If you’re in debt, you’re not alone. However, while such a thought might be of minor comfort to some, the very mention of debt collection agencies can send shivers up the spine. If you have creditors and you have fallen behind on repayments, they will have the ability and legal right to collect the debt from you.
However, there are many misconceptions about what creditors can and can’t do when chasing a debt. In this article, we’re going to explain exactly what you can expect and what you shouldn’t be subjected to.
What can creditors do?
- They can contact you via email, letter or phone in order to chase the debt you are carrying.
- Although slightly more unusual these days given the cheaper forms of communication available, some creditors may send doorstep collectors. These are not bailiffs and therefore have no more power than someone writing you a letter.
- They may continue to add interest charges to your original sum, providing they are in line with the original agreement.
- They can exercise a ‘right of offset’. If you owe them money and they owe you money they can “net” or offset the amounts. An example could be if you have money deposited with a bank and also have a credit card or loan which is in arrears.
- They can pass the case onto a third party debt collection agency. It is important to bear in mind that such organisations don’t have any more legal power than your creditors.
- In some cases, a creditor might issue a statutory demand, which if ignored could lead to bankruptcy.
- They are allowed to file for a County Court Judgment (CCJ) against you.
- Indirectly, creditors can damage your credit score as a CCJ is published making it more difficult and expensive to raise further finance in the future.
- If you do not repay the debt after the CCJ the credit may also try to recover the debt by applying to the court for:
- an Attachment of Earnings. This is an instruction from the court to your employer to deduct regular amounts from your wages to be paid in the first instance to the court for onward transmission to the creditor.
- a Charging Order – this effectively secures the debt against property you may own. In some cases if the debt remains unpaid the creditor may then apply to the court for an Order for Sale – forcing you to sell your home.
What can’t creditors do?
- They shouldn’t harass you. As a debtor, you have a duty to keep them informed of your situation and intent to pay, but that doesn’t give them carte blanche to call you persistently throughout the day.
- Data protection laws prevent them from speaking to your family, employer or friends.
- If somebody calls at your home claiming to be a bailiff when they are actually a doorstep collector, they are committing fraud. Remember, these people do not possess any additional powers.
- The rise of social media has made it easier than ever to track people down. However, creditors and debt collection agencies should never stalk you on the likes of Twitter, Facebook or LinkedIn.
- If you do receive note of a CCJ against you from the court, and if you make an offer which is accepted by the judge, your creditor is not allowed to contest it – they must abide by the arrangement.