There are several steps to consider when a debt turns bad. One or two missed payments will usually prompt a reminder or gentle warning from the creditor. If subsequent payments are missed, the creditor might ask for the entire debt to be paid in full by a certain date.
Obviously, if you are struggling to meet weekly or monthly repayments, you would probably be unable to make a single, much larger payment. At this point, the situation has already become unmanageable in the framework of the original credit agreement. Charges for late payment will also be added to the debt, for as long as the problem continues without intervention.
Negotiating a revised payment schedule with the creditor at the earliest opportunity is always the most effective way to avoid the bailiffs. By tackling the issue early, you could give yourself a fighting chance of clearing debts without incurring too many financial and credit-related penalties. By ignoring the problem, you could move a step closer to encountering the bailiffs.
After several weeks or months of requesting the borrower to clear his debt, a creditor is likely to hire a debt collection company to take over the account. Some debt collectors work directly for creditors, while others buy bad debts from creditors via a legal process, known as novation. Debt collectors tend to be more aggressive in their demands for payment, than high-street lenders, such as banks and retailers.
What happens if your debts have been passed to a debt collection agency?
A debt collection firm will typically send a letter to you to notify you of your duty to clear your debts. The letter might state that you have one or two weeks in which to clear the debt in full, otherwise solicitors will be instructed to initiate legal proceedings in the small claims court (depending, of course, on the size of the debt).
At this point, a debt collection company could write to you to tell you that they plan on using bailiffs to recover the debt or you could look to enter wither a Company Voluntary Arrangement or an Individual Voluntary Arrangement in order to solve the problem.
Reasons to avoid bailiffs
Unless appointed by a court to recover tax arrears, criminal fines or VAT, bailiffs cannot force their way into properties. They can, however, gain peaceful entry via a door that has been left unlocked or a window that has been left open. Once peaceful entry to a property has been made, bailiffs can return at a later date using force (on the property) to remove seized goods, which are then sold at auction.
How to avoid bailiffs and clear your debts
If you’re struggling to repay your debts, don’t panic! Although it can feel like a scary situation, it’s important to remember that there is help available that could enable you to get back on track – even if your debts have been passed on to a debt collection company.
No situation is hopeless, so try not to let things get to a stage where you’re constantly worrying about a bailiff turning up at your door.
Creditors must treat your fairly and they may be able to help you set up a new repayment structure. If not, then you can rely on the help of a professional debt management company to help you overcome your money troubles.