Posts Tagged ‘debt’

New Lending Code 9: mental health, debt agencies

November 19, 2009

181. If a subscriber has received appropriate and relevant evidence of a customer’s mental health problems they should consider whether it is appropriate to pass or sell the customer’s debt to a third party debt collection agency. [Reproduced with the kind permission of the British Banking Association -see link below]

I can see no justification whatsoever for a creditor using an agency or selling the debt on once it is aware the customer is in the vulnerable groups. Certainly in the vast majority of cases hectoring is not what is required, even less the harassment, worry and fear of these crude methods.

Much, much more is likely to be achieved by a sympathetic and supportive approach. I wonder about the decision making process that has developed the current blind and thoughtless path.

By the very nature of their situation few vulnerable debtors are likely to be in a position to clear a debt immediately. And often their incomes are so inadequate that it is unlikely recovery of the debt is likely.

Where that is the case all blindly cold processes are pure waste of money. At best they are deliberately cruel, and at worst actually sadistic. The latter is in itself a mental health issue, as it happens – but this time on the other side of the debtor-creditor divide.

Of course not all vulnerable debtors are in poverty or poor. But where the only assets are a house, or the means of getting through their day without difficulty, pursuit raises issues of human rights.

Far better, then, to approach all such cases with skill, knowledge, understanding, and sympathy. This form offers support to just that.

At the same time it should not be turned into a requirement in all cases. Where it can contribute and their is agreement to use it is, without question, an invaluable aid in working out the best course of action.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

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New Lending Code 2: mental health, systems

November 6, 2009

Debt and mental health
This section of guidance is relevant to both personal and micro-enterprise customers.
173. The impacts of financial difficulty can be especially acute for customers with mental health problems. Subscribers should consider their processes and systems to ensure that they can be responsive to a customer in financial difficulties, from the point at which they are made aware of a mental health problem. [Reproduced with the kind permission of the British Banking Association – here]

The Lending Code is now part of the formal equipment of the Office of Fair Trading, and sits more certainly side by side with holding of Credit Licences and with such fair dealings rules as the Consumer Protection Regulations.

Monitoring remains with the Lending Standards Board [that was the Banking Code Standards Board], but penalising becomes a matter for the OFT.

This is why this is such an important advance. It is now a requirement for creditors and debt collectors to take into account mental problems where there are financial difficulties. This is already covered in the CPRs, under the guise of vulnerable debtors. Vulnerable includes the elderly and those without funds.

While the Debt and Mental Health section is by no means as definite as I would like, it is such a big strengthening of the position of debtors with such health problem that the wording is to be praised as improving the experience of such debtors.

By featuring the good practice guidelines of the Money Advice Liaison Group, the other members of the vulnerable classification are effectively included. The more definite advice in the guidelines also becomes part of good practice.

It is also worth glancing at the 2005 comments of the Treasury Select Committee.

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

New Lending Code Overview

November 4, 2009

I am not used to eating my words, but this may be the occasion. Fortunately the matter is one that has not just my approval, but is a demand of mine.

The new code has taken on board the advice of the MALG forum on mental health issues and debt. For me this makes the new version a cause for celebration.

Because it is rather hidden away my first glance did not take it in. But the lay out of the pdf of The Lending Code is, in fact, very well designed and does make it easier than usual to find one’s way about.

So congratulations Paul Ross, who is in charge of the code for the British Banking Association. This is a success.

Make the most of this praise ;-), there is unlikely to be any more!

I need time to evaluate the content, of course. I will have to take some pretty small bites and chew hard, so there is no option but to write many blogs to give you the information you need.

Next blog will look carefully at the entries on the mental health advice to creditors, and I will try to give a good overview followed by detailed discussion of the effects of the different paragraphs.

But this inclusion has certainly cheered me.

Of course I do take credit for its inclusion. Don’t laugh.

