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Concerns over the treatment of those in debt

Concerns over the treatment of those in debt

Category: Debt

Updated: 09/06/2016
First Published: 09/06/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Being in debt can be a difficult thing to go through, but unfortunately, many people seem to be having that situation exacerbated by poor and inconsistent treatment by debtors – and it's making their financial hardship even worse.

New findings from StepChange Debt Charity highlight the issue in greater detail, with many of their clients being routinely hit with interest and additional charges, which understandably makes it harder to recover from their financial difficulties. It can become a vicious cycle that's made worse from aggressive enforcement and demands for unaffordable repayments, the charity argues, which deepens debt even further.

Paying the price

The study found that 68% of respondents felt that default charges made their debt problems harder to deal with, while 62% had been hit with additional fees and charges despite telling creditors that they were in financial difficulty. A further 52% said that their creditors and debt collectors continued to add fees and charges after they knew the person was seeking debt advice, which could exacerbate their stress levels even further.

Unnecessary aggression

Particular concerns have been raised regarding the "aggressive pursuit of debts", with many debt collectors resorting to threatening phone calls, bailiffs and other strategies, all of which can cause extra anxiety and stress – and often mean that people feel pressured into making unaffordable repayments.

Indeed, the research found that 65% of clients have experienced some level of bad debt collection practice in the last two years, with 17% having gone through an intimidating or threatening visit from a doorstep collector, 16% being contacted by bailiffs, and a whopping 41% having received intimidating or threatening phone calls.

These kinds of tactics don't always work, either, and they certainly don't make things easier for the individual in question: 53% of those contacted by bailiffs said it had made their debt problems harder to deal with, and a further 15% said that they'd felt forced to take out more credit.

This kind of pressure can, in turn, deepen existing financial problems, and mean it takes a lot longer for them to get back on their feet. For example, 26% of respondents said that debt collectors had taken repayments they couldn't afford, and 14% even had their creditors take those repayments directly from their wages or benefits. A further 20% said they'd found utility providers' repayment rates unaffordable, which shows that it isn't only traditional forms of debt that can cause problems.

Breathing space

Given the difficulties many people face in escaping debts, particularly when they're hit with extra repayments, the charity believes that a new 'breathing space' scheme is needed to ensure that people in debt get the protection they need. Happily, this is something the Government is considering, and as the research shows, the need for it is becoming more urgent.

The charity's idea of such a scheme would mean those who seek advice for debt problems would be given a period of six months to a year in which interest and charges are frozen and enforcement action halted, which would give them time to get advice and start recovering their finances. Then, when people are able to repay their debts at an affordable rate and within a reasonable time, the charity believes that the protections should continue, but only when recommended by a regulated debt advice agency.

As it stands, there's a clear gap in the existing suite of options available to those in temporary financial difficulty, with some able to get help (in the form of interest freezes or a halt on enforcement action), while others can't. Without such help, temporary financial problems can potentially become entrenched debt problems, which is why the charity is calling for help to be implemented without delay.

"The current options available to people struggling with debt aren't working," said Mike O'Connor, chief executive of StepChange Debt Charity. "If people do the right thing and seek debt advice in order to tackle their debts, they should get the support that they need to recover.

"Some creditors are providing support for their clients, but the lack of a consistent approach and the lack of statutory guarantees means that just one creditor engaging in poor practice can undermine a person's ability to resolve their debt problems. These findings are yet further evidence of the need for action at a time when consumer debt is growing at its fastest rate in 10 years."

What next?

The scheme may be yet to make an appearance, but in the meantime, you don't have to suffer in silence. Start by reading our guide on how to get debt-free, and don't be afraid to seek help, either through your credit providers or a debt charity – hopefully, you'll be able to get the support you need to become debt-free for good.

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