A look at some of the debt collection tactics used by creditors and advice on what you should do if you are receiving threatening letters and being pressured.
Following on from our recent blog post about the debt collection letters sent to Lloyds TSB customers in debt management plans, this week we came across another instance where a debt collection company put a customer under pressure to pay back his debts.
This story initially came to light when “Phil”, the debtor, posted a question on the ClearDebt Community. You can view the community thread here: I am being pressured by a debt collection agency.
For anybody who is being pressured by debt collectors, here are some key points.
Is my debt being dealt with by an external debt collection agency?
People in debt can sometimes receive aggressive sounding letters which seem to be sent from an external debt collection company, acting on behalf of the original creditor. However in a number of cases we’ve found that this supposedly external company is actually just another trading name of the creditor. Companies often create this pretence as a collection tactic to add pressure and intimidate the person concerned. One quick and easy way to see if this is the case is to read the small print in the footer of the letter, where it should state if the collector is a trading style of the creditor.
Will they send debt collectors to my house?
A debt collector isn’t a bailiff – they do not have powers to force entry into your home and you do not have to let them in. Companies may threaten to send door step collectors but more often than not, this is all it will ever be, a threat. Door step collection is a very costly and inefficient way to recoup money and is an option very few companies use, although they are more than happy to threaten it.
Creditors will use ambiguous language in letters to lead a debtor to believe that a collector has been at their home. Phrases like “we called your house today” or “we have tracked you to your address” can lead debtors feeling that a collector may be at their door any moment, when in fact they have never been to their home. One well known bank were sending postcard sizes cards, similar to the type delivery companies often use, to debtors homes saying that they had called at their home that day. However they had not been to the debtors property but in fact had “called” via telephone.
I’ve received a letter containing a notice of court proceedings
Most people don’t know the in’s and out’s of the court system and creditors use this to their advantage. Check what you have received contains a court stamp, if it does not then this letter is not an official court document. If the letter makes reference to appointing a bailiff, remember that before a bailiff can be appointed a CCJ must be obtained. The court would then set a repayment amount and they could only apply for a bailiff if you did not meet this repayment.
What should I do if my creditor applies for a CCJ?
If your creditor applies for a CCJ the first thing you will receive is a County Court Claim form which you will need to complete and return within 14 days of the date of the form. Return the form to the Court as detailed on the claim form. As you owe the money, you should admit the debt and complete the form with your income and expenditure details, explain who else you owe money to and make an offer of payment.
Once you have returned the form to the court, the creditor/collector will receive a copy of your offer. They might object to your offer of payment (if they have applied for a CCJ then it’s unlikely that they will accept your offer of payment) so in most cases you will receive a Judgment after Determination. If this is more than you can afford then you can apply for a redetermination.
How to apply for a redetermination
In order to apply for a redetermination you will need to complete a N245 form. This form is used to establish your income and expenditure as well as how much money you owe to other creditors. Make sure you include all relevant details (but remain realistic) as they will use these figures to determine your monthly repayment amount.
When completing this form, you must tick both the suspension of the warrant box AND the reduction in the instalment order box. By ticking both boxes it will stop a bailiff from being appointed and the court will also review the repayment of the debt, normally setting a monthly instalment amount.
Be aware that there is a £40.00 fee charged by the court for processing the N245 form, although you may be exempt of paying this fee depending on your circumstances. You can apply for fee remission by completing an EX160 form.
If you maintain the instalment amount, set by the court, no further action will be taken. Further action will only be taken if you do not maintain repayments. If your circumstances were to change and you were struggling to maintain the payments, then you can apply to the court to review the instalment amount.
Pose your debt question to the ClearDebt team
The above is just a summary of the advice we gave recently to somebody in need, you can pose your own debt and finance questions here on the ClearDebt Community, or if you’d prefer to speak to somebody over the phone, you can reach us on 0800 019 2095.