You will probably understand creditor harassment if you cant afford to your debts when they are due or you have fallen behind in debt repayments. They will start with sending you reminder and overdue letters. If you cant make the repayments then they will start sending you emails, texts, phone calls and even visits to your home. Sometimes the creditors will contract out the more nasty parts of the hounding to debt collection agencies.
So does the creditor harassment work? The answer to that is yes, as consumers in the UK are tortured with phone calls, letters and emails every day by the creditors and the debt collection agencies acting on their behalf. If it didn’t work they would stop doing it and pursue other means of getting repayment from the debtors, so for that reason the creditors are not going to stop these methods anytime soon.
So what can the consumer can do? The obvious way to stop the harassment is by paying off your debts and maintain payments as they fall due. But for many people it is simply not an option. It may be a case that you are actually insolvent and you may never be able to pay off all your debts. So does that mean you are destined to serve a life sentence getting harassed by your creditors? No is the answer as there is a solution to this. Rather there are several possible solutions and they all come down to the same thing. The creditor harassment will reduce in each of these debt solutions and stop altogether in some of them.
Provided you are truly insolvent you can enter into an Individual Voluntary Arrangement (IVA) or petition for your own Bankruptcy (BCY). These are two personal insolvency processes that protect you from your creditors and that have the full weight of the law behind them. Even if you are not insolvent, you can enter a Debt Management Plan (DMP) with your creditors. You can do this yourself by reaching agreement with each of your creditors as to how you will repay your debts to them.
This is sometimes called a self administered DMP. Most DMPs however are administered with the assistance of companies which specialize in setting up DMPs between consumers and their creditors and then administering these plans over a period of years. While creditor harassment will usually diminish when you enter a DMP, it will not disappear altogether. This is because creditors are not bound by law to accept the DMP proposals.
This is not the case in an IVA or bankruptcy. Once the IVA has been approved or the bankruptcy Order granted, creditors must stop chasing the debtor for payment and must deal with the Supervisor of the IVA or the Trustee in Bankruptcy in seeking repayment of the debts owed. Creditor activity in chasing debts will often continue for 6 weeks or more from the date of the iva or bankruptcy approval. This is because large banks, credit houses and other lenders are not terribly efficient at communicating the matter to their various departments. The debt collection department may be department to hear about the iva or bankruptcy so they will still chase you until then.