FOOL'S EYE VIEW
Know Your Rights When You're Deep In Debt

By Jane Mack (TMFJane)
August 20, 2002

Did you know that it's a criminal offence for creditors to harass you for money? The penalty is a fine of up to £5,000, and, if convicted, it would provide evidence that the creditor is no longer a "fit and proper person" to hold a consumer credit licence. Since the Office of Fair Trading oversees the credit industry they can revoke these licences any time they like.

It's worth bearing this in mind if you're being contacted excessively for repayment of debts. You know the sort of thing – frequent phone calls at home and at work, and a constant stream of official-looking letters demanding payment and threatening legal action?

The law exists under section 40 of the Administration of Justice Act 1970 and it states that:

• A person commits an offence if, with the object of coercing another person to pay money claimed from the other as a debt due under a contract,
  
• harasses the other with demands for payment which, in respect of their frequency or the manner or occasion of making any such demand, or of any threat of publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation;
  
• falsely represents, in relation to the money claimed, that criminal proceedings lie for failure to pay it;
  
• falsely represents himself to be authorised in some official capacity to claim or enforce payment; or
  
• utters a document falsely represented by him to have some official character or purporting to have some official character which he knows it has not.

For the most part the larger lending institutions don't employ bully boy tactics – they know better than to even attempt it. And they're usually more approachable than you think. Many of the banks, building societies and other large organisations have their own central recovery units (CRU's) to deal with people in debt and they'll often agree to forgo interest & charges on accounts and can even accept lower repayments if you ask nicely. Most creditors are reasonable people – they just get frustrated when they're ignored.

If people in debt tend to have problems with anyone, it's the smaller debt collection companies. They earn their money in two ways: a creditor such as a bank, will pass the debt on to the collection company with the promise that they can have a percentage of whatever they manage to recover, or they sell the debt to them at a discount. Either way it is obviously in the interests of the collection company to retrieve as much of the debt as possible and this is why many people in debt begin to dread the phone ringing or the arrival of the postman.

About half of the country's debt collection companies belong to an organisation called the Credit Services Association. They estimate that around £50 billion of consumer debt is overdue at any one time although they usually only handle about £3 billion of it. But since the average debt referred to them amounts to £200, that's a lot of people who are being chased for money! However, its members have to abide by a Code of Practice and the CSA takes a very dim view if any of them don't.

Naturally, the best course of action to take when facing any type of debt problem is always to contact your creditors. Don't ignore letters and phone calls and don't be frightened. The worst they can do is take you to court and no judge is going to order you to pay more than you can afford. Okay, so you may end up with a County Court Judgement but it's not the end of the world.

But if you're genuinely trying to do your best and you feel you are being harassed by creditors then don't hesitate to mention Section 40 of the Administration of Justice Act to them – and feel free to contact the Credit Services Association and the Office of Fair Trading to report their behaviour. Remember, they could lose their licence to operate and that's a handy thing to know.

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