Information About Debt Collection Laws
August 27, 2010 advice, Finance, money
In the UK, debt collection laws are regulated by the Office of Fair Trading (OFT); the governing body that sets out guidelines for creditors to follow when they are chasing a debtor for repayment. Even though those guidelines are not considered as laws, creditors remain under the obligation of following these guidelines. Otherwise they could see their consumer credit licence (and in effect their ability to trade) revoked by the OFT.
The OFT is responsible for giving out consumer credit licences to companies that are deamed fit enough to hold them. What’s more, the OFT is also responsible for establishing rules best practice consumer credit rules. In order to be awarded a consumer credit licence, the trader must comply with the following criterias:
· The trader musn’t have commited any offences that involve fraud, dishonesty or violence
· The trader must comply with credit and consumer legislation
· The trader must not practice discrimination of any kind in connection with their business activity
· The trader musn’t engage in business practices envolving deception, oppression or any other form of unfair or improper practices.
Creditors are also under the obligation of following these rules if the debtor has elected to use a third party debt collection agency to represent them (for example in the case of a debt management plan). However, debtors must be aware of common mis-practices carried out by some dishonest creditors. These include:
· Producing documents that mislead the debtor into thinking they are court documents
· Misleading the debtor by sending them documents that provide them a false impression regarding their situation due to a lack of knowledge
· Contacting the debtors without fully disclosing who is calling and what the purpose of the call is
· Using technical or legal jargon in order to confuse the jargon
· Not providing statements within reasonable time when they have been requested by the debtor
· Contacting the debtor at unreasonable times
· Ignoring reasonable requests of when to contact the debtor
· Making the debtor believe that being in debt is a crime despite the OFT stipulating that it is their guidelines for a creditor or a debt collection agency to do so.
· Harassing the debtor and causing them unnecessary stress
· Refusing a payment or refusing to work with a third party debt collection agency chosen by the debtor in order to deal with their financial situation.
Some creditors will also threaten debtors with visits from doorsteps collection agents who disguise themselves as bailiffs. However, it is illegal for them to enter the debtor’s property as only bailiffs that have been apointed by a court of justice are able to enter a property in order to seize the debtor’s valuable goods. Furthermore, it is also not uncommon for creditors to try and encourage the debtor to take out further loans in order to repay their debts.
If a creditor is found guilty of using any of these techniques in order to obtain the repayment of their debt, they run the risk of having their consumer credit licence revoked, which could then lead to them being unable to trade.
