

      It’s hard to say whether the bank will pursue the debt through the court, I’ve spoken to people who receive CCJ’s within the last few months before the debt becomes Statute Barred but there’s no specific yes or no answer to this.

      One thing’s for sure, if the creditor does decide to take further action, the details would likely be sent to your previous address without your knowledge which could leave you unaware of any further action.

      If you did receive a CCJ for the debt, you’d need to provide a budget and complete the paperwork to make sure that you don’t potentially end up with a ‘judgment in default’. This means that the court wouldn’t be aware of your financial situation and if no payments are made to the CCJ the creditor could take action such as a bailiff (enforcement agent) or a deduction from your wages or benefits as two examples of enforcement action.

      Once a CCJ is in place, it would be in place for as long as it takes to repay the debt.

      I hope this helps,

      Rory

  • Shannon Howard

    Hello three years ago I took my son to a company for photos and some how managed tk be talked into receiving these photos for a lot of money 800 plus pounds felt like a fool . Once outside I rang to Cancel this agreement they said I couldn’t as I had left the building . I then Recieved a parcel from them which I sent straight back (have receipt) and they have nwo informed me it was debt and have passed it on to debt collectors . Does anyone now were I stand do I owe this money surely I get so long to cancel any agreement I mean I rang nt even a hour later and what can this company do

    • moneyaware

      Hi Shannon,

      Sorry to hear about the issues you’ve had. This type of consumer advice would be outside of what we can advise on.

      I’d recommend seeking advice from your loan Citizens Advice Bureau (CAB) as this could fall under sales of goods laws.

      If it turns out that you’re liable for the debt and think you’ll struggle to pay, we can help. We’ll be happy to offer our free, impartial and confidential advice to help you deal with the debt.

      Please visit out website at http://www.stepchange.org for more information on how we can help.

      Rory

  • Marie

    Hello iv had a payment plan in place with barclaycard for three years and have always paid on time but today recieved a letter from them saying they have now sent this debt over to asset link capital ,please can anyone tell me what happens now

    • moneyaware

      Hi Marie,
      Thanks for your message. Although you were paying on time and in line with your payment plan, it sounds like you’ve been making reduced payments for a while which may mean that you were paying back less than originally agreed.

      Often when this happens, a debt is passed on to a debt collection agency. This is a normal part of the debt collection process and just means that any payments you do make would usually be to the new company. It’s important to remember that debt collection
      companies have no more powers than the original creditor.

      You can read more about what you can expect from a debt collection company here: http://www.stepchange.org/Debtinformationandadvice/Whatyourcreditorscando/Debtcollectionagencies.aspx

      Some debt collection companies might want to discuss your repayments and come to a new agreement, others will continue to use the same payment arrangement you had with the original creditor. If you do have any difficulties coming to an agreement on how much you should repay then I’d suggest getting in touch with us for free debt advice.

      We can discuss your financial situation in more depth and put together a sustainable budget which will show the debt collection agency what you can afford to pay back. We have over 20 years of experience in dealing with creditors, and most accept and trust that budgets we put together accurately reflect a person’s situation.

      You can get in touch with us online using our Debt Remedy tool here: http://www.stepchange.org/debtremedy It usually takes around 20 minutes to complete and you’ll need some financial information to hand, such as details about your income and your debt.

      If you’d prefer to speak to someone, you can give our helpline a call on 0800 138 1111. It’s free to call from landlines and 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

  • Marie

    Many thanks for your response according to barclaycard I continue with the usual payments for six months then it’s reviewed ,cheers I was just very worried really how this asset link company would treat me with this debt as iv heard terrible things about how they treat you

    • moneyaware

      Hi Marie,

      Thanks for the response. It can often be worrying when debts are passed on but all creditors who deal with these types of debts must be fair, clear, not misleading and must follow the rules when dealing with your debts.

      Rory

      • Marie

        Many thanks il keep u updated as it goes along see what happens ,have a nice day

      • Marie

        In fact iv just researched you and the reviews are fab about you so watch this space you may get a new debtor lol cheers and so nice to read all the lovely positive reviews on your selfs well done

  • sharon

    Hi. If I agrees to a debt management plan it means that I would have ti include my bank account overdraft. Does this mean that the bank will effectively blacklist me from other products like insurance. Also will I ever be able to bank with them again

  • lexxus20

    Hi, I left the UK around 6/7 years ago and had a few debts – not mortgages etc, I am wondering if i decided to return to the UK next year will my debts have fallen off my Credit report?

    • moneyaware

      Hi there,

      Thanks for getting in touch.

      Most things will drop off your credit rating after six years.

      However this doesn’t mean the debts will be cleared and you would still owe the money.

      We’d always advise you to deal with your debts. If you need help repaying your debts, we would be more than happy to help you put together a budget based on your income, debts and outgoings to help create an action plan to deal with the problem.

      You can find out how to get in touch with us from abroad here:

      http://www.stepchange.org/Contactus.aspx

      I hope this helps,

      Jen

      • lexxus20

        Thank you for the reply, so If I was to return the UK will I be able to apply for credit, will these I owed money to be able to come after me if I return? I just want to know so that if I do return I know what my options are and what steps to take.

      • moneyaware

        Hi there,

        This really depends on what’s happened since you left the UK and whether or not any of the creditors took further action against you for the debts.

        We wouldn’t be able to offer a specific yes or no answer on this, but we’d recommending checking your credit report using a credit reference agency such as http://www.noddle.co.uk to see what information is being held about you and this will hopefully offer you more information.

        I hope this helps,

        Rory

  • moneyaware

    Hi Sharn,

    If you include a bank overdraft in a debt management plan it’s usually recommended that you change banks and open up a basic bank account elsewhere.

    This is because the bank has a “right of offset” which means that if you hold any other products with them such as a credit card or loan, they can use the money in your account to make payments to these without needing your permission. By changing accounts, you remove the risk of the bank taking money that you need for essential spending like bills and household needs.

    Credit ‘blacklisting’ is a very common myth where people may think that having poor credit means that you won’t be able to open up accounts or borrow again in the future, which simply isn’t the case.

    Nothing on your credit report is permanent and although it’s ultimately the bank’s decision to allow you to have other products in the future, your credit rating won’t be permanent and you could always look elsewhere.

    Rory