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Monthly Archive for October, 2009

Negotiating Credit Card Debts With Creditors – Do it Yourself!

Published on October 30, 2009 in Credit Card Debts and Get Out of debt. 5 Comments

It is very common that debtors run away from the creditors out of fear and shame. But in reality and in most of the cases, the creditors keep on calling people because they are uncertain about getting their money back. If you can gain their confidence that you are trying your best to pay them, half of your pains will be gone.

This does not mean that you must pay the full amount. You can wipe off your credit card debts by negotiating with creditors at much less then the initial amount.

As you are reading this article, I assume that you have gathered the positive energy to get out of your credit card debts. In this article we will provide you some simple tips for negotiating your credit card debts with your creditors.

The first step is to open the conversation corridor. Most of the debtors run away from them. However, the best solution is rather than the creditors calling, you should be proactive and call them to talk about your financial condition.

If you don’t keep in touch with your creditors, they will assume that you do not want to pay back. As a result creditors may start thinking about taking action against you.

Once you start negotiating with your creditors, the first step is to come to terms with them regarding your repayment. Keep contacting your creditors several times before they accept your request.

Some legitimate reasons to contact the creditors are:

  1. You owe them debts
  2. You have some money to offer
  3. You have certain belongings that could be sold to clear your debts
  4. You want to know how you can get out of debts.
  5. etc.

Which creditor should get the biggest share of money?

The most convenient way to divide your money among all your creditors is making offers on a pro rata basis. Here you would be offering the most to the creditor you owe the most. You can do this by:

Total Money Available For Credit Debts X Money Owed For Individual Credit Debt ÷ Total Amount Owed For Credit Debts

This formula will give you a weekly or monthly repayment rate. Most creditors prefer this method because they feel you are treating them fairly.

However it is often seen that the creditors do not suspend interest rates while you are paying back. Thus interest charges on one debt becomes more than others. This can put you into a crisis again.

How to stop further interests on your debts?

Start writing to your creditors as soon as possible and explain your financial situation. Ask them to stop charging further interests on your debts or you will be unable to pay them off. Attach your financial statement with this letter. This statement should also have the list of creditors and the amount you owe to each of them.

When negotiating with your creditors, be clear with your reasons and request. You can always ask your creditors to freeze the interest. Otherwise, your debts will keep on increasing at an alarming rate.

Sort your debts before you contact your creditors:

You must present a budget sheet when you are contacting a creditor. This would give them a fair idea about your financial situation. As a debtor you need to persuade your creditors into accepting your offer. So it is essential that you keep up a good code of conduct. Whenever you are negotiating with your creditors, make sure that you maintain paper work. This includes invoices letters, offers made, credit card statements etc. Note down the date, time as well as the names of the creditors you have contacted.

When you are negotiating credit card debts with creditors, make sure that you can make payments. If your creditors accept your offer, start paying immediately. This will give your creditors a proof that you genuinely want to write off your debts.

If you cannot pay anything to your creditors, give them an explanation. Request them to allow you to make payments after three or six months. Or you could give them a token offer of £1.00 a month and say that you would contact them as soon as your situation gets better.

Creditors can take legal action against you. However, if a credit agreement is regulated under the Consumer Credit Act, a creditor must issue a default notice prior to legal action.

You can also negotiate with the credit card companies 0% balance transfer of money on your credit cards. Switch over your debts to a lender who will offer you an introductory interest-free balance transfer card. But you should look out for one that does not charge a fee. There are many credit cards that charge 3% of the amount transferred.

At the same times stay alert – sometimes the 0% transfer is a trap. At times credit card companies will pull back your recent debts while allocating your monthly repayments. This means that those debts will be paid last. So your purchase debts will keep on increasing with a high interest rate till your balance transfer is paid off.

During your interest period, you can switch over your remaining debt to a new balance card and keep on repeating it till your debts are cleared. Try and apply for a new 0% card at least 6 weeks before the expiry of your old credit card’s introductory period.

You must remain transparent while negotiating credit card debts with creditors. If you cannot stick to your repayment agreements, contact your creditor immediately. To compensate, you can even offer a portion of your funds that you had promised to offer or go for a renegotiation of the proposal. Contact your creditor before they start calling you. In case you receive court papers from your creditors, visit Citizens Advice bureau.

