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

posted by in Living with debt

UPDATE October 2017: The rules around creditors sending court forms have changed. You should now receive a ‘letter of claim’ before any court action. Read more about the new Pre-Action Protocol for Debt Claims.

If you need help right now use our anonymous online advice tool Debt Remedy. In around 20 minutes you’ll find the best way to deal with your debts.

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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

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 Living with debt
  • Dave

    Hi
    Can anyone advise me please I had bailiffs at my house today while I was at work and gained entry to my house as he moved my partner out of the way and after scaring her with saying he will take everything she said she would try and get the money even tho the debt has nothing to do with her .as the bailff asked her for a house let if she went out but she refused and he said do you have any passports the only ones she could find was my 7 year old twin girls passport then he left with them after all this had gone on I returned home from work and he came back but we never answered the door so he posted the passports back to me this doesn’t sound right that they can do that so ant advice would be greatfully received thanks

    • moneyaware

      Hello Dave

      I’m really sorry to hear that you’re experiencing this.

      Having a visit from a bailiff usually means that you are in need of debt advice, so we’d strongly recommend that you give us a call. Gather together details of your income, monthly outgoings and debts and call us on:

      0800 138 1111 (Mon-Fri 8am-8pm, Sat 8am-4pm)

      We have lots of information on our main website about how to deal with bailiffs and what rights they and you have, but the main thing is – don’t ignore the situation:

      https://www.stepchange.org/debt-info/debt-collection/bailiff-help-and-advice.aspx

      Some general rules are:

      Bailiffs must send a letter before they visit.

      This means as long as your creditor has your current address, you’ll get warning before the first visit from a bailiff.

      There is a set process that bailiffs have to follow:

      Your creditor will send instructions to a bailiff. This is called a warrant of control

      The bailiff will send you a letter called a notice of enforcement. This gives you seven working days’ warning before they visit your home

      If you don’t pay the debt, a bailiff will visit you. They’ll usually try to come into your house and make a list of your goods

      It’s rare for them to take goods away on their first visit. Instead they’ll usually leave your goods with you, as long as you make payments towards the debt. This is called a ‘controlled goods agreement’

      If you ignore the bailiff, or if you don’t make the payments you’ve agreed, they’ll return and take away your goods to be sold

      If you believe that a bailiff has acted unfairly, or not followed procedure you may be able to make a complaint about them.

      I hope that this information helps,

      Thanks
      Becca

  • James

    Hi
    Can someone please offer me some advice? Last year I moved back to the Uk after having lived in Luxembourg for a number of years. When I moved back I must have had a small outstanding debt with my Luxembourg mobile phone contract – a maximum of €50! Ive now received, one year later, a letter from a company called Creditreform UK who inform me I owe them €344!! Do I have to pay this? Can I not just pay back the original €50 debt? What will happen if i irgnored this letter??
    Thanks

    • moneyaware

      Hi James

      Thanks for your message.

      We would not advise that you ignore letters about an outstanding debt, this is because you could miss things like default notices, notices of court action or a statutory demand.

      Your debt has been passed to a debt collection agency; you can read more about them here: https://www.stepchange.org/debt-info/debt-collection/debt-passed-to-a-collection-agency.aspx

      Debt collection agencies are companies who specialise in collecting debts where the original creditor can’t get arrears repaid. Debt collection agencies don’t have any special legal powers. They can’t do anything different to the original creditor.

      Letters or phone calls from collection agencies can be worrying. They may refer to court action or that they’re sending someone to your home. However, they’re not allowed to lie or mislead you about their legal powers or make an excessive amount of phone calls.

      They could take court action if you don’t pay. But this is less likely to happen if the collection agency is aware that you’re seeking help with your debts or if you agree to a payment arrangement.

      In order to deal with the debt, you should offer to pay them only what you can realistically afford.
      Usually, if a debt has been sold to a collection agency interest and charges will usually stop. The original creditor may already have stopped these after the account defaulted.

      However, in some cases a debt collection agency may continue adding interest and charges. But they can only add amounts which are allowed in the contract you signed with the original creditor.

      If the debt is still owned by the original creditor they may continue adding interest and charges while the collection agency is contacting you.
      I hope this helps, if you’re struggling financially you should consider getting debt advice, you can do this online at: https://www.stepchange.org/DebtRemedy.aspx

      Thanks,
      Becca

  • Mel

    I fell into arrears with my water rates last year and came to an arrangement. Which I cleared in April. The debt collection company said even though the balance was cleared I had to stay on the same weekly payment terms with them. This means I have now paid my water rates in full up to April 2018. Even though it would have suited me financially to spread the payments over 12 months – Were they allowed to keep me on this payment process with them even though I was no longer in arrears?