When I spoke to Paul Ross on the phone I July I did try to impress on him how important it was, and that the information needed had been published by the Money Advice Trust in the 2007 review of the Banking Code. the impression I got from him was that there was no way he would include it.

I wrote on this to him in July also. Either he was pulling my leg, which I doubt, or I did spark his thinking. And after investigation I suspect he came to the same conclusion Idid about its importance.

Well that’s my story, and I’m sticking to it ;-). Here is part of my email on July 22:

“In this I am particularly conscious of the MALG advice in 2007 – and the BBA is a member of MALG – that seems to have simply fallen by the wayside. This dealt particularly with the problems of vulnerable debtors. While the major part of the industry does seems sensitive to this anyway, there are some big players that appear not to appreciate the responsibility on them for fairness in these areas.

“I also appreciate the main thrust may be to ensure the new wording equates to the old, but it might be a useful move for the BBA to indicate at least the new broad heads to enable early thought by the multiple users of the code regarding the changes they will all have to make in their references.

“November 1 is very near in practical terms, only three months away. Any early information on the change would be much appreciated by all users.”

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis On Your Own Terms
http://www.controlyourdebtcrisis.co.uk

Bailiff Power: “We have the balance wrong”

June 13, 2009

Every time I think I have reached the bottom of this government’s inanities over bailiffs I am apprised of further actions which make sense only if these people are in the pay of the financial casino.

Thanks again to the Zacchaeus 2000 Trust I have learned of the Bill introduced by Karen Buck M.P., (Labour for Regent’s Park and Kensington, North), a few days ago under the ten minute rule. It has gone now to second reading which is a triumph for her preparation work which has taken a year.

[Most often ten minute rule Bills are killed at birth!]

In her introductory remarks Ms Buck offers these points which are worth some thought by us all: Bailiffs (Repeals and Amendment) is the title of the Bill and it “… make requirements in respect of the use of force and forcible entry by bailiffs; to make provision for the reference to court of certain cases involving vulnerable clients; and for connected purposes.”

“… Debt and debt recovery action have become a reality for ever larger numbers… the arrival of a bailiff is, for many of those people, the ultimate trauma and humiliation… people have had heart attacks when the bailiffs have arrived. The mental and physical stress… is one of the worst things that will ever happen to them in their life.”

She points out that not all bailiffs fail to be as helpful as possible. But “… many.. are desperate and vulnerable people, and many are also victims of error. … even the actions of bailiffs who behave entirely reasonably… are disproportionate and excessive.”

“… it has become clear to me that we have got the balance wrong,… we need to review… We must certainly not, in any circumstances, think of escalating the powers available to bailiffs, and the Government should rethink their approach to regulation.” [my emphasis]

“… In my local authority alone, and in respect of just… council tax… more than 13,000 cases ended up in the hands of bailiffs over a three-year period.”

“What does it mean… It means fear and trauma for people, particularly children. I have heard of moving cases… children have refused to leave the house or have insisted on having the lights out at home because they are so frightened of a bailiff… seizing their television or computer.”

“… also means an escalation of the original debt, which simply compounds the problems that caused the financial crisis in the first place.”

“For one single parent with three children, one… disabled… (a) parking fine, about which I was making representations, had escalated from an original £60 to £700 by the time the bailiffs arrived.” [my emphasis]

In another “… two sets of bailiffs (were) chasing the same debt. Payments had been made to and acknowledged by the council, but did not then appear on the system.” [my emphasis] This lady wrote “… each party refers me to the other, the fees are ever increasing and.. threatening the removal of goods for the same amount.”

The Bill’s aims “.. are threefold. The power of forcible entry into a person’s home and the power for bailiffs even to use force against debtors are far too extreme to be given to civilian enforcement officers. The balance has been tilted too far against the householder’s right to be secure from trespass into their home. ” [my emphasis]

“… overturns a long-standing common law tradition,… in the Tribunals, Courts and Enforcement Act 2007… some p[owers] have not (yet) been brought into effect… such powers should be repealed.”

