Financial Friend

What are the Rights of Creditors and Borrowers?

Struggling with debt is bound to take its toll, but added pressures from creditors (lenders) will only amplify the situation. Our step-by-step guide can provide all the information you need to know about what a creditor can or cannot do, so you can identify your rights and eliminate additional stresses.

Doorstep Collectors

Creditors have the right to send doorstep collectors to your address; however, it is important to note they are not bailiffs. They have no right to take away your belongings or to make a cash request. They are no different to a phone call from a creditor, so it’s unusual for door collectors to arrive at your door.

Whilst it’s important to keep your lenders informed of your financial situation, you have the right to choose a preferred contact method, such as by mail. Some creditors will turn to scare tactics to encourage faster repayments, and may threaten to send bailiffs if you do not pay a debt by a certain date. Bailiffs will only visit your property if you have defaulted on a CCJ; otherwise, they will simply send a doorstep collection agent who can only request you make a repayment.

Phone and Mail Pressure

While creditors cannot harass borrowers every hour, every day, they do have the right to request repayments via telephone or mail; this is because you have broken your credit agreement. You should discuss your financial circumstances with the creditor to see if you both can come to a repayment agreement.

If a creditor insists on calling you, you have the right to block their calls. You should also consider writing to ask them to remove your number from your records and only contact you via mail. Should the creditor deny your request and continue ringing, you should contact the Office of Fair Trading (OFT) to make a complaint.

Whilst waiting for action to be taken, write to the creditors informing them you’ve contacting the OFT. If they ignore your letter, you should write a diary that states the frequency and times of the calls. Also note whether they are making threats or demands, and bear in mind that all court action can only be formally stated by mail and never over the phone.

External Harassment

Creditors have to follow data protection laws; therefore, they cannot contact you on social media or speak to your loved ones, employer or acquaintances. Never email a creditor as they can filter your email address to find your social network page – always send a letter. You also shouldn’t make contact with a lender on social media, and ensure you keep your profile private so only family and friends can find you online.

CCJS and Defaults

If you have missed 3 to 6 debt payments, creditors can issue a default notice. Creditors can also apply for a county court judgement (CCJ), and you must fill in the paperwork sent to your address. You can, however, make a repayment offer for the court to consider. If the court accepts your offer, the creditors have to adhere by the repayment terms.

Bankruptcy

While it is unusual for creditors to enforce bankruptcy, they can issue a statutory demand. However, they usually threaten you with bankruptcy in a bid to receive a repayment.

Remember, if you feel you are being harassed by creditors, you should not hesitate to contact the Office of Fair Trading to make a complaint.

What to Do When Faced with Debt Arrears

Falling into debt is easy, but it can seem like an uphill struggle trying to pull yourself out of it. If you have fallen behind on your rent, there are steps you must take to avoid losing your home.

Contact Your Landlord

It is imperative you contact your landlord before you miss a debt repayment. By talking to your landlord before the rent is due, you may be able to make arrangements to pay back what you owe in a different timeframe. If you have missed several rent payments, you should check exactly how much you owe instead of accepting your landlord's estimate.

Find Out if You're Responsible for the Rent Arrears

There are times when a tenant may not be required to pay rent arrears. While a landlord might be keen to receive the money they are owed, it is essential you identify whether it is you who actually owes the money.

You may not be responsible for a rent payment if:

• Your landlord has failed to record your rent payments
• If another tenant owes their share of the rent
• You are not a tenant
• You're not receiving your entitled amount of Housing Benefit
• You overtook the tenancy from another tenant and a landlord is ordering you to repay their share of the rent

Review Your Tenancy Agreement

As we have just said, there may be times when you are not responsible for making a debt payment. You should therefore refer to your written tenancy agreement, if you have one. If the tenancy agreement only has your name on it, it will be your responsibility to pay the rent and any arrears.

If the tenancy agreement has your name on it and no-one else's, despite the fact you live with other people, you will still be responsible for paying all of the rent and arrears. The people living in the property will be classed as your subtenants, which means it is your responsibility to collect their rent. If your subtenants are refusing to pay the rent they owe, you can ask them to leave the home or seek advice.

No Written Tenancy Agreement

If you have agreed to pay a landlord rent then this will be classed as a tenancy agreement, even if you do not have a written tenancy agreement in place. You will therefore have to pay the money you owe. However, a landlord would struggle to prove how much you agreed to pay them. It also makes it easier for someone else who lives in the property to miss a rent payment, as you will find it hard to prove they reside at that address.

Weekly Tenancy Agreement

If you are renting from a private landlord on a weekly basis, a landlord must provide a rent book. If they fail to do so then they are committing a criminal offence. However, they do not have to provide a rent book if the tenancy is based on a fixed term contract or monthly arrangement.

Financial Help

You may have a right to housing benefit if renting from a landlord. If you are currently receiving housing benefit, we recommend you contact the Housing Benefit Office to see if you're receiving the correct amount. Don't hesitate to contact them if there's been an unexpected delay in receiving housing benefit, which may have caused rent arrears.

On top of housing benefit, you may be entitled to additional financial help that might help you make a rent payment. For example, if you are in employment, you may be entitled to Working Tax Credit or Child Tax credit, if you have children. It never hurts to check whether you might be entitled to additional government benefits, which could help you prevent or escape debt.

When it comes to debt, don't suffer in silence. Take action and see what services are available to help eliminate your financial worries.