  • Iris

    Hi there,
    Can someone please offer me some advice?
    I was joining a gym but they never charge me the correct amount in my correct account. They charged always to my friend’s account. We tried to solve this problem and sending emails to fix it. After 2 months my friend and me moved to another country and we sent an email with the flight proof. We called them and they told us that everything was right and that we didn’t need any email confirmation. Now C.A.R.S a Debt Collection Agency is calling us asking for 600£. We are not agree with this, what can we do and what can the collection agency do against us?

    • moneyaware

      Hi Iris,

      Apologies for the delay in replying.

      I would recommend contacting the gym and explaining what’s happened. If they told you they wouldn’t charge you for the gym membership they shouldn’t have passed your debt to a debt collection agency. It sounds like there has been a mistake and the gym have passed this debt on. It will help you if you have details of your phone conversation, to prove they told you the debt wouldn’t be collected – things like the date and time of the call and the name of the person you spoke to.

      There’s some information on our website about the powers companies have to collect UK debts if you live abroad: https://www.stepchange.org/debt-info/dealing-with-uk-debts-abroad.aspx. This would only apply if you actually owe the money though, so the first thing to do is dispute this debt with the gym.

      Kind regards

      James

  • Paul Silvester

    I entered into an agreement with a credit card company in 2000 and defaulted in 2004 due to il health. The debt was ‘allegedly’ sold to a collection company in 2004. I have been making payment each month since then. In 2009 I asked for a copy of my agreement etc and they sent me a document claiming it to be the terms and conditions from 2000. It didn’t seem correct so I repeated my request and in 2010 they sent more paperwork saying these were the terms and conditions. However they are different. I also asked for a copy of the original notice of assignment and this was never sent.
    However, as I do owe the money I have carried on paying, in 2018 it will have been 14 years. Recently they have started harassing me to increase the payments even though I have a letter from them dated 2010 accepting my monthly payment offer and without stipulating that this can be reviewed. Were do I stand on this. Is there a custom and practice angle here? Should I press for the correct terms and conditions?

    • moneyaware

      Hi Paul,

      It’s hard to say whether they’ve fulfilled their obligations under the Consumer Credit Act by providing you with the information they’ve provided. It seems strange that there’s a disparity in the information they’ve sent you, when it should have been the same paperwork.

      Typically we’d recommend looking into original agreements if you weren’t sure if the debt is genuinely in your name. If you accept that you owe the money then it often isn’t worth pursuing. On the other hand, there’s nothing wrong with making sure everything is in order.

      If you’d like more in depth debt advice we can help. There’s more information on our website here: https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx.

      Kind regards

      James

      • Paul Silvester

        It is not an issue of whether the money is owed, I have to follow the law and I expect my creditor to without fail and at all times. My request for your opinion was more related to my creditors acceptance in 2010 of a monthly payment without any mention of this being reviewed in the future. I consider that this constitutes a binding contract as it meets the definition of comprising four key elements: offer, acceptance, consideration and intent. I would be grateful for your view.
        Thank you

      • moneyaware

        Hi Paul,

        Apologies for the delay in replying.

        I’m not a legal expert, so it’s hard to know if the payment acceptance 2010 constitutes a binding contract.

        Someone with a knowledge of contract law may be able to offer you more guidance.

        Kind regards

        James

  • Emma

    I had a mortgage with my ex husband. 4 years ago we separated and I was forced to leave with my son. I had to rent privately and support myself and my child on my own. Before I left I had a statement of fact drawn up where he signed admitting that any debts run up at the property were without my knowledge, and that he would fulfil the mortgage payments on the agreement that when he sold it I let go of any claim to equity. I had no choice but to do this as I couldnt afford to stay there myself. Anyway, within a year he moved away, abandoned the house and it got reposessed. I was not contacted by the mortgage company and i didnt know until it was too late. The house was sold cheaply and there is now a £25,000 defecit. After a year or so the mortgage company sent a debt copany to find me. I did an income and expenditure form and I agreed to pay £10 per month (yes for about 200 years!!) I set up a standing order and have paid this every month for 3 years now. I moved last year and havent heard anything from them yet I have still been paying. I am worried about the future now that this will always be hanging over me. I am due to move in with a new partner into a house he owns and I am worried that this debt could harm him or affect his house etc. I dont know what to do about it but I cannot pay any more but clearly cant afford to pay this debt. Help please!

    • moneyaware

      Hello Emma

      I’m sorry to hear about your situation and for not replying more quickly.

      It’s good that you’ve worked with the mortgage company on a plan to manage this debt, but there may be better ways to approach this. If you contact our advice line they will be able to talk through the options, confidentially and for free.

