The debt collection process is the method where lenders collect unpaid debts from individuals or businessmen. This process is the chief source of income for banks. The organizations that focus on debt collection are known as debt collectors or collection agencies.
Mainly when a borrower borrows a loan from loan organizations or lender, there is an agreement is being made between them. In this written agreement, it is clearly mentioned that within a selected period of time the borrower has to pay off the whole amount to the lender along with the interest.
As per this agreement, a debt collector is trying to reclaim that money from the borrower as he has the right to do so. Although this collection method can be varied from lender to lender. You can also get free advice from their agency if you want, as we offer for our clients with impartial debt help.
The negative side is that your creditors can record your missed payments in your credit file. Due to this, they will not provide you a good score. That is why it is important to check your abilities before you take any loan from them.
There are three ways of the debt collection process.
If You Miss One or Two Payments to a Debt
Unable to Pay Three or Four Payments to a Debt
When Five or Six Payments are Missed
If you missed out on one or two payments to debt, your creditors will send you notifications or reminders and ask you to make up your missed payments so that your account could be up to date. During this time, you will also receive a sympathetic approach from the creditors. They might want to know or understand about your situation.
In this second scenario, your creditors could be hard for you. Their approach could be firm towards you. Not only they send your tough letters but they also can threaten you. In this situation, you must take advice from a debt advice agency. In case you are facing any such issue then reach out to us at any time.
If the Consumer Credit Act controlling your account then you might get a default notice and soon after you can find your account will default. Due to this, your credit file will be impacted and you may find difficulties in getting a good credit score in the future.
Soon you notice your account is no longer in use. Even your creditors can assign your debts to a third-party agency or an outside organization.
In the third phase of this process, your creditors can send you more letters, phone calls to ask you to pay off your payments. All your other regulated debts including credit or store cards, personal loans, catalogues or overdrafts, etc will be default now.
They might take serious actions against you. For instance- your default account can be handed over to debt collection agency, legal action can be taken against you, creditors can apply for a Country court judgment, your debt can be written off or sold. If this happens, your credit score can be badly affected this time.
If you are already dealing with this situation or want to avoid it then this is the time when you would require advice. So feel free to contact us and start sorting out your debts and your financial condition.
Although debt collectors can reclaim their money, they are restricted by the debt collection laws as well.
If creditors would decide that you can not repay your debt then they can take various actions against you. You can also receive phone calls, letters and even in some cases they pay a visit to your home. So, if you still do not make any arrangements to repay the amount, creditors can take legal actions against you.
In England & Wales, if you become a defaulter and do not want to come for an agreement with your creditors then they can take your debt to the country court for a claim. Before they take such action, you will be notified with a “letter of claim” where you can find all the details of the debt.
This letter comes with a reply form which you have to fill in and send them back within 30 days. In case, you do not respond, you might have to face bad consequences. The court might send you some forms where you have to explain your circumstances in detail and return them within a certain period of time.
Even the court can declare a CCJ(County Court Judgement) where they will tell you how much to when. In case you do not respond to the court forms then you might ask to pay installments that you will not be able to pay off.
In Northern Ireland, if you can not pay then legal actions can be taken against you. All your credit cards, personal loans, and other unsecured debts will be undertaken by court. Even your creditor can use Country Court’s small claim process if your debt is below £3,000. In case, your debt is over £30,000 or mortgage then this will take care of by High Court.
In Scotland, your debts are controlled over by the Sheriff court. But for the critical cases, creditors issue a case in the Court of Session. Like in England & Wales, here you would also get a court form called “simple procedure notice of claim (form 6a)”. This will then send when your debt is £5,000 or more than this.
As per the law of Consumer Credit Act, your creditors can send you “default notice” and you will get 14 days of time to reply to them. After that, they will start the court action.
In case if you have got a claim or initial writ then use our decision/decrees guide. If you are unable to pay or ignore the claim then your creditor will start diligence to get the money.
It is important to inform your landlord about the rent arrears and lender about the mortgage arrears to get the best options for the repayment. They can help you by extending the time period of your debt.
Through our debt advice tool, you can get affordable and effective solutions towards any arrears. You can also learn how to deal with eviction and repossession.
If you can not pay CCJ or County Court Judgement then you might have to face critical situations. Your creditor can even take court action against you. Even they can issue a civil bill where all the information about the amount and the reason for the claim will be written. Once you get the bill, you have to respond to them immediately. Either you have to pay the full amount or request your creditor to extend the time period.
In case you are unable to pay, your debt will be passed from CCJ to EJO (Enforcement of Judgement office) for collecting the money. EJO can follow different ways to collect the money and you might have to pay additional charges for your debt. However, to deal with the situation, you can take advice from us or get our available options.
If you have taken a debt or want to get one, you must have a basic understanding of the whole debt process. Apart from that, you should know about your rights and the consequences of the process. This will make you free from all your worries and uncertainty. Check out this section to learn more about it.
So, if you have doubts about whether you are financially capable or not use our free online debt advice service or call us on 03301225235. For any queries, you can contact us and our experts will get back to you as soon as possible.