Facing up to your debt – especially at this time of year, when money is tighter than ever – can sometimes feel like a herculean challenge. Once you finally take the plunge, though, it becomes a huge relief and can make it much easier to picture a more financially satisfying future. Making this first step becomes a lot easier when you have all the necessary information, and that includes understanding what the legal implications of your debt could be.
It’s important to look into strategies for repaying your debt, and you might want to seek expert advice in order to do so. In the meantime, though, this information should help you understand what your rights are.
Free from harassment
Your creditors are allowed to call you or write to you, and they can even visit you at your home. However, you still have the right to live free from harassment. Any of the following actions could be considered illegal – so if you face this bad behaviour, keep a record and consider making a complaint:
- Calling at unreasonable times
- Pressuring you to borrow more money
- Refusing to deal with debt charities like Stepchange if you ask for help
- Sending letters designed to look like court forms
- Taking unauthorised payments
- Calling your place of work after you have told them not to
- Discussing your debts with a third party, such as your family or boss
- Demanding payment for a statute barred debt
Perhaps the scariest part of unpaid debt is uncertainty around the legal consequences that you may have to face. The most important thing to remember is that it is extremely unlikely that you are at risk of going to prison.
With common types of household debt including loans, mortgage or rent arrears, credit cards, overdrafts, utility arrears or catalogues you can not be sent to prison.
However, this doesn’t mean there aren’t legal consequences, and you could still be taken to court. The outcome from this might include having a County Court Judgement (CCJ) made against you, which appears on your credit file for 6 years. Your creditor may also be able to take money directly from your wages, if the court allows them to do so.
You may also be concerned about how information of your debt could spread to the people you know or work for. As we’ve already mentioned, it could be considered harassment if debt collectors talk about your debt to an unauthorised third party – so assuming they follow the rules, they shouldn’t do so.
There are other ways that people could find out about your debt, though. Creditors, including your landlord, can see information about your debt on your credit file if you make an application to them. You have to give permission for this, but in most cases you’ll be unable to get credit if you don’t agree to a credit check.
Court action such as a CCJ and insolvency solutions such as a debt relief order are a matter of public record. This means that there are registers available to be searched by anyone, which will disclose court action or insolvency. In practice, it’s unlikely anyone will come across this information unless they are actively looking for it.