Are my creditors harassing me? The difference between creditor pressure and harassment

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Date: 11 November 2021

Upset man holding credit card with laptop on background as he struggles with debt

Feeling creditor pressure can be one of the most stressful aspects of being in debt, whether it is personal, or company related. While you may find it distressing, your creditors are allowed to chase you or the company for repayment. That said, it is important to identify when a creditor is being reasonable when chasing repayment and when they've overstepped the line into harassment. 

So, with that in mind, here are a few ways to differentiate the two: 

How are you being contacted, and how frequently? 

When in debt to your creditors, they are allowed to chase you and remind you to repay what you owe. These reminders could be telephone calls, letters, or visits from debt collectors. When trying to distinguish reasonable creditor reminders from harassment, you should look at how often you're being contacted and what they specifically regard. 

For example: being contacted at your company's premises during working hours about the company's debts wouldn't normally constitute harassment. However, if they've contacted you at your home regarding company debt late in the evening or in the early hours of the morning, that is less appropriate.  

Also, consider how often you receive these reminders. A reminder once per week, or once per day at the place relating to your debts (home for personal, business premises for company debts) would be considered reasonable. However, numerous letters within a week and multiple phone calls per day at all hours of the day wouldn't. 

Have they threatened you verbally or in writing? 

While the mention of legal action or a reminder to repay within a timeframe may frighten you if you're struggling with debt, a reminder wouldn't necessarily constitute harassment. One of the ways to differentiate harassment from acceptable reminders is to look at the language used in the creditor's correspondence with you.  

Using aggressive wording, threats, or even encouraging you to take out more credit, thus putting you deeper into debt, would count as harassment. If you spot such language and attempts at manipulating you into accruing further debt, you could complain to the creditor or report them to the financial ombudsman

Have they threatened legal action? 

If you continue to ignore reminders and repayment requests from your creditors, they are allowed to initiate legal proceedings to recover what's owed to them. Statutory Demands and County Court Judgements (CCJs) may arrive, which should be addressed as soon as possible to avoid longer-lasting damage to the associated credit rating. 

While being in debt is a crime in certain countries, the UK is not one of them, and matters of personal and company debt don't typically involve the police. Such matters are handled by county courts rather than the criminal courts, and threats from creditors alluding to involving the police are likely to be empty. 

Do you have an insolvency arrangement in place? 

Once you realise your company is unable to repay its liabilities when they fall due, you should take the necessary action to avoid worsening its position. Doing so is part of your directorial duties, and burying your head in the sand and failing to act will only worsen the situation.  

If you or your company is insolvent, you should seek advice from a licensed and regulated insolvency practitioner. They will guide you through the available options and advise you which would benefit you the most.  

If you're an insolvent individual or a sole trader, you may be suitable for an Individual Voluntary Arrangement (IVA), which allows you to repay your personal or sole trader debts in affordable monthly instalments.  

If you're a company director and that company is insolvent, the options available are different, and the most appropriate course of action would depend on the volume of debt and what you want for the company going forward. A Company Voluntary Arrangement (CVA) is like an IVA but designed for limited companies to repay their debts.

If the debts are more substantial and more serious action is required before continuing or closing, the company could benefit from an administration. If the debts are of such a level that the company is beyond saving, directors can protect themselves and minimise creditor losses by entering a voluntary liquidation, closing the company in an orderly manner. 

Most insolvency arrangements mean the included creditors should raise any issues with the insolvency practitioner and not you or your company. 

To summarise 

Your creditors are allowed to contact you and remind you to repay their debts without it being classed as harassment. You shouldn't ignore their reminders; doing so can result in legal action, which can have longer-lasting consequences if ignored. However, there are boundaries your creditors should respect when chasing you for repayment. Reminders should be delivered at reasonable times, and if the debt is company-related, your creditors shouldn't contact you at home or during non-working hours.

You should pay attention to how the reminders are worded; they should be professional and free from threatening or aggressive language and shouldn't allude that the creditors have powers that they don't, such as involving the police. 

If you or your company is insolvent, you should act in the creditors' best interests and enter an insolvency arrangement. After doing so, your creditors should contact the licensed and regulated insolvency practitioner assigned to your case regarding any further matters. 

Copyright 2021. Sponsored post made possible by Wilson Field.

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