“… the power to enter domestic premises forcibly… for collection of criminal fines is already legal, and that too is creating appalling distress for many vulnerable households. Many… fines are levied on people on low incomes for offences such as the non-payment of TV licences, fare dodging and truancy.”

“… the issue here, too, is one of proportionality,… I also seek a statutory procedure requiring bailiffs to return cases involving vulnerable and impoverished debtors to the courts or the creditors, and powers to allow people subject to any bailiff action to apply to the courts for any bailiff warrant to be suspended… (this) is (currently) available only to people subject to county court bailiff warrants.”

“… case law, which holds that a distress warrant cannot be withdrawn once it has been issued. That directly contradicts the national standards for enforcement agents, which suggests a procedure enabling the bailiff to return cases of vulnerable fine defaulters to the court.”

“… disproportionate fines are being paid by benefit claimants and other low-income groups, intensifying the poverty that pushed many of them into debtY Finally, we need a statutory provision for bailiffs to accept ‘affordable payments’, with a definition of what that might mean in practice…”

“… I believe that they need greater protection, and above all, to be freed from the fear of the implementation of the excessively harsh powers held in reserve in the legislation.”

The Bill has six more stages; second and third reading in the Commons; first, second and third readings in the Lords; and signature by Her Majesty. It is only a pity that with this government tottering and the next election in any case but a year away the chances of it becoming law are slim.

But ‘good on yer’ Karen Black; you’re one we need back in the Commons. And keep it up Zacchaeus Trust; we need you.

Debt Control Man

Bailiffs get unreasonable powers

May 1, 2009

I had earlier had the view that bailiffs were well contained by sensible limits. Thanks to The Times online I find this is not now so.

You may at times have thought me unreasonably hostile to this government; however I further view this as a little snide piece from a business dominated group.

Thanks to the Zacchaeus 2000 Trust the new measures are being fought vigorously and Jack Straw has already taken some action to mitigate the legislation. However, some measures which need to be understood remain.

Councils are already making more use of bailiffs, says The Times, to collect Council Tax arrears. Our ‘People’s’ ministers were going to extend bailiffs’ powers so they can use force when to seize goods in cases of civil debts.

We are indebted to Zacchaeus and its new lawyer, Joanna Kennedy, for forcing a halt to this return to the bad old days. Kennedy’s and the trust’s aim remains to roll back the legislation – Tribunals, Courts and Enforcement Act 2007 – ‘ “…and although ministers have said that they will not enact them, they remain on the statute book. So the Government could change its mind at any time. We’d like the provision to allow the use of force and effect forcible entry removed entirely.” ‘

Here! Here! Bailiffs still have a right to use force over unpaid criminal fines under the Domestic Violence, Crime and Victims Act 2004, such as for non-payment of a TV licence or motoring offence. For the past 400 years until that Act, entry to a person’s home had to be peaceful.

What a disgusting piece of legislation from a disgusting Government.

Quite incredibly the details of MoJ guidance to bailiffs on forcible entry appears to have been made a state secret!. These have been withheld “for reasons of the health and safety of bailiffs”. How, trust chairman Reverend Paul Nicolson, asks, “can we or the magistrates’ courts tell if bailiffs are keeping the rules if the rules are kept secret?”

Under a Freedom of Information request, a version of the guidance was released, with 15 of 30 pages redacted. An appeal to the Information Commissioner led to reissued guidance last autumn with different redactions — including some parts previously seen.

To put it mildly this is a business government. And a total betrayal of the founding of the Labour Party. That party was formed to fight the very excesses by business that Brown and his band are bringing back onto the statute book. It makes the Tories look positively socialist!

Explaining her new role Kennedy explains: “I had been a lawyer for 30 years and I enjoyed it, but increasingly I found the amorality of the commercial legal process frustrating and I wanted to do something a bit more worthwhile. A lot of it,” she added, “was making the rich richer and, as lawyers, becoming rich yourself.”

