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Missing payments on your debt or debts can have serious consequences. If you can’t or refuse to pay your debts, then expect letters through the post, calls from the debt collectors or even a visit from the bailiffs for debt collection.

It’s an unpleasant scenario to be in? So, if you are in debt and need help, what happens when you miss your payments? What will your creditors do to get their money back? Is there support and assistance available if you are in this position? Read on to find out more.

Should I be worried if I miss a debt repayment?

If you miss a payment on your debt, get in touch with your creditors and let them know why you missed a payment. They may find solutions to help you repay the debt owed to them without you facing legal action.

Spot the signs and find out when you need debt help.

What should I do if I miss lots of repayments?

If you are missing payments regularly, this can be a bigger problem. Usually, this is between three to six months of missed payments. However, the type of debt you have differs.

Priority bills such as mortgage debt and council tax arrears are less forgiving and may start pressurising after two missed payments, however non-priority loans such as credit card debt may wait longer until they proceed to more severe action.

What action will companies take to recover the money owed to them?

Companies have the right to take action to ensure you pay the debt back to them. So, what can they do to try and recover the debt?

1. Contact you

This is often one of the first things a company will do. They will write or call you to ask you what is happening and why you miss your repayments. At this stage, if you are cooperative, they will try and agree with you to repay the debt.

However, if you have missed several payments, the creditors will not be as forthcoming. Instead, they may demand you make the payment in full.

2. Increase interest rates and charges

Most companies have the right to charge you interest or late payment fees if you miss payments. These charges are added to your balance, meaning that you will owe even more money. This is usually part of their terms and conditions when setting up the loan.

3. Send you a default notice letter

Depending on your loan agreement, if you have missed up to six payments, the company you owe money could add a default to your account.

Find what a default notice is and what it means to get one.

This will go on your credit report, which could hinder getting credit on your name.

Find out ways to improve your credit score.

4. Refer you to a debt collection agency

A debt collection will be more persistent at trying to recover the money. As their expertise lies in debt recovery, they will be able to use more time and energy to contact you and obtain any money owed to them.

5. County Court Judgement starts

If you refuse or can’t pay your debt, then the courts may get involved in your debt. It is essential not to ignore the letter and make arrangements to pay your debt back.

Please find out more about County Court Judgements (CCJ) and what It means to get one.

If you don’t cooperate, this could lead to further action against you. Having a CCJ will affect your credit score negatively or your possessions being taken away from you from debt collectors.

6. Expect a call from the Bailiffs

If you have failed to follow the terms of the CCJ, then the courts could ask for the bailiff to visit your home or business.

Find out more about business debt.

The bailiffs have the power to remove goods to the value of the debt or ask for the money that is owed to your creditors.

Expect additional fees to be added every time the bailiff contact and visit you. This means that your debt will be increasing as a result.

7. Start the process of bankruptcy

If every other step has failed, then then your creditors will start the process of making you bankrupt. This doesn’t happen often and can only be done if the debts are over £5,000.

Find out more about bankruptcy.

What does a debt collection agency do?

A debt collection agency collects debt. If you do a quick search on the internet, you will find many debt collection agencies that help companies recover debt from their clients.

A company will ask the debt collection agency to work on their behalf to recover the debt. This will mean the agency will get paid a percentage of the money recovered.

Alternatively, the company will sell the debt to the debt collection agency for a discounted price, so they will be solely responsible for recovering the debt.

What is the difference between a debt collector and bailiffs?

A bailiff has been assigned by the court to collect your debts. Bailiffs have the power to repossess and sell your possessions to repay your debts.

However, debt collectors do not have the same legal powers. They are only able to contact you via letters or phone calls.

The only way a debt collection agency can take legal action is if you refuse to pay your debt and they apply for a CCJ. However, if you are actively getting debt help, this is less likely to happen.

Can a debt collector visit my home? What should I do if they do?

If you get a debt collection agent visiting your home, then you follow these simple rules below:

1. Don’t let them in

2. Get them to show their ID

3. They are not allowed to take anything from your home. Only the bailiffs can.

4. If you ask them to leave, then they have to

How long does the debt recovery process take?

It is hard to establish an exact timescale. Still, generally, the debt collection process from you missing your first payment to the bailiffs being instructed to obtain the money you owe them could take over six months.

This depends on the type of debt you have, as some obligations require more urgency and have more power to speed up the process. For example, the council tax debt can start the debt recovery process a lot quicker than, for instance, if you have credit card debt.

Debt collection should not come as a surprise, as you will be sent countless letters advising you that you need to pay the debt. You would have also been allowed to discuss a payment plan with your creditors during the process before going down the legal route.

We always suggest you keep the lines of communication flowing with your creditors as it will show them that you are trying to work out ways to pay your debt off rather than ignoring it.

Can I stop the debt recovery process from happening?

Changes to your financial situation could mean that you miss those all-important debt payments. It is essential that you deal with your debt as a matter of urgency, as one missed payment can be controlled, but more payments missed can result in serious repercussions.

You can take some short-term steps to stop the debt recovery process from happening.

1. Speak to your lender and ask for a payment break

Get in touch with your lender and speak to them about your current situation. This can be done via phone or writing to them.

If you are open with them about your problems, they might be able to reduce or freeze your payments until you can make the payments again.

Find out more tips on how to stop getting into debt.

2. Ask friends and family to help

It is time to put your pride aside and get help from your friends and family. Usually, if they are in a better financial position than you and know that you will pay them back, they will help you. Also, if you borrow money from them, you won’t be lumbered with hefty interest charges.

3. Review your budget

If you haven’t already, get a budget done for your monthly income and expenditure. Use our handy budget planner to do this.

It is time to cut down on non-essential spending such as TV subscriptions gym memberships. Identifying which things are luxury and essential can ensure you make those well-needed cash savings.

Find out how you can make savings on your monthly food budget.

4. Consolidate your debts

If you have more than one debt, you should consider debt consolidation. This involves taking out a new loan and paying off existing loans.

5. Payback using your savings

It makes sense that if you can’t make your monthly payments, then you should use your savings.

A rainy-day fund might be a good investment for plans. Maybe it was Christmas you were saving for or a family holiday?

However, losing your home and paying your debts would be much higher up the priority list, so if you have the savings, pay off the arrears and then address the plans at a later date.

How and where can I get help and support if I am in debt?

If you are being contacted by debt collectors but are unable to make the debt repayments, it is essential to get in touch with someone who can help you find a solution to your financial problems.

Please take a look at our debt solutions page or contact one of our advisors for more information.

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