Repayment Arrears and Debt Collection
You have been in repayment arrears with your debts for one month and more. If yes, have you received default notices, it is extremely likely that you will hear from a debt collection company. This is the first step towards debt collection in full by various debt collection companies. These could be via a reminder letter or some sort of strict approach i.e legal action threat. Repayment arrears and debt collection activities are interrelated to each other.
These debt collectors are debt collection companies who are now regulated by the Financial Conduct Authority. There are solicitor firms who also can send a demand letter for debt collection on behalf of their client.
There are specialist collection companies such as Moorcroft and Wescot who work with lenders and are targeted at collecting outstanding debts.
The creditors sometimes outsource their collection of these types of companies. Debt collection companies set agreed terms on repayment arrears which provide amongst other things that you are treated fairly during the collection process.
As alternative lenders do frequently sell debts that have become “impaired” which means they have fallen into arrears.
The debt purchasers generally buy the debts at a discount but are entitled to collect the full sum from you.
The debt purchasers can apply charges and interest, but only if this is covered by your original agreement.
If you are unsure as to whether your debt has been sold or is simply being collected, it would be best to contact the original lender and find out if the debt has been sold or not.
Your credit card and personal loans Debt are generally covered by Consumer Credit Agreements and must be regulated by The Financial Conduct Authority. The past few years have seen numerous debt collection companies exit the industry as a result of tougher regulation. They must demonstrate they have systems and processes aimed at “treating customers fairly”.
- Make sure they undertake data protection checks before they discuss your debts and your payment plans.
- Take extra care to make sure you understand the debt collection process, especially if you are vulnerable ie, struggling with a health issue or a disability or struggling to understand as English is not your first language
A debt collection agency can send someone to your house, these people are referred to as “field agents” or “doorstep collectors”.
If you do receive a visit, remember that these people are not bailiffs, you do not have to open the door or let them in. If you do open the door, make sure you ask for proof of their ID. The most important thing to remember if you do receive a visit from a “field agent” or “doorstep collector” is that they cannot remove any goods from your home. You also shouldn’t make any cash payments to them, it would be better to call the debt collection agency following the visit and set up an arrangement directly with them.
Agree on an Affordable Payment Plan
It’s wise to engage with the collection company and agree on an affordable repayment plan. They are likely to ask you to provide the details of your monthly income and expenditure.
You can either complete one of their forms or supply your own. Please take help if you are unable to prepare your financial summary sheet which will help you work out your monthly budget. It also identifies how much you are paying to other creditors you owe money to.
If you feel that this task is difficult and you need help, there are charities and specialist debt solution practices that can help you set up payment plans. All debt management and debt collection companies in the UK must be regulated by The Financial Conduct Authority (FCA).
Acme Credit Consultants Ltd offers a debt management plan.
Court Action (N9, N245, N244, N56 and many more)
If you do not engage and respond to the debt collection company’s efforts to collect the debt, they are likely to threaten you with court action. This action is known as county court judgment (CCJ). If you receive a county court claim form, this is the first step towards obtaining a judgment and it is vital you take action.
You have 14 days to reply when replying to the claim form, you have options on the form as to how to respond:
- Admit the claim if you agree that you owe the creditor that amount of money. You will need to complete the form which will include providing a breakdown of your income and expenditure. You must be able to show the court how much money you have available to repay the debt.
- File a defence if you do not agree with the amount of money that the form states you owe. It is advisable to seek advice if you intend to go down this route.
- Submit an acknowledgement of service if you intend to defend the claim, but need longer than 14 days to prepare the defence.
Debt Help is just a call away
Please call our office on 0203 318 0990 for further advice and help with court claims. Our team could offer you suitable service from our experts.
If you need some help with unknown debt or have been contacted by a collection agency, get in touch.
There is a range of debt solutions available for your needs. It depends on your personal circumstances, i.e., you are employed or self-employed or you are a shareholder of a limited company. Should you enter into a debt solution with us, fees will apply.
All debt solutions need to be carefully considered. 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 strategic partnerships with Insolvency Practitioners for formal debt solutions.
There is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit www.moneyadviceservice.org.uk.