Debt Collection Process
What is the debt collection process?
Different lenders have various ways to collect unpaid debts. The faster their act and attitude when they contact you, and the further action they going to take.
This means we cannot tell you when and what will happen if you have fallen into arrears but we can give you an idea of what to expect.
Your creditors will direct you to a free advice agency such as us for impartial debt help. The sooner you get advice the better.
The payments that you miss will get recorded on your credit file so you will find it even more complicated to get credit. But if your financial difficulties are short-term and you can pay off the debt or arrears at this stage, you might be able to keep your accounts open and continue paying them off as usual.
What could creditors do: Find out what action your creditors can and cannot take and the process they will use to collect debt
England and Wales court action: If a creditor starts a court action, you will need to act quickly to prevent further action
Scotland court action: What to do if you receive a decree or if you are facing diligence
Eviction and repossession: If you are falling behind with mortgage or rent arrears you could lose your home.
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If your account is regulated by the Consumer Credit Act, you can probably expect a default notice soon, and shortly after that your account will default. This will have a big impact on your credit file and make it a lot harder to get further credit.
You will probably be getting to a point now where your accounts will get closed and further action is getting started. Your creditors are likely to pass your debts to collection agencies, so you may start to get contact from new companies.
Any regulated debts you have such as credit or store cards, personal loans, payday loans, hire purchase, catalogues or overdrafts are likely to be defaulted by now. These creditors may have taken some further action by this stage.
The most common action after an account has been defaulted is for a creditor to pass it on to a specialist debt collection agency. This has probably happened by now.
Other more serious action could have happened or could potentially be coming soon. For example, some creditors may be thinking of taking your debt to court and applying for a CCJ (County Court judgment).
Your credit file will seriously get affected by now but that shouldn’t be your main concern. If things have gotten to this stage, it is important to get advice and start sorting out your debts. It is never too late to contact us to start getting your finances back in order.
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