Posts Tagged ‘write off’

New Lending Code 10: mental health, court action

November 20, 2009

182. The subscriber should also only initiate court action to pursue the debt as a last resort and when it is appropriate and fair to do so. [Reproduced with the kind permission of the British Banking Association -see link below]

The only time I can see that court action is justified is where it can be clearly shown there is BOTH ability to pay AND wilful avoidance of resolving the matter on the part of the debtor.

Whatever the history of the creation of the debt – and there can be more than one side to this – the issue at the collection stage is about both the position of the debtor, and the reasonable actions to determine resolution.

Now bear in mind that resolution may be achieved in many ways. The debt may be completely written off, without any call on the debtor in the future. It may be frozen on any basis from not chasing it at all, to regular contact; here the intervals of contact should relate the fact that freezing is going to be a response to small likelihood of payment. Annual contact should be sufficient.

There may be token payments, of say £1 a month. But here the use of this should be sparing, as this can cause problems for poor and disabled debtors. It is likely that the debtor has more than one creditor. Not only may the total pounds be noticeable, but the costs of paying can add 50 percent or even more.

The Debt Management Plan is not available where monthly repayments total less than £100 a month. At lower figures there is no way of using an intermediary, including charities, to distribute the total repayment.

Where there are a number of creditors it would be a good move for creditors to organise a clearing house for these payments. And that would permit something even more in keeping with fairness.

A debtor is generally required to treat all their creditors equally. But if only a pound or two a month can be afforded it is hard to divide; unless there is a clearing house that gathers many such payments, doing the computer-easy calculating and accounting, and passing sums on in bulk to the appropriate creditors.

It isn’t brain surgery. And not even rocket science!

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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Getting Good Information on Debt, Debtors and Creditors

September 7, 2008

I sought to have my affairs handled by a commercial company and by a leading charity in debt advice. To say both made a hash of the information I gave over the phone is to be very polite about it!
One charity, which handles debt management for you if you wish, told me I would not get debts written off. So far I have five of my debts written off and another two put on ‘no chase’.
So you see why I say ‘do it yourself’.
I know this will not suit everyone, but I do urge you to learn all you can before you make any decision about what to do. This means you will be more certain that your action is right for you. Today the emphasis is on the debtor – that’s you and me – being treated with respect and with sympathy.
There are rules about what these creditor companies and debt collecting companies can do. Primarily their behaviour is in the hands of the Office of Fair Trading, which issues licences to trade in credit, and in May 2008 set up the Consumer Protection Regulations, and in the voluntary code—the Banking Code.
To outline them here would be impossible, but just a few things to bear in mind. However unpleasant any representative of the creditor or of the debt collector behaves they have no right to enter your premises, much less take any of your property. To reach this stage there must be a court case and you must be notified of that and have the right to be present in person and/or be represented by a lawyer to present your case.
Only the court can give permission to distrain your goods or your home, which latter would normally be only in a mortgage matter or where you are deemed to be able to pay but refusing.
That would be a long way down the road. Only an authorised bailiff has the right to physically enter your home and possess anything that is yours. And he must be formally appointed by the court. If, let us be quite clear, a creditor or a representative does behave with any unpleasantness or aggression (or with threats or pretending to have official documents when they do not) they place themselves in the wrong. And they can face penalties – including losing their licences to trade.
Always keep your nerve in these situations – easier said than done, I know – and always be honest and seek a fair settlement.
Making sure you seek information and advice has an important use, reassuring you of your right to be treated fairly and with respect. When you deal with creditors you need to be able to demonstrate that you have sought advice. And you will find a lot of genuine advice and help from the organisations mentioned, and from others.
Chief among them is your local Citizen’s Advice Bureau. Now you are not going to enjoy this experience, but grit your teeth and set to. The interviewers at CABs are volunteers – trained – but volunteers, so do treat them with respect and thank them for their help. There are so many of us (and so many others with other problems) that they are not going to be able to give you a lot of time.
But there is a lot of useful material available on their computers and it is a good idea to ask them for print outs of what the interviewer thinks might help you.
Definitely get as much information as you can and ask as many questions as you need. It is your life you are dealing with, after all.

Joseph Harris
Debt Control Man