Recessions are gloomy times. With businesses folding left, right and centre, these are dark days for everyone. Well, for everyone except private recovery firms bailiffs and other members of the debt collection industry who enjoy a steadily increasing stream of lucrative business.; privateers sailing the seas of financial depression.
Private Debt Collection companies operate by buying a borrower's debt from the original creditor for significantly less than the total owed. They will then pursue the debtor and attempt to retrieve as much of the monies owed for themselves, often whilst claiming they are operating on behalf of the original lender, which is in fact no longer the case.
This is but the tip of the iceberg, however. In our time helping people with dealing with debt problems, we've heard plenty of anecdotes about the unethical behaviour of debt collectors. When you consider that a debt recovery firm generally only pays between six and sixteen percent of the value of the debt in order to acquire it with the aim of pocketing the balance, the picture painted of the average Debt Recovery firm is a grim one.
They will often employ whatever tactics they think they can get away with in the pursuit of profit. When contacting debtors they will often demand repayments far in excess of the debtor's ability to pay, whilst refusing all the debtor's offers and charging interest in the mean time. They will sometimes even attempt to charge the debtor for the numerous unsolicited letters and phone calls they make to the debtor's home. One of our clients described how he was contacted thirteen times in twenty-four hours.
The list of woes continues. Many clients report debt collectors trying to use misleading language, misrepresent themselves as having authority to seize goods or property belonging to the debtor or refusing to deal with a third party debt management consultant – all of which contravene the codes set in place for Debt Retrieval by the Office of Fair Trading. In some cases, debt collectors have been known to use false company names claiming to send bogus legal letters to frighten the debtor into paying up.
KNOW THE SCORE
If you owe money it is fairly certain that at one point or other you will have to deal with debt collectors. The key in beating them is to not be afraid of their heavy-handed approach. They rely on debtors having limited knowledge of the laws surrounding how a debt may be collected and will push very hard if they think they can get away with it. They may use threats of jail or bankruptcy; in truth they have no powers in this regard whatsoever.
When dealing with them it is beneficial to set the tone early on by informing them that you are aware of your consumer rights. By contacting you repeatedly or late at night (which they most likely will), they are already in contravention of the rules set out by the Office of Fair Trading. The law is on your side when you are dealing with them, and you have the right to send them a letter demanding they 'cease and desist' from contacting you.
Another tactic to watch for is the home visit. Debt collectors will often try to pull the wool over a debtor's eyes by informing them of an impending home visit, implying it is a fait accompli. Should the debtor be taken in by this ploy, it will mean that the collector has the right to visit when it suits them. Under no circumstances should a debtor consent to visits from a debt collector if they do not wish them to come back. Bear in mind that that debt collectors only operate before any court action has been taken, and they do not have the same powers as bailiffs.
GETTING THE FACTS
Reading up on your rights regarding debt collectors won't take long, and it's wise to brush up on the ins and outs as soon as soon as you receive initial written communication that they have acquired the debt. Your local branch of the Citizen's Advice Bureau, the Consumer Credit Counselling Service and the Office of Fair Trading can all give detailed advice on your rights in a debt situation. Furthermore, Debt Management firms like ours can also offer a lot of helpful advice and deal with them on your behalf as part of our service.
IT'S NOT ALL BAD
Despite all of this it is as well to remember that not all debt collectors are unscrupulous and that some do ensure their business is ethical, fair and above board. Many will genuinely help to solve your problem by accepting low monthly payments based on your income and outgoings. No matter what type you deal with remember to remain respectful and polite throughout, stick to agreements and do not agree to pay back unrealistic sums, as failure to pay generally makes matters worse.
Pay Day Pitfalls
Search for 'Pay Day Loans' on the Internet and you will be bombarded with a myriad of brightly-coloured, friendly-looking sites promising 'convenient, immediate, low-cost credit'. On High Streets across the UK, more and more shops are springing up offering cash 'advances' on pay cheques. Are Pay Day loans an easy way to get out of a tight spot, or are they more trouble than they are worth?
Mortgage Misery and Mayhem
The latter half of this decade has seen borrowing rates in the UK soar, with many home-owners seeking to re-mortgage their properties in order to be relieved from crippling repayments. However, they face serious challenges. Whilst sub-prime mortgage lending in the US is seen to have been a major cause of their current fiscal predicament, the UK heeded the warning, and lenders are becoming increasingly selective about who they will lend to.
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