Debt Collection Agencies Not Helping Borrowers
Are Personal Debt Repayments Set Too High?
Jun 12, 2009
Excessive, unmanageable personal debts have resulted in a growing demand for Debt Management Plans. The Times recently stated that 700,000 consumers had already turned to debt repayment plans where a lower repayment is made based on affordability. Struggling borrowers are now complaining that debt collection agencies are failing to co-operate and placing them under undue pressure.
Debt Collection Agencies Rejecting Debt Management Plan Proposals
Individuals struggling with financial difficulties claim that debt collection agencies are proving less than co-operative once missed or late payments have become an issue. This is despite the fact that they purchase full collection rights with respect to defaulted accounts- often for less than 30% of a loans value. Instead of helping borrowers to make realistic monthly repayments, there are complaints that:
- Borrowers are being pressured into making unaffordable monthly repayments.
- County Court Judgements (CCJ's) are being taken out against a borrower so they can pursue a Charging Order at a later date.
County Court Judgements (CCJ's) and Charging Orders
A County Court Judgement (CCJ) may be taken out by a lender when a borrower has defaulted on a credit agreement. A Charging Order can then subsequently be pursued which turns an unsecured personal debt into a loan that is enforceable against the borrower's property. A CCJ needs to be issued by the court before this can ever happen. Always attend court and present the judge with a full budgetary breakdown; it is unlikely that the court will then agree to the Charging Order taking place.
Northern Rock Is the Least Helpful with Personal Debt Problems
Borrowers with financial difficulties may be surprised to discover that recently nationalised Northern Rock is amongst the least supportive with regard to personal debt problems. Chris Jary, a debt counsellor for Action for Debt, stated that: “Northern Rock is one of the worst for harassing borrowers. They do not listen to people’s individual circumstances or take into account the customer’s other personal debts.”
Pay What Is Affordable with a Debt Management Plan
Tom Howard, of the Consumer Credit Counselling Service (CCCS), stated that: “A borrower can repay only what they can afford. If a debt-repayment plan has been properly devised by a debt charity, and the creditor still refuses to co-operate, the borrower should continue making the monthly payment outlined in the plan. Do not be bullied into paying more.”
If personal debt is a problem, never agree to offer debt collection agencies more than can be realistically afforded. It is a sure-fire way to fail, thus increasing the likelihood of a County Court Judgement (CCJ) or even a Charging Order being issued. Talk to a qualified debt counsellor before proceeding with a Debt Management Plan.
Readers that found this article useful may wish to find out how a credit report affects borrowing, discover ways to reduce a credit card balance or secure the best mortgage rate.
Sources
Thompson, Lauren. (June 6, 2009). "What to do if a lender gets tough." The Times.
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.
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