Default on payments

The Consumer Credit Act (CCA) requires certain procedures be followed and specific documentation be provided in the event that two or more payments are missed. Within 14 days of the second default payment, the lender must send you a notice of default to include the following:

  • Exact details of the breach – i.e. how much is owed
  • How this can be remedied – i.e. what action the consumer must take and by when
  • Whether any additional sums of money (default sums) have been incurred as a result and when they must be paid
  • Consequences of further default or inaction
  • Restrictions (if any) on the lender’s right to repossession

The notice of default will not be enforceable if the procedure is not followed in this way by the lender. Furthermore, the goods cannot be repossessed without first serving this notice and waiting for the required 14 days to enable you to respond.

Applying for a Time Order

A further consumer protection measure the Act incorporates is the ability of the consumer to apply for a ‘time order’ from the courts. If successful, this will provide you with a longer amount of time to pay, in the context of your personal situation. To avoid further action from the lender in the meantime, you must write to them advising them of this intention.

Debt Collection Agencies

Debt collection is big business. As the use of Debt Collection Agencies (DCAs) increases, so have the number of complaints from the general public regarding the underhand, intimidating and often unlawful practices they are resorting to. Complainants also cite frequent examples of being mixed up with debtors who used to live at the address where they are currently living.

While there are still no laws governing what DCAs can and cannot do, the OFT have produced guidelines in relation to acceptable and unfair practices, breach of which may result in revocation of their licence. The OFT regard the following practices to be unfair practices:

  • Frequent and / or threatening phone calls
  • Being contacted at unreasonable times
  • Refusing to deal with the debt advisor and contacting the debtor directly
  • Failing to investigated disputed debts
  • Threatening court action and not describing the process accurately
  • Pressurising debtors to pay in full, in unreasonably large instalments, or to increase payments when they are unable to do so
  • Requesting the debtor takes on further borrowing to finance a repayment

Remember that DCAs are not bailiffs and have no right to enter your home or visit your place of work. You are within your rights to ask them to leave and they must do so. They may only visit you at home where you have been given reasonable warning of a visit. Where you have engaged the services of a debt management company to manage your debt and negotiate with creditors on your behalf, you can insist that DCA deal only with them, and not with you directly. If you query or dispute a debt – and remember it is your right under s 77-79 to request to see your credit agreement and statement of debt from the creditor, then the DCA must not continue with debt recovery activities during this time.