How to Stop Debt Collection Agency Harassment
Debt Solutions, Debt Management Plans, Debt Relief Order, IVA
Mar 2, 2009
Whilst millions of consumers struggle unsuccessfully to make debt repayments, debt collection agencies are enjoying an unprecedented period of boom. Increasing levels of involuntary unemployment and excessive lending by financial institutions are largely behind the rising levels of loan default.
Recent figures show that the banks and debt collection agencies aren't being more lenient with debtors. County Court Judgments (CCJ's) in England and Wales have risen by 17.4% to 223,519 during the third quarter of 2008. The total interest paid on personal debt in the UK was a £76.2 billion in the last year.
Creditor Harassment and the Role of the Debt Collection Agency Following Loan Default
Once a credit agreement has been defaulted on, the lender will attempt to collect the debt. However, more difficult cases, where the debtor isn't answering calls or has vanished, are likely to be sold on cheaply to a debt collection agency.
Uncollectable debts are written off against taxes and the debt is sold on to a debt collection agency. The majority of debt collection agencies are buying defaulted accounts for as little as 15% of the debt's value, but they still attempt to collect the full loan value.
Preventing Debt Collection Agencies with a Full and Final Settlement
As already alluded to, debt collection agencies purchase uncollectable debts for a fraction of the amount owed. Debt collection agencies are a business so offering a full-and-final settlement of 30-40% will regularly be accepted. Always get any full-and-final settlement offer accepted in writing prior to making a payment. Provided this is done in the way outlined, creditor harassment from debt collection agencies will cease.
Using a Debt Management Plan to Prevent Creditor Harassment
A debt management plan involves making a payment to an intermediary who will disseminate the proceeds to creditors on a pro rata basis. Whilst a debt management plan is only a voluntary debt solution, creditor harassment from debt collection agencies will normally cease. This is because a debt collection agency is starting to recover some of the money used to buy the debt.
Legally Binding Debt Solutions and Debt Collection Agencies
A debt solution, such as going bankrupt, an Individual Voluntary Arrangement or a Debt Relief Order will prevent creditor harassment from debt collection agencies. Unlike a debt management plan, these are all legally binding debt solutions rendering any sort of creditor harassment illegal.
It is possible for someone to avoid creditors for six years and benefit from a debt write-off. However, it is best to tackle debts with a debt solution to prevent creditor harassment from a debt collection agency. Those that have or can borrow money from a family member may wish to offer debt collection agencies a full and final settlement.
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