Updated on 18 June 2015.
If you're struggling to repay money you've borrowed not knowing where you stand can make the situation even more nerve-wracking.
Debt collection companies and bailiffs have been in the headlines for all the wrong reasons recently, harassing people at work and threatening to throw those that owe in jail.
You'll be relieved to hear that this isn't actually allowed - there are rules and regulations governing the collection of debts that give you some protection. We explain just how far a debt collection company can go before they overstep the mark so you know where you stand.
There's a difference between what debt collection companies and bailiffs are allowed to do to reclaim money.
It's important to know who you're dealing with so you can be clear on exactly what they might do and what you can do about it.
Whether a debt collector or bailiff is appointed will largely depend on the type of debt you have outstanding.
Debt collection companies are used by banks and building societies to chase unpaid debts on credit cards, overdrafts and loans. They're also used by utility companies, payday loan companies and many non-financial businesses to collect debts.
However, they do not have the same powers as bailiffs and are more restricted in what they can and can't do.
Only if the debt collection company fails to recover your outstanding payments and the company you owe money to successfully takes you to court will a bailiff be appointed.
The exception to this is if you fail to pay your council tax or are convicted of an offence and don't pay a fine. In this instance the Magistrates court can side step the debt recovery route and hire a private bailiff to collect your debt.
In the articles below we answer everything you need to know about what debt collectors and bailifs can and can't do to reclaim money that you owe:
Whether a company can repossess your home to settle unpaid debts, and how easy it is for them to do this, will depend on the type of debt you have outstanding.
If you have an unpaid mortgage or secured loan the borrowing is directly linked to, and "secured" against the value of your home.
Repossession isn't an easy process and it's something that lenders try and avoid if possible. They're also obliged by the FCA to try and find a different solution before they take steps to reclaim your home.
If you are struggling to meet mortgage payments it's a good idea to speak to your lender as soon as possible to see what they suggest.
For more help read our guide: How to Avoid Repossession.
If you have any unsecured loan or credit card debt it's unlikely you will lose your home if you are unable to keep up with your repayments.
Several companies have hit the headlines for threatening to prosecute their customers for failing to re-pay their borrowing.
However, unless you've knowingly committed fraud, and this is proven in a court of law, you cannot be sent to prison for failing to pay your debts.
It is also illegal for a debt collection company to imply that non payment will lead to criminal proceedings; this is considered to be a form of harassment.
If you have been told by a debt collection company that you will go to prison unless you pay this is tantamount to harassment and in breach of guidelines.
If you find your self in this situation you can complain about the debt collection company in question either through the original creditor in question, i.e. the bank, utility company or council that you owe money to or by complaining to Trading Standards.
Written by Martin at money.co.uk
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