People with unsecured debt may take the situation lightly because they know that assets are not attached to the debt.
They worry more about secured debts like their cars and homes.
However, neglecting unsecured debts is not a good idea because creditors can get court permission to recover money through the sale of assets. This turns a relatively mild situation into one that causes much stress for the debtor.
The Role Of A DCA
A debt collection agency is a private company that collects debts on behalf of a client who is a credit provider. If an individual does not make payments on a credit card bill or unsecured personal loan, the creditor may hire a collection agency to collect the money on its behalf.
The credit provider could also sell the debt to the collection agency, making the debt due to this firm rather than the original creditor. A debt collection agency is subject to rules and regulations designed to prevent harassment.
A bailiff is used to collect debts subject to a court order. For example, if a consumer breaches the terms of a County Court Judgment requiring repayment of a particular debt, the court may authorise a bailiff to take possession of assets and sell them to recover the money owed. A bailiff may be employed by a court or may act as a private debt collection agency retained by the court.
So What Do Bailiffs Do Exactly?
Bailiffs typically have more legal options than private debt collection agencies that are not working on behalf of a court. If an individual owes money to Inland Revenue or related agencies, bailiffs are granted more rights including the use of a magistrate warrant to break into the home of the individual.
A bailiff authorised to evict an individual due to non-payment of rent or a mortgage may also force entry and begin the eviction process.
If an individual agrees or has no alternative but to allow a bailiff to seize his or her property, the items taken may be sold to repay the debt. Bailiffs may remove televisions, non-essential electrical equipment, and items stored in an unlocked garage or shed, including cars.
However, they may not take essential goods, which include bedding, clothing, most types of furniture, items or assets used for work purposes, or refrigerators, ovens, or other essential electrical appliances.
Unless a spouse is jointly liable for a debt, he or she should not face loss of personal property. Only the property and certain assets of the individual named on the account will be at risk. A spouse should think twice before applying for credit jointly, especially if the other party tends to overspend or has a history of poor financial management.
Debtors are entitled to work with debt collectors and bailiffs to resolve the financial issue. They may request additional time to repay the debt before property removal will occur or they may negotiate a repayment plan. If a debtor believes that a collection agency is acting unfairly, a complaint should be filed with the local Trading Standards Officer.
