Falling behind on repaying your creditors is rarely a good idea. Not only does it put unnecessary strain on your finances, but the psychological impact can be similarly damaging. So, what can you do when your creditors are breathing down your neck and demanding you repay debts that you maybe can’t afford?
What can my creditors do to reclaim their money?
Simply put, if someone owes a creditor money, they should pay it in the time specified. If you don’t pay on time, your creditors have the right to pursue you for repayment. They can do this in several ways.
Reminders and warnings
At first, your creditors are likely to send you warnings, which can be via telephone, email, or post. If your debt is business-related, they should only contact you during work hours, and for personal debt, they should only contact you at home and at a reasonable time. They may even send debt collectors.
Reminders and encouragement to repay your debts are not the same as harassment. Creditor harassment can occur if the creditor engages in the following:
- Using threatening language.
- Contacting you at all hours at home, work, and even on social media.
- Breaking data protection laws to uncover your personal information.
- Pressuring you to take out credit to repay the debt.
- Threatening legal action that they cannot enforce.
Such behaviour isn’t acceptable and should be reported to the relevant authorities.
Further action
If you ignore letters and reminders, your creditors can take further action to encourage you to pay. This further action can include issuing a County Court Judgement (CCJ) against you. Failing to repay a CCJ in the allotted time can harm your credit rating, and the judgement will stay on your credit file for six years.
If you still don’t repay, and you owe more than £5,000, your creditors could even apply to make you bankrupt.
Stopping creditor pressure
While dealing with your unpaid debts can be unpleasant, you should never ignore them. Doing so will only worsen the situation, and your creditors could pursue further, more drastic action. Fortunately, if you act quickly enough, you can go some way towards alleviating pressure from your creditors.
Contacting your creditors
If you’re aware you cannot make an upcoming repayment, it might be worth contacting your creditors. If given enough notice, they may allow you to delay repayment or to alter the arrangement in another way. While it may feel daunting to admit to your creditors that you can’t repay what you owe them, they may appreciate being told in advance as opposed to not receiving the payment and having to chase you.
Formal repayment arrangements
If negotiating with your creditors is unsuccessful, a more formal way to clear your unaffordable, unsecured debts is to consolidate them into an affordable, monthly repayment arrangement. These arrangements are called IVAs (Individual Voluntary Arrangements). They allow indebted individuals and sole traders to repay their debt in monthly instalments at a tailored, affordable rate, usually over a period of five years. These arrangements are legally binding and must be carried out by a licensed insolvency practitioner.
Summary
Pressure from your creditors can come in many forms and should not be ignored unless you want their tactics to get even more forceful, risking greater consequences for you. Though creditors are within their right to try and recover what you owe them, this action should never become harassment. Reaching out to your creditors can go some way to reduce the pressure. If not, you have other options, such as repaying your debts via a formal, monthly repayment arrangement overseen by a licensed insolvency practitioner.