You can even negotiate the claims with your creditors. For your credit card debts, the Citizens Advice Bureau can hold debt collection for up to 60 days.

If at any point of time you feel that you are being harassed by the creditors, contact your Citizens Advice Bureau for help. The Office of Fair Trading (OFT) has laid down certain guidelines for the behaviour of the creditors that they regard as ‘unfair business practice’. Read this article for more information on How to fight against Debt Collectors – Rules and Regulations.

Address of Citizens Advice Bureau (Regional Office):

46 Donegall Pass

BELFAST BT7 1BS

Tel: 9023 1120

E-mail: info@citizensadvice.co.uk

Visit www.citizensadvice.co.uk for more advice and help.

How to stop a Charging Order?

Published on October 10, 2009 in Get Out of debt. 0 Comments

Did you know that creditors can enforce a County Court Judgment in case you owe them money?

Yes, they can apply for a charging order if you do not repay your debts. A creditor gets a security for the debt with a Charging Order. This means a debt would be secured, like a mortgage on your house or any other property. However, before a Charging Order is made, there will be a court hearing and you can stop a Charging Order with various arguments.

But first you should know when a creditor may apply for a Charging Order?

  • A Charging Order can be applied by a creditor only when a CCJ is issued against you.
  • A Charging Order can be enforced only when you have been unable to pay the debt immediately or on the said date. This is also called a “forthwith judgment”.
  • A Charging Order can be enforced if you missed one or more payments as ordered by the court.

How to stop a Charging Order?

The court decides whether to make a Charging Order (under The Charging Orders Act 1979) or not. The following needs to be considered before the order is made. The financial situation of the debtor has to be considered. The court has to make a right decision considering the fact that other creditors are not harmed. Many situations are considered before issuing a Charging Order. Check out these:

  • In case anyone in your family is seriously sick or is disabled
  • If you can show that you are already into a payment arrangement scheme with your other creditors, the order can be stopped.
  • According to the rules set by Charging Order, your creditors require to inform all the other creditors regarding an Interim Charging Order. So if this is not the case, an order can be ceased.
  • Was there any possibility for your creditor to offer a secured loan when you got your first loan? However if they gave you unsecured loan, then your other unsecured creditors can be threatened by a Charging Order. This can cease the order.
  • You can also postpone the Charging Order by asking the court for an instalment order or an attachment of earnings order.
  • There is another way out of a Charging Order. It is Time Order. This can be applied by debtors only if their debts are covered by the Consumer Credit Act. This will change you monthly payments and give you more time to clear your debts.
  • You can also stop a Charging Order if your total debt amount is less than £5,000 to all your creditors. You can ask the court to include your debts under an administration order.
  • In case you are on the verge of being made bankrupt, you can argue that a Charging Order can give the creditor an unfair advantage over other creditors.
  • A Charging Order can be prevented in case your home is worth less than your mortgage or negative equity. In this situation, the creditor does not get paid even if the house is forced to be sold.
  • If a Charging Order forces you to sell your home, you can raise an objection pointing out the crisis of your family. This can be done if the debt is in your name but home is jointly own

We will recommend you to talk to a legal adviser who can offer you the best solution depending on your situation.

How to fight against Debt Collectors – Rules and Regulations

Published on October 5, 2009 in Get Out of debt. 23 Comments

We get a lot of questions from our readers of YesDebtFree via the “Ask a Question” box. Apart from replying to each and every mail, we thought that we should publish answers to some common questions.

In this article we have answered the most common questions about debt collection agencies and their harassments. If your question is not answered here, please write a comment or ask us directly via the “Ask a Question” box.

How to Fight Against Debt Collectors?


What are the debt collecting agency regulations?

The Office of Fair Trading regulates the debt collecting agencies in UK. A licensing system has been introduced by the Consumer Credit 1974 (the ‘CCA 1974’) in order to protect the interests of the consumers. The OFT can take strong action against any agency that is found guilty of unfair practices or deemed to unfit. The OFT debt collection guidance ensures fair debt collection. You can contact OFT in writing at:

Enquiries and Reporting Centre Office of Fair Trading Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX
Online: http://www.oft.gov.uk/contactus

CSA-the only national association in UK has a code for regulating the practices of debt collection agencies. For more information read this PDF file published by CSA.top

Can a debt collector visit my home without an appointment?