Welcome to the world of defending the under-privileged Joanna; more strength to your elbow and those of Rev Nicholson and Zacchaeus. We certainly need you.

Joseph Harris
Debt Control Man

Hold on to your cash

April 22, 2009

I do not often discuss the wider economic picture here. This is because there is enough to discuss on issues of how to control one’s own affairs.

But I do feel that this is one of those times that wider events are going to impact on exactly that, and quite seriously.

My view of the direction of the British and of the world economy is extremely bleak. For me this is no recent conversion. For as long as I can remember I found the idea of exponential growth in a finite world merely disaster waiting its opportunity.

It is my belief that now the changes will be quite dramatic; if they are understood then there can be an orderly and planned move to the changes.

But in the interim you and I need our wits about us. And the first move is the opposite of the ‘wisdom’ from official circles. You need your cash more than some over-exposed company. You have no duty to spend. Rather you have a duty to think how you will manage in the next years if there is a drop in your income.

And – unless you are one of the few lucky ones – your income will not rise and is most likely to fall. This will look acceptable as deflation operates for a few years. But the actions of governments, and the continued thinking – that if you are in debt you should borrow your way out – promises a massive inflation following on from that.

In terms of debts and repayment, my advice is to is to ensure you have kept in your own pocket everything you possibly can; and I give advice on that elsewhere. While it may feel like a good idea to repay debt as fast as you can it may not be your best approach at this time.

In view of the difficulties ahead I may write more on the wider picture, but for now please think very carefully when faced with any expenditure – including repayments.

Joseph Harris – Debt Control Man
author: Control Your Debt Crisis on Your Own Terms
site: http://www.controlyourdebtcrisis.co.uk

Does the FOS Work for Us?

April 14, 2009

I have earlier praised the Financial Ombudsman Service for its very existence.

My thinking is that it will act as a check on creditor failures to observe the rules, and that findings would take into account these rules in dealing as ‘piggy in the middle’.

Well I’ve been in ‘the waiting room’ of the FOS now for over a year and I am far less certain of this. Even more important I am very concerned at the extent to which the debtor has still to fight to get a proper hearing.

I cannot give you full details of the cases involved, since to mention the companies could well bring those savage legal departments sniffing like the monsters in any one of a thousand science fiction films! I can say that the process of the FOS is wearing for the debtor.

That process is three-stage. More if you take the delays into account.

The queue does of course relate to the changes in the volume of work, and the time it takes to train up; no basic criticism over that since it has to take the banks’ unfairness on its shoulders. and we know there is plenty of that.

First stage of actual process is with the adjudicator. Here one is dealing with a new process, so in essence it is necessary to repeat the arguments you have given to make sure they are fully understood, together with one’s perceived faults in the bank or credit card company response.

If you don’t like that – and from my experience don’t expect to – you can ask for the adjudication to be reviewed. If you don’t like that you can request your case go to an actual Ombudsman. Each time you need to re-present your case to some extent.

Now I am sure many people are happy with their experiences at the FOS so I am not going to dismiss its work out of hand, but sometime this year I will be dealing with an actual Ombudsman and that will certainly tell me whether I still have praise for the process.

Any way, for the umpteenth time now I am having to prepare my response to what I consider an appalling adjudication which reads to me almost like a letter from one of the companies.

I plan to write more on the service, and on the whole process, here, in my book, and on my website.

Joseph Harris
Debt Control Man

Twenty Thoughts for Debtors

November 23, 2008

In an entertaining but astute article in , The Financial Times Weekend Magazine, David Gaffney offers a trawl through some dos and don’ts and a couple of misconceptions.

He has written a novel Never Never based on this, and as you would therefore expect, he has a keen ‘eye’.

First he cautions against the ‘all the eggs in one basket’ approach to controlling spiralling debt. And warns not to borrow one’s way out of trouble. Perhaps he should have a word with Dear Gordon?

