Debt Problems – What Creditor can do and can’t do

 Debt Problems-What Creditor can do and can’t do

Debt Problems-What Creditor can do and can't do

There are a lot of worrying thoughts and misconception about creditors that what they may do and cannot do during your debt problems.

We hear from my clients that they are scared of debt recovery agent and Bailiff knocking their doors.

 Debt Problems can create a lot of other family problems.

Debt Problems must be dealt with in a timely manner.

The rules around creditors sending court forms have changed. You should now receive a ‘letter of claim’ before any court action. It is a new Pre-Action Protocol for debt claims.

Call our office on 0203 318 0990 for immediate debt advice.

The creditors will send you letters and call you as they need to collect their money from you once you have broken terms of your signed agreement with them. It does not matter if your debt is from Halifax, Natwest, Lloyds, HSBC, Nationwide and Barclays.

Your debt is regulated under CC Act 1974 amended 2006 and it is unsecured, the creditor can use below collection process.

It is important to know your rights to put you in ease from your Debt Problems.

It is to be noted that advice below on your debt problems is about what creditors can do with your unsecured debt. You may find more information on our website www.acmecredit.co.uk or write to me on debt@acmecredit.co.uk

Debt Problems what creditors can do?

Your Creditors will certainly do the following soon

1. Your creditors can send you payment demand letters and can call you during day hours.

2. Your creditors or third party collection companies may send you local doorstep collectors, kindly note they are not bailiffs.

The doorstep collector has no power to enforce the debt and threaten you.

3. They can continue to add interest and charges to your account in line with the original agreement.

4.  As a customer, If you bank with the same creditor whom you owe money or your current account was used to draw funds to pay your credit card or loan payment even if you did not allow it.

Although the bank does not need permission from you it does need to warn you in advance, this is called ‘Bank’s right of offset.’

Your Creditor will do the following in a few months

5. You will receive default notice after missing 3-6 months repayment on your credit commitment.

Missed repayment serve as a warning that your account is about to default.

A default notice will be 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.

It is important that you must bring your repayment up to date if you do not want to receive default notice on your credit report.

If you can’t afford to pay repayment on your credit card or loan accounts, please take immediate debt advice.

We strongly recommended that you should not use your second credit card to pay your first one.

6. Your creditors do not want to spend their time and efforts in chasing you for payment demand as it cost them to recover more, thus they may pass your debt amount to debt collection company.

The debt collection company will act on recommended enforcement action from original creditor and will be consistent in their approach in contacting you.

7. Your creditor can apply for County court judgment (CCJ). If you receive them, kindly seek immediate help from a qualified debt advisor. If there is no response from you, it is likely you will receive ‘Judgement in Default’.

8. Your creditor can apply for CCJ and further can enforce the debt repayment via ‘Attachment of earnings’ or Charging order if you own your property and has equity in it.

Do not ignore payment demand letter

Your creditor can also apply for bankruptcy order if your debt is more than £5000.00 as single account debt. Although it is not common in regulated debt collection process.

Please read our blog on CCJ and what you should do.

Debt and Court Order-What you must Know -Helpful Tips

Debt problems what creditors can’t do?

The creditor can’t call you on odd hours of the day especially early morning or late evening.

They can’t put psychological pressure on you or harass you, they can only request you to pay while you are going through debt problems.

Debt collection process and guidelines under Financial Conduct Authority regulation – refer to below link.

Check out FCA debt collections guidelines

New GDPR rules explained

Your creditor can’t break data protection laws.

Your creditors can’t discuss your debt problems with your family members, friends or employer without your specific permission.

  • They cannot pretend to possess legal powers they don’t have, for example by making their letters look like court documents.
  • Your creditor cannot claim they can send bailiffs to your property without a court order.
  • They cannot add excessive amounts of interest or charges neither can they increase the rate of interest because you’ve missed payments.
  • They can’t add collection charges which are more than the costs to them. For Example, a creditor couldn’t add £100 for sending a letter to you which will have cost them much less than this.
  •  The creditor cannot chase you on social media and ask you publicly to pay the debt.
  •  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.

FCA Debt Collection Regulation

In practice and due to revised new debt collection regulation under FCA regime, you’ll find many creditors are more reasonable than you might expect, especially if you explain your financial position and willingness to pay and let them know you’re getting help to try and sort it out.

Please call our office on 0203 318 0990 for further advice and help on court claims.

There a range of solutions depending on whether you are salaried or self-employed or you are a director or shareholder of a limited company.

Should you enter into a debt solution with us, fees will apply.

IVA’s are formal solutions and failure to keep to the terms can result in your IVA failing and you could end up bankrupt.

Our office offers all types of debt solutions and we have a strategic partnership with Insolvency Practitioners for formal debt solutions.

Rajnish Tyagi is an experienced and Cert DR qualified debt advisor at Acme Credit Consultants Ltd. He specialises in offering suitable debt solutions to clients.

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