      You can reach our customer service team on 0800 138 1111, Mon-Fri 8am-8pm, Sat 8am-4pm.

      Also, please take a look at the information on our website about mortgage arrears https://www.stepchange.org/debt-info/mortgage-arrears.aspx

      I hope this is a help.

      Kind regards
      Jenny

  • Marguerite

    Hi there i just need some advice, I was on pip 2 and half years ago and was given the mobility component but not the care, then in August 2016 I asked for a change on circumstances and in July 2017 finally had my face to face assessment, I hadn’t heard anything then few days ago I was told I will lose my mobility as ill only get the standard mobility but will now get the standard level care, they worked it out that I had been waiting 14 months for it and owed me 3145, they put it in an old bank account that when I joined an iva 2 years ago I was told to not use anymore, now when I called Halifax to release that money they told me that my iva agents must called to authorise this, I called the iva and they said i may lose all that money to my iva, I pay my 99 a month as agreed as it automatically comes out of my bank, I have pleaded with the company and emailed them explaining why I need this money as I’ve been trying to cope without it for 14 months. I’m not sure what I can do apart from wait until they decide to let me have any of the money at all, I am losing my mobility car soon and I have a disabled son too and I have extreme anxiety when it comes to public transport and being around lots of people or not in control of a vehicle I am travelling in, I won’t go out alone as I get scared. Lost my mum in April to cancer and I am finding all this extra stress is causing me extreme psychological distress. Xx

    • moneyaware

      Hello Marguerite

      I understand how stressful this situation is for you, I hope things improve soon.

      I’d suggest you discuss this with the people managing your IVA – they will be able to give you specific advice relating to your circumstances. You could also complain to the bank. They have a responsibility to investigate all complaints and will at least be able to give you an explanation for why they’ve not released the money paid into the account.

      If you’re not happy with their response, you have the option of referring your complaint to the Financial Ombudsman Service.

      Kind regards
      Jenny

  • Garry

    I signed up to Sports Direct Gym a while ago and they have a camera on the car park which automatically takes pictures when you enter and leave. I was told during my introduction that I need to enter my number plate into the system so that when i enter the car park and scan my card it proves I am in the gym and not just parking there throughout the day.

    So for the first 10 days of going to the gym I scanned my card in as I was told I needed to do, then on day 11 I realised that 1 of the letters on the number plate (on the system) was wrong. So I changed it to the correct one. Anyway after about a month I received 10 parking tickets from G24 for £100 each. I got evidence from the gym and it corresponded with the times of the tickets to prove I was there. They then said they understand but i need to pay a admin charge of £15 per ticket. So I said no I am not paying £150 for an admin charge when i was parking there legally. Now they have sent the original £100 letters and are asking me for payment.

    I was just curious what can they actually do. I believe if it goes to court then I will be able to defend that the tickets are not enforceable, however I am worried that I might be able to get a CCJ without having the opportunity go to court?

    • moneyaware

      Hello Garry

      If you don’t pay the amount owed, the parking company could apply for a County Court judgment (CCJ). If they went down this route you’d have an opportunity to put forward a defence if you didn’t agree with the amount they say you owe.

      It’s nearly always better to try to resolve these kinds of issues before they go to court.

      For private parking companies such as this, there’s an appeal process available through an independent adjudicator.

      If you want more advice on challenging unfair invoices from private parking companies, there’s more information on the MoneySavingExpert.com website. See this guide here https://www.moneysavingexpert.com/reclaim/private-parking-tickets

      I hope this is a help.

      Kind regards

      Jenny

  • Denise Scatiggio

    Hi I really need an advise.
    I’m Italian, from Venice but I had been living in England for 3 months.
    At that time I signed up Pure Gym in Milton Keynes.
    I joined the gym with a membership for 1 year but a couple of months later I had to get back in Italy because my mom was really ill and I forgot to delete it.
    When I was in England, I was leaving with my aunt and she let me to use her bank account when I signed up the gym because I hadn’t been able to get one by myself ( I have ever understood why).
    When I left my aunt cancelled the membership by her bank account but then she started receiving letters by credit resolution services which asked us to pay the fee of 30 $. She straight away went to the gym and explained the situation about me.
    At the beginning the manager of the gym said we didn’t need to pay because I wasn’t leaving in England anymore and I only had to cancel the membership by the website ( and I did it ) but with the time the amount of money had been increasing till 150$ .
    My aunt had called few times the bank, the gym and whatever institution to sort out this issue.
    For all the time, everybody told us to not be worried about this and there is no need to pay it.
    Then, the credit resolution wrote me by email and I had been quite clear saying that I’m not willing to pay this money for something that is not my fault and explaining all the situation.
    They asked me to show them a proof of address to cancel the membership without paying and so I did it but a week later they come up with other bullshits and so for them I have to pay 150$ .
    At this point, I really don’t know what to do.
    One part of me think that they can’t do anything because I’m not in England and they don’t have any details or informations about me but another part says “if one day I want to get back there, will I have any problem about it?”
    I really need an advise.
    Sorry for the long “story” and maybe for some mistake.
    Denise

    • moneyaware

      Hi Denise

      As you have been told by the gym you don’t have to pay, you are right to fight this. You should get in touch with the gym again and make a formal complaint. It’s also a good idea to inform the debt collector that you are disputing the debt and they should hold off the collection activity during this time.

