“The Truth! What Creditors Can And Can’t Do!”

Understanding Debtor Rights and the Extent of Creditor Action

After the festive period, January and February tend to be tough months for anyone in debt. It is also when creditors increase their pressure and up the ante when pursuing debtors. Therefore, we have decided to set the record straight and dispel the myths that surround what creditors can and can’t do.

What creditors can do?

1. They can continue to add interest and charges to a debtor’s account in line with the original agreement, provided that debtor is not in a legally binding solution (such as an IVA or bankruptcy).

2. They can take money from connected accounts without any permission to do so, for example if a debtor has a credit card and a current account with the same bank they can dip into the current account and take what is owed on the credit card.

3. They can chase a debtor by phone or letter. Yes, they can call or write but they certainly cannot harass a debtor. See what they can’t do below for more details.

4. They can send doorstep collection agents. This is often used as a scare tactic, these are not bailiffs and have no more power than someone calling on the phone. They can be ignored or politely told to go away.

5. They can issue a default notice, usually sent after 3-6 missed payments. This is something creditors are legally required to send once a debtor has defaulted on an original agreement.

6. They can pass the debt on to internal or external debt collection agents. Although they can be more persistent and misleading, they don’t have any more legal powers than the creditor.

7. They can apply for a County Court Judgment (CCJ). Creditors and debt collection agents tend to use this route when they have exhausted calling and writing. As a scare tactic they may threaten to obtain a CCJ. It is rare for third party debt collection agents to actually instigate legal action due to the added cost.

 What creditors can’t do?

1. They can’t harass a debtor. They are entitled to be informed of a debtor’s situation. There are guidelines set by the Office of Fair Trading in terms of how contact can be made and the frequency of the contact.

2. They cannot speak to a debtor’s family, friends, neighbours or employer about the money owed to them. They may do this to cause embarrassment in an attempt to try and get paid. Taking such steps is illegal.

3. They cannot enforce a debt unless they have obtained a CCJ. Creditors may threaten bailiffs but if they haven’t obtained a CCJ and if somebody should subsequently knock at the door they will be a doorstep collection agent who has no more power than somebody calling from a call centre. 

Coming out of a recession many businesses begin to overtrade. Following a long drawn out period of low order books and not many new clients, the feel good factor returns. Orders increase and preparation for growth starts. Many however will run out of cash.

At Oakdale we are specialists who act solely for our clients (the debtor) and not their creditors. If you are experiencing creditor pressure then please don’t hesitate to get in touch for a chat with one of our experienced, compassionate advisors on 0151 928 4434 or fill in the form & we’ll call you back.