No, a debt collector cannot visit your home without prior appointment. Under Common Law, you can refuse anyone an access to your assets without a warrant or a court order. You should write to the debt collector that they cannot visit your place without prior appointment and that you do not want them to visit your home. However, if they pursue you, they will be committing a ‘Tort of Trespass’ and you can deem this behaviour as an act of harassment as mentioned by the Protection From Harassment Act 1997.top

What happens if I have unsecured debts which are older than 5 or 6 years?

In England, if your debt is older than 6 years and has not yet been acknowledged, your creditor cannot take any action against you. These debts become ‘statute barred debts’. Your creditors cannot take you to court for this. In Scotland, for debts which are older than 5 years or older than 6 years, cannot be claimed by creditors. This has been stated under the Prescription and Limitations Act (Scotland) 1973. For England it is stated under the Limitations Act 1980.top

What are the laws for statute barred debts in UK?

The laws for statute barred debts are set under the Limitations Act 1980. If a lender does not recover debts from the debtor for a long time, debts become statute barred. Under the Act, there are two types of time limits:

  • 6 years (simple contracts)
  • 12 years (contracts under seal)

For Scotland, debts become extinguished if a lender does not recover debts. Debts become barred under the Prescription and Limitation (Scotland) Act 1973.top

Are doorstep debt collectors legally powerful?

No, a doorstep debt collector is not powerful. They do not need any court permission unlike the bailiffs. But they do not have any power like the bailiffs. If these doorstep debt collectors visit your residence, you can ask them to leave. If they still pursue you, just call the police. You can also report this to OFT.top

What is a court barred debt?

Court barred or Statute barred debts are those which cannot be recovered by creditors. The Limitation Act 1980 states that legal action can be taken if these debts are pursued. If you have debts that have not been recovered by your creditors in last 6 years or more, then it is deemed as statute barred debts.top

Can debt collectors follow me?

Yes, they can follow you. At first the debt collectors will look out for your personal information on the electoral roll and get your address. In case you are not on the electoral roll, they will find you out on the DVLA, Land Registry, telephone records, insurance, banks and even employment records. These debt collectors can even visit your town, ask locals about you.top

Can UK debt collectors trace you in USA or other countries?

Yes, they can follow you to USA. In UK there are a number of tracing agents employed by debt collectors to get back to you.top

Can a debt collection agency pursue disputed debts?

Disputed debts are unapproved debts or more than 90 days old. As per the restrictions set by OFT, debt collectors cannot pursue disputed debts. It is illegal to threaten a debtor on this ground.top

What are the debt collection harassment regulations in UK and Scotland?

Creditors cannot harass you to recover debts in UK as well as in Scotland. In UK it is a criminal offence as stated under section 40 of the Administration of Justice Act 1970. The Office of Fair Trading and Trade Associations in UK also have published guidance of activities for creditors to ensure fair debt collection. In Scotland also creditors cannot harass debtors as stated under Protection from Harassment Act 1997.top

Do I have to tell a debt collection agency about my personal finances?

No, you need not tell them. Legally they cannot force you to disclose your personal details as stated by the OFT-Debt Collection Guidance.top

Can debt collectors collect from you on unsecured debts in UK?

Yes, debt collectors can pursue you to recover unsecured debts. Unsecured debts include credit card debts, telephone bills, cable or satellite bills, department store revolving charge accounts, unsecured line of credit at a bank or student loans. Collection agencies can drag you to the court for unsecured debts. But prior to this, however, they will send you lots of letters requesting payment in full.

However if you talk it out wit them and ask them to make separate arrangements they can probably work out something with you. Nevertheless if you are being threatened, call the police.top

How to stop debt collectors calling in UK?

According to OFT guidelines, it is illegal to for debt collectors to contact you frequently. If you report this to OFT, then debt collectors may loose their license. You can also write a letter to the company to stop calling you. For more help you can get in touch with your local Citizens Advice Bureau, the Office of Fair Trading, and the Consumer Credit Counselling Service.top

How to deal with banks calling for debt recovery?

