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