Growth in debt problems raise concerns over debt collection standards
As the economic downturn deepens and becoming an increasingly prevalent issue, concerns have once again surfaced over the issue of debt collection – a method used by many creditors to attempt to recoup any outstanding debts from an individual.
According to the BBC, the government has expressed concerns over the issue of debt collection, with Consumer Minister Gareth Thomas set to meet representatives of the industry.
The concerns relate to reports that debt collectors have increasingly been targeting innocent individuals over unpaid debts as well as instances in which collectors are not adhering to industry regulations.
Mt Thomas described himself as “increasingly concerned” about the reports, which included “psychological harassment” including “constant phone calls” including calls to neighbours and employers.
The concerns come amid fears that more and more borrowers will be faced by bailiffs and debt collectors during the downturn, with many seemingly unaware of the rights that they have.
If you are having trouble with bailiffs, or believe that you may be approached by debt collectors agency in the future, this guide may help you.
What is debt collection?
Debt collection is a process in which a creditor can employ the services of a bailiff or debt collection agency. Whilst the term “bailiff” is colloquially used to describe any individual working for the purposes of debt collection, there are in fact three forms of debt collector.
Bailiffs work on behalf of the court, collecting debts relating to local authorities (such as unpaid council tax, child support or local authority parking fines). Debt collectors on the other hand, are employed almost exclusively for private debt disputes.
Do I have to let a bailiff or debt collector into my home?
Debt collectors do not have right of entry into your property and do not have a right to seize goods. Instead, they are bound by the conditions of the Office of Fair Trading (OFT) debt collection guidance. A debt collector cannot harass or attempt to intimidate you. If a collector does harass you, inform your local trading standards office. If a debt collector threatens you physically, report the incident to the police.
If you are visited by bailiffs working on behalf of a county court, you are under no obligation to let them into your home and they have no authority to force entry on the first visit. They can however, enter your property by “peaceful” means, such as an invitation to enter and they can enter through an open window or an unlocked door. If they attempt to break into your house, push past you or prevent you from closing the door, then an offence has been committed. In some circumstances, a bailiff may be accompanied by a police officer. The officer is only present for the purposes of keeping the peace and cannot become involved in the debt dispute.
Bailiffs working on behalf of HMRC do have the legal power to force entry, provided that they have a magistrates warrant.
If a bailiff does gain peaceful entry to my property what can they do?
If they have been able to gain entry to a property, a bailiff will usually try to find and seize any goods of value belonging to the person who owes the debt or who is named on the warrant. They have a right to enter all rooms and open any cupboards or other storage spaces. These goods will be seized with the purpose of raising cash via public auction and so the value of the goods seized will be representative of their value at auction, not their purchase value.
The bailiff will make a clear intention to seize various items, either verbally or by attaching some form of mark to them. This is sometimes called levying distress upon goods.
Once the bailiff has seized goods, they have several options available to them. The most common practice they remove items they have seized immediately from the property to be stored and eventually sold at public auction. Alternatively, they can leave someone on the premises to guard the items that have been seized or, in the case of bailiffs collecting rent, secure items that have been seized in your home. These last two options are very rarely used.
The most likely outcome is that the bailiff will ask you to sign a ‘walking possession agreement’. This allows the goods to remain in the property and for you to use them for as long as you make the agreed payments.
You cannot attempt to remove a bailiff from your property once they have gained peaceful entry.
What goods can a bailiff remove?
A bailiff cannot remove any essential items from your property, clothing, bedding, cookers, fridges, most furniture and the ‘tools of your trade’ (for example, a computer you use for work).
They can take non-essential items such as your television, games console and any possessions outside your home (for example, your car or garden equipment), or in unlocked sheds and garages.
Do I have to pay bailiff fees?
Bailiffs collecting council tax and other local authority debts can only charge a flat-rate in fees per visit. Private debt collector’s fees are not subject to any form of capping system.
Will I get advance notice of a bailiff visit and fees?
Local authorities must send you a letter giving 14 days notice of a proposed bailiff visit to collect council tax. County court bailiffs must issue a warning notice allowing 7 days for you to pay. Other debt collection agencies will tend to write to you in the first instance, offering the opportunity to pay before you are visited in person.
How do I negotiate settlement with a debt collector?
You may negotiate with bailiffs to make either full or partial debt repayment there and then, which usually results in them leaving without taking any goods. If they accept any payment from you, make sure you get a receipt or other proof of payment. Bailiffs may be willing to take part in a reasonable negotiation (subject to legal and contractual constraints) but only make an agreement if you can afford to stick to it.