Apart from debt collectors, banks in UK are also using harsh tactics to recover debts from commoners. According to the rules drawn by OFT, customers can appoint financial advisers. They will deal with the bank regarding repayment. The bank is obliged to communicate with the adviser instead of calling the customer repeatedly.top

What are the laws for preventing debt collection calls?

It is essential for debtors to maintain a diary of all the contact between the debt collectors and themselves. If they are calling you frequently, you need to report this to your local Trading Standards office with a diary of harassment. The Trading Standards office will take care of this matter and will issue a verbal warning or criminal prosecution against the debt collection agencies. Even the OFT can revoke their credit license.top

Can debt collectors call me if I inform them not to in UK?

Yes, they should stop calling you provided you write to them about this. You also should mention that you are aware about the OFT guidelines and can report it to OFT if they disturb you further. You can even say that you have a recording service in your phone and so can send evidence to OFT too.top

Can debt collectors call you on Sunday in the UK?

Debt collectors call anytime including Sundays. But as stated under the OFT guidelines, they cannot disturb you or harass you. However, they cannot visit you on Sunday or any other national holiday like Christmas. If you are a victim, report it to OFT.top

How often can debt collectors call you in UK?

There are incidents that debt collectors often call 7 days a week and more than 5 times a day. This can regarded as distressing and harassment as defined by the Protection from Harassment Act 1997. According to the guidelines produced by OFT, it is unfair for the debt collectors to call repeatedly during unsociable hours.top

What is debt collection consumer protection?

Debt collection agencies are licensed under Consumer Credit Act 1974. This protects the interests of the consumers. OFT can take action against these debt collectors, if their operations are unfair. Even their credit license can be seized.top

How to lodge a complaint against a collection agency in the UK?

You can report your situation to your local Trading Standards Officer, The Office of Fair Trading and OFCOM. Well, OFT has a complaint form where you can lodge your complaint against debt collectors in UK. You can get in touch with OFT with your complaints and queries at:

Call: 08457 22 44 99
E-mail: enquiries@oft.gsi/gov.uk
Address: Enquiries Centre
Office of Fair Trading
FREEPOST
London
EC4B 4AH top

How to stop debt collectors when the debt isn’t yours?

If you are being chased for a debt that is not yours, it may be a case of mis-trace. Mis-trace means that a debtor has changed his address without informing his creditors. In this situation, you should write to the agency or company. You can also ask the debt collector to check electoral register if you have your name on it. This will show that you are not the debtor. Once they get the notification they should stop chasing you.top

How to deal with debts that has not been acknowledged?

You can write a letter to creditor that the debts haven’t been acknowledged since 6 years. Under section 5 of the Limitation Act 1980, creditor has no right to take any action against you. It is important that you mention about the OFT rules that deems it unfair to pursue statute barred debts. Nevertheless, if you are pestered, you can complain to OFT.top

Are debt collection companies legit? How to find if the company is legitimate?

Debt collection agencies that are licensed by OFT under the Consumer Credit Act 1974 are legitimate.

If you want to know whether a debt collection agency is legitimate, call Consumer Direct to find out. You can reach Consumer Direct on a single national telephone number – 08454 040 05 06 – from 0800 – 1830 Monday to Friday, and 0900 – 1300 Saturday, excluding bank holidays and public holidays. Consumer Direct is available in England, Scotland and Wales. Consumers from Northern Ireland should contact ConsumerLine on 08456 00 62 62. For more information visit Consumer Direct website.top

Can you stop debt letters being posted to an address in UK?

If you want to stop debt letters being posted to you, you can consider The Mailing Preference Service in UK. You can request here that the mailing should be ceased to your address.top

What can debt collectors take?

Well, debt collectors cannot take anything or repossess goods unlike the bailiffs. For this a court judgment must be produced.top

What to do with letters from debt collectors that are not for you?

Never ignore these letters. Read them and react accordingly. If you find out that you have no debts then write to the debt collection company asking them to stop sending you any more letters.top

Should I sign a debt collector’s letter?

