Due to reasons such as unemployment, relationship break down, illness or excessive use of credit, people and businesses often get into financial difficulties and they struggle to keep up with debt repayments. It is not advisable to avoid the responsibility to repay your debts. There are options available to help you in case you are in genuine financial difficulty and are not able to meet your repayment obligations.

 

Practical Guidelines to Prevent Debt Recovery Action

 

You have a legal responsibility to repay back the money you owe, if you have borrowed money, bought any goods with finance, have loans or credit card debts or owe money for bills or accounts.

 

Following are the key practical guidelines to prevent debt recovery action in case of hardship:

(a) You should contact the creditor without delay to discuss a repayment plan, in case you are unable to meet your financial commitments;

(b) When negotiating a repayment plan with the creditor, you should be realistic about what you can pay, taking into account your other financial commitments.You should be honest to the creditor or debt collector about your situation;

(c) Keep copies of any letters you send or receive from the creditor and keep account of notes of any conversation you have with the creditor;

(d) You should ask for proof e.g. documents, account statements from the creditor, in case the debt does not belong to you or if you disagree with the amount demanded;

(e) Ff contacted about a debt which is several years old, you should not confirm the debt or make any payments till the time it has been proved that the debt belongs to you;

(f) Ff you are threatened by the creditor with legal action; you should seek legal advice as soon as possible to know about the options available to you; and

(g) If you are contacted about your debt, you should be cooperative and should also expect to be treated professionally. You can make a formal complaint, if a creditor or a debt collector misleads or threatens you or is abusive towards you.

The first step you should take when experiencing financial hardship is to discuss your situation with the creditor or the service provider.

Many companies have a designated hardship officer who assesses the financial situation of the debtor and works out a payment plan to help youpay offthe debts. Whether the hardship officer can help you will depend entirely on why you are having difficulty in making payments and for how long you will be experiencing problems in making the required repayments .

You can ask the creditor for a ‘hardship variation’ if you are experiencing hardship as set out in Section 72 of the National Consumer Credit Code. The creditor has legal obligations to respond within 21 days, in case you have applied for a hardship variation with the debtor.

You can also ask the creditor to extend the loan period, so that you can make smaller repayments over a longer period of time or you can ask to postpone the repayments for an agreed period of time.

You can also lodge a dispute with the Financial Ombudsman Service or the Credit Ombudsman Service Limited, in case you are not satisfied with the reasons for refusal of your hardship application to the creditor.

Feel free to contact our team of experts at Owen Hodge Lawyers to provide you assistance in this matter.

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