      I hope this is a help
      Jenny

  • Mark

    Hi there, I need some advice.
    In March 2015 Cabot debt collectors issued a county court summons against me for a credit card debt. This so called debt dates back from 2002 when I was incredibly mentally ill. I could not replay the credit card debts and stopped paying the Halifax in 2006. The CAB negotiated that I pay £1 per month. Cabot took over the debt in 2009 and started harassing me.
    To cut a long story short, in 2014 I stopped paying the £1 per month because I believed that the debt was not enforceable on either the grounds of mental health or that Cabot didn’t have the original or a true copy of the original credit agreement.
    After much harassment and abuse from Cabot I finally got a copy of the original credit agreement. They haven’t got the original and what they sent me would not stand up in court as a true copy. I have checked this out.
    In March 2015 Cabot issued a county court summons for the alleged debt through solicitors called shoesmiths. These are very unscrupulous people.
    I asked for more information from shoesmiths about the alleged debt and never received it.
    Therefore, without the full information, I submitted a holding defence.
    In the following months, nothing happened and the summons did not go any further. It was impossible to get anywhere with shoesmiths. There were blackmail tactics from them as they tried to get me to cave in and start to make repayments. I refused and continued to tell them to either proceed with the summons or drop the action
    Finally about a year ago, the action was dropped, over 18 months after it was originally started.
    There was a short letter and legal document from shoesmiths stating the action was dropped.
    I’ve heard nothing from Cabot since until yesterday when they sent a letter with the debt listed and amount, but with a different reference number. The asked if I wanted to talk to them about the debt and to see if I wanted to accept their offer. They never made an offer in the letter.
    This obviously has got my very worried and scared again. My health is extremely poor again and I can’t cope with all of this starting.
    What are they up to? What can I do.
    It’s my reading of the situation that they know that their so called true copy of the agreement won’t stand up to the Legal test in court or they would have certainly gone to court to get the debt enforced.
    Is there anything I can do to stop them from harassing me again?
    I thought everything was over and done with.
    Should I ask them to formally write off the debt or should I do nothing and see what, if anything, their next move is.
    Incidentally, Cabot have already stopped pursuing two other alleged debts they held against me and I successfully won against four other debt collectors/banks as they stopped all collections against me.
    At the time these alleged debts occurred I was seriously ill and had no idea what my actions were at the time.

    Many thanks.

  • Leander

    Hi,

    A year back I signed up for a gym membership at my university campus, which demanded payment in advance. The charge was £165, but I could not pay by the cooling period of 14 days, as my student finances hadn’t arrived. Nonetheless, I never attended a single day as I was overwhelmed with coursework. I offered to make monthly payments to uphold the honour for signing the agreement but they refused to accept any payment unless it was in full.

    As I couldn’t pay the full cost upfront, they sent Credit Resolution Services to collect the money plus an extra £200 that the services added. They called me and said that they could take court action against me if I didn’t pay them the full charge. As I still could not make the payment and was entering bank overdraft, I agreed to pay £20 a month, but the catch was that they added £5 to every separate payment, and they added £25 on every month I couldn’t pay. This was in December 2016.

    Recently I have been in overdraft often, working to steer away from un-arranged overdraft, and I can’t keep doing this. I am a biochemistry student, and I have been taking prescribed anti-depressants due to this issue. Now, I have paid £225 in total, way over £165 for a membership I never used, and I still owe them £305.

    Credit Resolution Services has sent a letter saying that they will file for legal action unless I continue paying immediately. What are my options?

    Thanks,

    Leander

    • moneyaware

      Hi Leander,

      Thanks for your message.

      There are two directions you could look to take with this debt:

      1. If you feel like you shouldn’t have to repay this debt you could make a complaint to the university gym and explain the circumstances. If they agree that you shouldn’t owe this money then they may be able to call the debt back from the debt collector.

      2. If you’re willing to repay the debt but can’t currently afford the payments they’re asking for then you could look to negotiate a lower installment while money is tight. We can give you more advice on this and any other money issues you might have. Here’s some details about how we can help:https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx.

      Kind regards

      James