debt collection laws agencies CCJ

debt collection laws can be confusing... some basic may help....

WHAT ACTION DO CREDITORS TAKE TO RECOVER DEBTS - If you are struggling to repay a debt and keep missing your monthly payments, it is likely that you will be contacted by the creditor to whom you owe money. The creditor will normally want to understand your situation and when you will be able to make your payment. If you cannot make a full payment, then the creditor is likely to try to put pressure on you to do so. This normally involves the following types of threat:

Default Notice - your creditor will issue a Default notice against you which will effect your ability to borrow in the future and mean that you will have to repay the total balance of what you owe!

What Does This Mean? - it is very common for debt collection laws default notices to be issued where there are debt problems. If you are issued with a default notice, this will be registered on your credit file. This will effect your ability to borrow more money. However, this does not last for ever. The effects will last until your current debt is paid in full or settled. In reality you should not be borrowing more until your current debts are paid anyway and so this restriction is really not so bad. In terms of having to repay the full balance of your debt, your creditor may demand that you do this. However, if you are not able to pay your normal monthly payment, then you are unlikely to be able to repay the full debt. As such there is little more that your creditor can do regarding this threat other than continue to pursue you for repayment.

Involvement of a Debt Collection Agency or Solicitor - If you do not make regular payments, your account will be passed to a collection agency and / or solicitor. A threat may be made that this collector will visit your home.

What Does This Mean? - if you persistently miss your monthly payments, your creditor will chase you for a limited time only. After 8-10 weeks, it is likely that the creditor will pay a collecting company or solicitor to try and recover the debt from you (depending on the different creditors, the timing of this may vary). The collecting company will write to you and call you demanding payment. They may threaten Court Action (see below) or a visit to your home. In reality it is very unlikely that a collecting agent will send someone to your front door. This is a very expensive exercise and often does not yield positive results for the collector or the lender employing them. By the time a collector is involved, a default notice will already have been issued against you and so your ability to borrow has already been effected. As such, the biggest threat the collector has against you is Court Action.

What About Bailiffs? - Bailiffs are generally employed by government agencies or utility companies to recover debts. For example non payment of Council Tax, Rent, Water, Electricity and Gas bills. It is rare that personal loan and credit card companies will employ Bailiffs to recover their debts. This is largely because the cost of using a Bailiff compared with the amount of money collected really does not make economic sense.

Court Action - If both the efforts of the lender and any collector do not end positively, then usually the last resort for the creditor is to try and recover the money owed at court using a County Court Judgement (CCJ).

What Does This Mean? - a County Court Judgement (or CCJ) is an order made by the court to enforce payment of an outstanding debt. The CCJ will require either immediate payment of the full outstanding balance or more usually, prescribe a monthly repayment plan based on what can be reasonably afforded. If a CCJ is in place and the debtor sticks to its terms, then the creditor is unable to take any further action to recover the debt directly. In addition, the creditor is legally obliged to freeze further interest or account charges.

COUNTY COURT JUDGEMENTS - THE FACTS - Although the threat of a CCJ sounds terrible, in fact this procedure is designed to help the individual who is struggling with debt. The advantage of the CCJ is that the Court will mediate between the person who owes money and the creditor. As such a third party with no vested interest will review the circumstances and enforce a repayment plan based on what can reasonably be afforded each month.

In fact you do not actually have to go in person to a Court at all. All of the correspondence is carried out by post!

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