Once you sign a debt collector’s letter, it means you are agreeing to pay the claims they have made. It is essential to check whether you have debts, or have statute barred debts, legitimacy of the debt collection company etc. Before signing, you must get proper legal advice or else you will be chased by the debt collectors.top

How to prosecute debt collection agency?

When you receive a call or a letter from a debt collector, write back to them for the original credit agreement. They are legally obliged to send you a copy. If they do not and still contact you, report this to OFT. The OFT will take strict action and ensure that you are not harassed. Often the debt collection agencies loose their credit license.top

6 common problems faced while applying for an administration order

Published on October 3, 2009 in Administration Order. 0 Comments

While applying for an administration order, you might come across several obstacles. Here are 6 most common problems faced by people while applying for administration orders in UK. If you have any specific question or problem, please write a comment. We will be happy to advice.

1. High debt amounts:

Administration Orders deal with credit debts but in reality the administration order form instructs to list all your debts. This can create problems because if you have mortgage arrears or other high amount priority debts, it can make your total debt look more than £5,000. So be specific on the form about what you do not want to include. For these debts, you will have to go for separate arrangements with the creditor. If you do not specify the debts you want to exclude from administration order, your application might not be granted by the court. However, you can also reapply to make changes. It is also essential to state that you are trying to come to separate arrangements with your creditors. You can get copies of letters from your creditor as a proof.

2. Jointly owned debts or joint and several liabilities:

In this situation, you need to provide details about the other person who owes money. You also need to put in your total debt amount. When you borrow money with another person, you are liable for the whole amount and not just half of it. This is called “joint and several liabilities”.

However your creditors can still go to the other borrower even though you get an administration order. In this case, the other person also needs to apply for administration order. At the same time, he can apply only if he has a County Court Judgment and debts less than £5,000. The other borrower can also make separate arrangements with the creditors. Even if owe debts jointly, you will need to apply for this order separately. The court will never grant joint applications.

Make sure that you carry a copy of your personal budget sheet to the hearing.

It may be that your application is refused without a hearing or despite a hearing your application has not been accepted by the court. You can write to the court by addressing your letter to the Court Manager.

3. Council Tax Arrears and administration order:

Council Tax is paid in instalments over 10 months. Council Tax arrears for previous years can be included in an administration order. The current year’s council tax cannot be included. It can be taken into account only if you have missed a lot of payments and the Council has informed that you have lost your right to pay in instalments. Once your council tax arrears are included in the administration order, deductions from your benefit for payment arrears will cease. Even payments drawn from your wages to pay council tax will also stop.

You can also add your arrears from community charge in your administration order. Community charge or poll tax is no longer an ongoing bill.

4. Magistrates’ Court Fines:

In your administration order you should include any magistrates’ court fines. This should be done while you are applying. However, the district judge most often leaves the fine. You should remember to pay the fine to the magistrates’ court until a conclusion is reached that it can be included in the administration order. This will prevent the magistrates’ court from taking any action against you. Make it a point to include these payments to the magistrates’ court in your “Regular Expenses” on the Administration Order.

5. How to deal with Social fund loans and benefit overpayment in administration order?

Do you have a weekly deduction from your benefit for a social fund loan or overpayment of benefit? In such a situation, the Department for Works and Pensions (DWP) will keep on deducting and will raise an objection if you include these arrears in administration order. Recently it was decided by the court that even social fund loans and benefit over payments are not ordinary debts and must be paid off. You should include a social fund loan while applying for an administration order though it is common for the district judge to leave out these debts. However, if you are no longer on benefits, you must include your social fund loan and benefit overpayment in the order.

6. What if I cannot afford the payments I have been ordered by the court?

It may happen that you fail to make the agreed payments. For this you can apply to change the amount in case the amount is too high as set by the court. Go ahead and get a N244 form which is a general county court application form. There is no fee charged for making this application. This is included in the deductions made to cover fees during the processing of administration order. If you are charged a fee, you can complain to the court manger. You can get it from your court office. You need to explain that you want to apply for a change in payments under your administration order. You can also get your personal budget sheet as a proof. After this the district judge will call for a hearing in private rooms so as to change the terms of the order. If you fail to keep up the payments as agreed, your order can be cancelled or revoked by the court. Once your order is revoked, your creditors can once again get back to you for the debts you owe them.

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