When you owe a lot, some arrangements can involve very tiny paybacks, and ‘geological’ payback periods. Gaffney says the first time he explained this to a client it was not well received! His bedside manner has improved.

Bailiffs seem a tricky area, but the main rule is not to let them in! Though of course the court-appointed bailiff is a different matter. Once in they are entitled to take inventory and return for collection of those goods.

He points out that creditors are keen to move as much of your money to them as they can possibly argue you should, while your task must be to hold on to all the money you need to live decently. And that – as a debt counsellor – he had no principles about his attitude to them. they will survive, and so must you, the debtor!

While he has some understanding of borrowing from one card to pay off others he says it is hard work and maybe it is a lot easier to stop. Strangely he found most multiple debtors were jolly, not my understanding at all. While bankruptcy costs.

He has several warnings about ways to avoid debt, such as being careful who you buy Christmas hampers from and ways of saving money on electricity.

Let me say he is a very witty writer and his explanation of the way judge’s are sympathetic to debtors is a good example, including that it might not be a good idea to wear clothes which are part of the original debts before the court.

He points out that credit companies want you to owe them money, which is their business after all. It is the paying back bit that can get complicated. And hire purchase goods cannot be taken back! Let me add that it is not a good idea to do this deliberately.

Among his clients have obviously been some ‘professional debtors’ since he suggests never being available to creditors or their agents since if they are unable to contact you for six years the debt lapses. Though the rule is not absolute, and would apply only to non-priority debts. (there are very few priority debts which include revenue taxes, council tax, rent, mortgage and utility services payments, and not much else)

But if you own your house his no 16 is ‘You can lose your house if you don’t pay’. Be warned! As I always emphasise being honest is the best approach.

One thing is very important. One that I have seen rarely mentioned. ‘Beware,’ he says clearly, ‘those creditors who sent measured and polite threats.’ Because they probably mean it.

It is possible to end up with someone else’s debts, so don’t accept delivery of something you don’t know about. It may carry a big burden of someone else’s unpaid debts.

He ends on a note of grim faced humour…

’20 Life is beyond some people’s means

‘A debtor is someone who hasn’t got enough money for the lifestyle he or she chooses. Most frequently this is a lifestyle most people call normal life – like having a phone, a telly, some clothes, heating the house and running the water. What should we do, kill them all?’

Joseph Harris
Debt Control Man

When to Go Bankrupt

November 15, 2008

Since contemplating bankruptcy for myself I have generally advised against it. At the same time every person’s situation is different.

So noting the new figures for bankruptcy and the chilling of the financial ‘institutions’ to their customers I revisit the matter.

According to This is Money personal bankruptcies rose seven per cent in the third quarter, against a year before.

The number of families whose lives were turned upside down in the three months July, August and September is 13,653. Bearing in mind that bankruptcy lasts a minimum of a year, and that maybe it takes another five to recover, that suggests the number of families affected now are around 200,000 – and rising.

That will soon be one household in ten; an epidemic!

Apparently financial institutions are forcing these bankruptcies, just at a time when their own debt is being ‘socialised’ and they are walking away from their mistakes with their yachts intact.

However let me steer myself away from the politics of this…

While there may be cases where the banks will recover more in this way, than from an intelligent approach, my own experience tells me some of the banks are incapable of understanding the difference between different situations.

On the whole they will have less to gain from forcing bankruptcy, than from an intelligent agreement.

I always say it is better to talk to the creditor, persistently, than to just assume there is only one way to go… downhill!

When you do talk, or write, remember that one operative may have a quite different way of dealing with customers than the one sitting next to her.

You may have to contact a different department; or the Chief Executive Officer of the creditor. Don’t be afraid to. He uses the smallest room just like you do.

If you are in a position where you obviously cannot pay what is the point of wasting company resources chasing you? It is poor decision making on the part of the creditor.

