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5 Tips To Handle Debt Recovery Companies
The unhealthy economy has meant more sustained efforts to collect by debt recovery companies (appleloans.co.uk). As the number of bankruptcies filed annually increases, debt recovery companies are aggressively pursuing borrowers who have fallen as little as a month behind. These companies attempt to embarrass borrowers into paying and frequently resort to scare tactics. The law on what debt recovery companies can and cannot do is very clear; even borrowers who have fallen behind have rights, and should be treated with respect. Here are the top five tactics debt recovery companies use to harass borrowers, and what borrowers can do to stop them.
Tactic #1: We’re Sending Someone Over
The law on home visits states that debt recovery companies can visit a borrower’s home, but they can only do so if they have a license. Borrowers are under no obligation to let a recovery agent into their home. If a borrower clearly tells the agent that the agent is not welcome and must leave the property, the agent must comply. Agents are also prohibited from physically intimidating borrowers. If a debt recovery agent does or says anything intimidating, borrowers should immediately close the door and ring the police. The agent can be arrested, and the recovery company may lose its license.
Creditors and their representatives can also apply to the Courts to obtain written orders for a bailiff or sheriff to pay a home visit and attempt to recover a debt. There are two ways that this is done.
Warrant of Execution. A warrant of execution must be Court approved (kredittkort). A bailiff will visit the home and ask to be admitted. Borrowers are not obligated to permit the bailiff access; as with collection agents, a clear statement that they are not welcome and must leave the property means that the bailiff must leave – but only if he has not already been admitted into the home. If a bailiff is admitted into the home, there is little the borrower can do. The bailiff will take an inventory of assets and return one week later to recover the goods if the debt is not paid.
Writ of Fieri Facias.A writ of fieri facias, sometimes abbreviated fi fa, is issued by the High Court. Instead of a bailiff, a High Court Enforcement Officer is sent to the home. Still, borrowers do not have to let the Enforcement Officer inside! As above, once an Officer is let into the home, he can seize goods; if he is not let inside and told he must leave, he is obligated to do so.
Tactic #2: We’ll Enter An Attachment Of Earnings
An attachment of earnings is only applicable if a judgment has already been entered against the borrower in Court. If a borrower is not repaying the judgment, a creditor may return to the Court to ask for an attachment of earnings. If granted, an order will be sent to the borrower’s employer to deduct a portion of the borrower’s earnings and send the money to the court.
If a creditor threatens a borrower with such an attachment and there has not been a Court judgment previously entered for the debt, or if the borrower has been repaying the debt as agreed, the creditor may be in violation of the Consumer Credit Act for not operating in good faith. Report perceived violations to the Office of Fair Trade (OFT).
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Tactic #3: We Don’t Work With Third Parties
Borrowers may hear this from their creditors in an attempt to dissuade the borrower from negotiating their debts. This is a violation of Consumer Credit Act. If a borrower hears this from a creditor, the time, date, person speaking, and circumstances should be noted down immediately and a complaint sent to the OFT. Creditors are required to work with third parties appointed by a borrower who are working in good faith, and failure to do so can result in the loss of the creditor’s Consumer Credit License.
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It is also important for borrowers to avoid signing any “nondischarge” agreements with creditors. A nondischarge indicates that a borrower agrees that a debt is not dischargeable in a bankruptcy filing (resources about home loans). Not only are such contracts usually not legally binding, they can also be interpreted as fraud on the part of the borrower since all creditors must be treated equally in a bankruptcy case.
Tactic #4: You Owe This Debt Whether You Feel Well Or Not
Borrowers who are suffering from a severe illness or a long-term condition that impacts their ability to repay their debts are frequently harassed by debt recovery companies. Every borrower in this situation should know that recovery companies who knowingly harass a borrower who is not well are violating the law. If a borrower informs the agency that they are not well due to a medical condition and cannot speak to the agency, and asks the agency to stop contacting them, the agency is obligated to comply.
Tactic #5: Pretending To Know The Law Better Than Borrowers
Many debt recovery companies are not as fully aware of the law as they should be, resulting in numerous violations reported to the OFT every year. The OFT has indicated that any of the following actions by creditors or recovery companies may be a violation of good faith statutes. Borrowers who believe that an agency has done any of the following should report the offender to the OFT straight away.
- Implying that the borrower may face criminal penalties, or is a criminal for not repaying debt (debt is strictly a civil matter)
- Suggesting that a borrower sell property or take out a loan to repay a debt
- Using gothic style text on collection documents or agreements, due to its legal connotations
- Threatening a borrower with bankruptcy for a debt under £750
It is unfortunate that creditors and debt recovery agencies use bullying tactics to coerce borrowers. Borrowers should make every effort to be aware of their rights, since the OFT has taken a very active role in pursuing violations such as those outlined above. Remember, debt does not ever make a borrower a criminal, and every debt situation will pass once action is taken to rectify it.