Code of practice for domestic customers

We will be discussing about debt collection processes in the current climate, what can be done if you find yourself in arrears, and the consequences if you fail to pay at all. We will be using the UK as an example, as most other nations around the globe have similar laws.

Life in general can be very difficult in the sense there are many demands on household budgets, organising and finding money to pay your bills can sometimes be very hard. However, bills must be paid.

If you do not pay your charges when they are due or the company you ought to pay cannot come to a satisfactory payment arrangement with you, then the whole amount in most cases becomes due and you may end up being taken to court. This will involve you paying extra costs because you will also incur court fees and solicitor’s costs. Most companies prefer to avoid this option but, customers need to pay for the services they receive.

1) What to do if you cannot pay your bill in full?

If you are in debts/arrears on your bills, I strongly suggest you pick up the phone and contact your debtor to make some payment arrangements. Most people make the mistake of not doing so, thinking the debts are just going to go away by some miracles. Unfortunately it doesn’t work like that. Companies do understand customers are likely to be in financial difficulties and will be willing therefore to setup some kind of payments schemes spread across the financial year (April – Mar) or less if you can afford to. Having said that, some customers might still not be able to meet the payment requirements set by the debtors and would therefore need to seek help from local government agencies such as the C.A.B (Citizens Advice Bureau) if you live the UK. They’ll be able to work out all your incomings and outgoings and then will get in touch with the debtors, and 9 times out of 10, your payment offer will be accepted, and these can be as low as £5.00 per week or even £10.00 per month depending on the debt.

Some money advice centres, which can be found in your local phone book, provide a similar free debt counselling service. You can also get in touch with department of work and pension in the UK to see if you might be eligible to claim benefit(s). They won’t be able to give you financial assistance, but may be able to provide support in other ways.

When calling your debtors, always ask if there are some kind of schemes they are offering to help people in difficulties. If you just call up, and want to set an arrangement, they will be happy to collect the full amount across a long period. Just ask, who knows they might turn around and say if you keep to the agreement they will match all the payments you make. Sweet as.

2) What if you are a tenant?

If you live in rented accommodation, it is not always easy to know who is legally responsible for the bill, for example for gas and electricity or water and sewage charges, it is usually the person living at the property, unless bills are also including in their rent. Unless the landlord has entered into a written agreement with the debtors accepting responsibility for the charges, this means you as the tenant must pay the bills. Life is tough. Companies are not parties to the terms of your tenancy agreement. If you believe charges are included in your rent but they have not written to you asking for payments, you will need to ask your landlord to contact them to pay. However, in the event your landlord does not do this, debtors will ask you to pay unfortunately. So you have to become a collector yourself and chase your landlord. If the bill is in the name of a previous tenant, you need to make a phone call and say so, as when they do find out, you will have a massive amount on your neck to pay! Meaning stress, stress and more stress.

3) What happens if you do not keep to the agreement or do not pay the bill?

You will most likely receive a final notice in red usually giving you 10 days depending on the company to pay the outstanding amount in full. If you still do not get in touch or pay, then it gets a bit nasty, you’ll receive a solicitor’s letter explaining the action they will take if payment is not made promptly. This will cause unnecessary stress that could have been avoided by picking up the phone and explaining your issues. Remember, these are real people who have problems of their own, and will do what is required of them to help. If you do not pay or contact them, they may ask an independent debt collection agency to recover the amount owing, and these are the tough nuts to avoid, as they can send people around, or even bailiffs (taking goods from your property).

If your account is referred to an external agency, and you have any complaint concerning the company, which you are unable to resolve directly with them, usually the debtor will be required to investigate and, if appropriate, remove your account from their files.

If you still fail to pay or contact the debtor, they may send you a letter before legal action, and they will issue a County Court Claim to recover their charges. You, the customer, will be liable to pay the fee for the claim and the solicitor’s costs, adding more charges to your already large debt. If you do not respond, the court may issue a Judgment Order for payment of the full amount due to the debtors, and will have an effect later on If you want to get credit for example a credit card, or a bank loan.

If you are still refusing to pay, then further actions will be taken to enforce the judgement order which may include:

• Bailiff or High Court Enforcement Officers coming round your property to seize your belongings and sell them at an auction. No! My lovely PC is going…no no!

• Asking the Court to place a charge against your property if you own your home. This means if you sell or re-mortgage your home, the money you owe will have to be paid to the debtor.

• Applying to the Court to take deduction from your income. The Court will contact your employer to deduct the money direct from your hard earned cash.

• Commencing insolvency proceedings against you as a last resort.

Remember a County Court Judgement (CCJ) will have an impact on your credit rating and may prevent you from purchasing goods on credit or obtaining a mortgage or other loan for a significant period of time.

If you have any further enquiries do not hesitate to contact us. Hope this helped.

External Links:

Department of work and pension: http://www.dwp.gov.uk/
Citizens Advice Bureau: http://www.citizensadvice.org.uk/