And if you have assets what is the point of forcing a sale of them at a time when the cash gained will be minimal.

And if you are in a position to offer something, what is the point in saying ‘no’ if the offer presented to the creditor is reasonable in your personal circumstances.

It is surely all good accounting, and straight common sense.

Although knowing what I do about derivatives, toxic debt, dark pools and the other arcane forms of gambling in the financial casino I don’t think anyone can accuse the financial ‘institutions’ of being blessed with common sense.

Joseph Harris

Debt Control Man

Can Debt Really be a Way of Life?

November 13, 2008
Life has a habit of knocking us off our perches, does it not?
Anyway I’m back with the blog and thought a quick review of the national and international scene might be worth the time.

I can actually remember when most people would at least be aware of the saying ‘neither a lender nor a borrower be’. And then, right at the beginning of the ’60s, came to our shores the first hire purchase company [Union Discount if I have the name right – started by the man who later created the Bank of Wales].

Hire purchase (h.p.) was quickly dubbed ‘the never-never’. I am still not sure if this meant you never finished paying, or if it meant that you never fully paid.

The first implied that the company had you in its grasp, the second that one paid in such small amounts over such a long time that you never really paid its value. When inflation was serious (remember it has reached 15 per cent a year within the past 40 years) of course the value of the cash used to pay was indeed well below the worth at the time the contract was signed.

It may have been at first that the loan was secured against the item, but later the loan became separate. In a way credit cards work on a similar basis except that the loan is never tied to any goods specifically.

Over the years the idea of credit grew and caught on. After all kings had always borrowed money – to fight wars if nothing else – and the Government of England had found itself with a debt in the seventeenth century.

That debt led to the creation of the Bank of England – a private joint stock company, empowered by parliament to handle the national debt!

The entrepreneur who had seen the opportunity later went on to bankrupt Scotland and force the union of the two countries. But that, as you can imagine, is a quite different story!

By about twenty years ago the idea of credit, that old frowned on idea of ‘buying on tick’, was accepted. Governments had early learnt how easy it was to run deficits on the nations’ dealings internationally – the balance of payments – and on the annual budget.

And we did not resist the idea of having more goods than we had earnt!

And companies, who always had been dealing with uncertainty, found debt a very good way of dealing with the lags between orders and delivery and distribution and sale. And then came the more relaxed control of the financial sector.

And the development of ‘derivatives’, and sub-prime mortgages. I don’t have to tell you much about those now, as they have been well discussed in the press, on radio and on television.

And in blogs…

I have seen all that well described as MLMs and Ponzi schemes, and the whole sector as a casino. And when those bastions of sobriety, the banks, joined in I am afraid there was nowhere else to go but down.

‘Down the rabbit hole,’ as Lewis Carroll put it so well, and in to Wonderland. Well a land in which the great and the good certainly seem to have well-developed senses of self-delusion.

And you spotted how our very own Gordon has taken centre stage, as though born to acting.

But then aren’t all politicians? [Paulson on his knees to Pelosi – I ask you!]

Meanwhile the massive $707bn that Paulson and Bernanke twisted arms to get the US Congress to approve to buy ‘toxic’ [don’t you love that term? It means poisonous!] debts from the banks is now not going to be for that.

Whatever; its purpose appears to be to pay the gambling debts of those big businesses, rather than to spur the US economy, which has a really big hangover from the ‘credit economy’.

Not incidentally that the $707bn tag is even very relevant to the new debt we are all going to have to pay off some time – through taxes – which as already reached about $2trn [that’s $2,000,000,000,000]. Maybe it needs some more noughts. It is big for sure.

It is about $300,000 for every man, woman and child on the planet – assuming a population around 6.7bn. In English say £200,000. But the possible real amount of toxic debt – silly me, I mean derivatives including sub-primes that have gone sour [not all have] – is about five times that.

So you owe a million; so do I. that puts our personal problems in perspective, huh?

Joseph Harris

Debt Control Man