Debtors – Know Your Rights

Obtaining credit nowadays seems to be a lot easier than it was 10 or 20 years ago. Because we are not all mind readers, it is sometimes impossible to determine what lies behind the corner which could have a negative affect on our finances.

If for some unfortunate reason you found yourself in a situation where you were no longer able to meet your monthly repayments to your creditors, would you be aware of the protection from creditors you have from the Office of Fair Trading?

It was recently reported that 12 debt solution companies were issued warnings for misleading debtors to cancel existing Individual Voluntary Arrangements and opt for Bankruptcy instead.

These companies sent unsolicited mail to unaware debtors informing them that they should not be in an IVA as it was unsuitable for them and should go down the bankruptcy route instead.

The companies had no right to do this, as one a debtor is in an IVA, it is a legally binding agreement between the creditors and the debtor which also ensures the debtor is protected from any form of harassment including how the debtor is making repayments.

The Office of Fair Trading makes it clear what is expected of creditors when dealing with people in debt.

There are guidelines set out for creditors which they are expected to follow and is important for people who are struggling repaying their creditors are aware of these guidelines so that they know their rights and know when creditors are attempting to act outside of these guidelines.

The guidelines are not only set out for those already in repayment arrangements but for all who are in debt.

All creditors are required to follow the guidelines set out by the OFT, this includes:

  • Not encouraging debtors to borrow money to pay their existing debt
  • Not contacting a debtor at work if this puts the debtors job at risk
  • Creditors should not harass debtors for payment where undue stress is being caused

The Data Protection Act also protects debtors from creditors disclosing their information to any third party without written permission from the debtor.

This includes sending letters to the debtor with information regarding who they are on the envelope.

Some creditors may arrange house calls to speak to the debtor regarding repayments. If they are unsuccessful, they may try to get information from a neighbor regarding your whereabouts. If this happens, the creditor must disclose who they are or why they need to contact the debtor.

If they were to disclose this information, they would be breaching the Data Protection Act and could have action taken against them.

Creditors who do not abide by the guidelines outlined by the OFT website could find their Consumer Credit License taken away from them which in effect, put’s them out of business, as they cannot legally lend money to people without it.

The guidelines set out by the OFT can be found on their website. It is wise to be clued up about your rights when you find yourself in a situation where you can no longer meet the repayments required of you.

It is not a crime to be in debt, anyone can find themselves in debt for a variety of reasons at any time of their lives.

The important thing is to always keep in touch with your creditors so that you can come to an agreement of what you can realistically afford to pay each month and be aware if a creditor attempts to mislead you about what and how you can pay.

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