Don’t tell the neighbours there’s a debt problem next door
(For more future updates, kindly subscribe to this blog's feeds via RSS reader or via e-mail.)
There has been good news this week for people with debt problems but a lot of pride. Debt collectors have been warned not to disclose people’s debt problems by leaving messages with the neighbours of those being chased to pay up.
The Office of Fair Trading (OFT) said it was “unacceptable” that debt collectors left messages with neighbours of those being traced. It also noted that this had the potential to cause embarrassment.
The OFT has already told one London-based company to stop this practice and is pledging to monitor other companies.
Link Financial Limited, a “trace and collect company”, (known as bailiffs to most of us) has promised to stop this practice, following a review carried out by the OFT and Lambeth Trading Standards.
Debt collectors will soon be required to treat people with financial difficulties fairly. I would have hoped that the rules already had this clause contained within them but apparently not.
From the end of May, debtors will be given “breathing space” if they have sought help in making repayments. This means that once a debtor has sought specialist debt advice, a debt collector must give them 30 days grace.
Current rules ban so-called “fishing trips”, which is where collectors contact people with a similar name to the genuine debtor, although this is a common practice and can be very scary for the innocent people involved. It is also, thankfully, illegal to harass consumers.
The Credit Services Association states that an average debtor may owe as much as £27,000 across up to 10 separate accounts.
Typical debts include unpaid utility bills, credit card debts and missed repayments on bank loans.
However, there is now evidence that UK consumers are turning away from credit card spending during the recession.
Spending on credit cards fell by 3% in the first three months of the year, compared with the same period last year, the group said.
However, increased use of debit cards meant spending on plastic cards was up 5.4% over the same period to £94.2bn. The number of purchases made on cards was also up, by 6.5%.
This was in contrast to the declining numbers of payments made by cheque. In the first quarter of the year, the number of cheques used fell by 10.6% and the total value of cheques dropped by 9.4%, compared with the same three months a year earlier.
