Rules about debt collectors & creditors
The Office of Fair Trading imposes guidelines on creditors and debt collectors on what they deem as "fair and unfair" practices in debt collecting procedures. The Office of Fair Trading issues creditors with Consumer Credit Licences, which enable Creditors to lawfully lend money to consumers.
Creditors are expected to follow the guidelines outlined by the Office of Fair Trading in order to be seen as fit to lend money. This also includes fair practices of debt collection. If a creditor or debt collector is found to be practising unfair tactics when it comes to dealing with consumer debt, they risk losing their Consumer Credit Licence.
The Office of Fair Trading expects creditors to abide by their guidelines. With this being the case, if you believe that a lender or debt collector has acted unreasonably, you should report them to the Office of Fair Trading.
Unfortunately many creditors practice "unfair tactics" in order to recover monies owed to them. Frankly they shouldn't get away with this but the fact is they do because people generally do not know their rights.
Some of the guidelines outlines by the OFT according to the Debt Collection Guidance, July 2004 are as follows:
Some debtors may find themselves struggling to pay their debt each month and realise they need help. Therefore, they seek advice and help in negotiating reduced repayments to their creditors each month. They nominate a third party, such as a debt management company, to deal with their debt and negotiate repayments with their creditors.
It is considered unfair practice for a creditor or debt collecting agency to refuse to deal with a third party nominated by a debtor. The only time refusal to deal with a third party would not be considered as unfair is if the third party is not acting in the best interest of the debtor. Debt management companies themselves must abide by the guidance set out by the OFT for debt management procedures. If a creditor refuses to deal with the elected third party, they must give a valid reason as to why.
DEBT COLLECTION VISITS
It is considered unfair for a debt collector to visit a debtor’s place of work unless it is a business debt.
It is acceptable for debt collectors to visit debtors' homes if the debtor has agreed or requested a visit, debts are disputed or deadlocked, or the debtor has avoided contact. However, debtors must be forewarned of a visit and given time to seek advice or support before the visit. If a debt collector comes to your door and you request him/her to leave, they must do so.
A debt is considered 'statute barred' if a creditor has not contacted a debtor for a period of 6 years and no action has been taken on the account.
Although the debt is still legally acknowledged as being owed, the creditor is not able to take any legal action against the debtor in order to recover the debt. It is considered unfair if a creditor or debt collector misleads the debtor into believing the debt is still legally recoverable. It is also considered an unfair practice if the creditor or debt collector presses for payment after the debtor has stated they will not be paying the money owed. This could amount to harassment contrary to Section 40(1) of the Administration of Justice Act 1970.
COMMUNICATING WITH THE DEBTOR
A creditor or debt collector who contacts you by phone, letter or visit, must state clearly who they are, where they are from, their role and the purpose of contact.
If a creditor or debt collector attempts to use unhelpful technical language to confuse or mislead the debtor, this is considered as an unfair practice.
If a creditor or debt collector tries to continue to make contact knowing you are vulnerable, suffering from illness caused by the situation or seeking medical advice, this could also be classed as an unfair practice as they are putting undue pressure on the debtor.
OTHER UNFAIR PRACTICES
1. It is unfair for a creditor to mislead a debtor into believing criminal action or criminal proceedings will take place when attempting to recover a debt. NOTE: BEING IN DEBT IS NOT A CRIME!
2. Creditors must not suggest to a debtor to either sell a property or to take out further borrowing in order to pay off the debt to that creditor. For a creditor to request you borrow more money to pay them off is basically requesting you to commit fraud as you are taking on credit knowing you cannot pay the debt back.
3. Creditors should not use more than one debt-collecting agency at any one time.
4. If a debtor queries a debt and money that is owed, it is unfair for the creditor to continue with recovery proceedings during the time the debt is being disputed. If requested, the creditor or debt-collecting agency must provide details of an outstanding debt. It is not all up to the debtor to prove they do not owe a debt, is it up to the creditor to prove they do if the debt is disputed.
If you are being chased for a debt and you believe that your creditor or their debt collector is breaching any of the above REPORT THEM TO THE OFT NOW!!
Whilst every effort is made to ensure that the legal information contained on “YouandYourRights” is accurate, it does not constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. Neither the Proprietor nor Dean Dunham can assume responsibility and do not accept liability for any damage or loss which may arise as a result of your reliance upon it.