With so many demands on household income, it’s easy to fall into debt despite the best of intentions. A change in circumstances, a drop in income or a rise in expenditure, can all result in a spiral of unmanageable debt.

Day 736 / 365 - Ski holiday Ouch ( credit crunch debts bills )
Creative Commons License Jason Rogers via Compfight

In the vast majority of cases, prioritizing your payments so that you meet essential expenses such as accommodation costs, council tax, utility bills and food and contacting your other creditors to explain your situation, will prevent matters from escalating.
However, in many cases, individuals shy away from telling their creditors they cannot pay, in the hope that their finances will take a turn for the better.

Unfortunately, failing to stay in contact with your creditors often leads to further action and frequently this involves a debt collection agency.

A debt collector’s role is to collect the money you owe and will usually start by attempting contact either by letter or telephone. If this is not successful, you will usually get a knock on the door, which can be an unpleasant shock if you weren’t expecting it.

But many people misunderstand the role of a debt collector and confuse their powers with that of a bailiff. Debt collection agencies and bailiffs do not have the same powers and it is essential to understand the difference and be aware of your rights.

Debt collectors hold no legal powers and despite public perception, they cannot seize your possessions to sell, nor are they allowed to force their way into your home. They are only permitted to request payment and must not act in a manner which is intimidating or aggressive.

How to handle debt collectors

Debt collectors in the past have come under fire for giving the impression of having greater powers than they held and for persuading individuals to pay up by harassing them. If a debt collector forces their way into your house, you should call the police immediately and you should never be forced into making a payment you cannot afford.

If you simply ignore requests for payment from a debt collection agency, the matter could be referred to the courts for enforcement action. However, you would receive notification of this and an individual other than a debt collector would be in contact. A rogue debt collector may try to dupe you into believing that a court has granted him additional powers, but this will not be true.

Just because you owe money does not mean you do not have the right to be treated with courtesy and respect and there is a code of conduct which debt collectors are expected to follow. This means that as well as not acting in an aggressive or intimidating manner, they are not permitted to call early in the morning or late at night or to telephone you at an unreasonable hour.

If you are unhappy with the conduct of a debt collection agency used by a lender, you can make a complaint to the Financial Ombudsman Service (FOS). An alternative would be to check whether the debt collector is a member of the trade body, the Credit Services Association (CSA). The CSA has a code of conduct and if you believe the debt collection agency has violated the code, you can make a complaint to the CSA. This does not affect your right to complain to the FOS.

If you do not like the way in which you have been treated by a debt collector, gaining evidence of their behavior can help your case. Having a tape recorder ready and recording any conversations is a good way to prove how you are being treated. You can also insist that they write everything down, or sign your notes, as confirmation they agree to your record of the conversation.

How to pay off debts

Ultimately however, if the debt is legitimate, you will at some point have to work out how you are going to pay it. If the debt has been sold to a collection agency you will not be able to go back and negotiate with your original lender. If this is the case, you can still open discussions with the debt collection agency and agree to a repayment scheme, which does not cause you undue financial hardship.

If you are on a repayment schedule, you may find the collection agency contacts you from time to time to see if you can afford to increase your installments. If you are not in the position to be able to do so, you should simply inform them this is the case and continue to make payment as before.

Unmanageable levels of debt can be stressful and it is always a good idea to try and tackle the problem sooner rather than later. However, it is never too late to get your finances in order and start clearing your outstanding balance little by little, at a rate that’s still affordable within your budget.

If you cannot afford to make the monthly repayments a specialist debt company such as Baines & Ernst could help you to consolidate debt repayments into a lower, more affordable monthly fee – even if your debts have been passed on to a debt collection company.

For more information on the help available, contact Baines and Ernst today.

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