Dealing with debt

Creditors employ bailiffs to collect debts owed to them. Generally, bailiffs may only do this with court permission. They cannot enter your property by force unless you invited them in on a previous visit to collect the same debt. Even if they have authority to enter your property, they cannot seize your basic household goods, clothing, bedding or trade tools. Debt collectors have even less power than bailiffs. They can only pursue debts by letter, phone, or legal action. They have no authority to visit you in person.

You should explain to your creditors that you are experiencing financial difficulties and tell them how you intend to resolve the situation. If, having done this, you still receive persistent calls from them or their collectors, this may count as harassment. Creditors should not put undue pressure on you to pay more than you can afford, sell any of your property or assets or take on additional debt to repay existing debts. If they do any of these things, you should contact your local council and Trading Standards office.

If there is no prospect of repaying a debt over £750 within a reasonable period, either you or your creditor(s) can ask the court for a bankruptcy order. If the court grants the order, it will freeze your assets and appoint either a trustee in bankruptcy or an insolvency practitioner to take over your financial affairs. This person will have power to sell your assets – excluding basic household goods, clothing and trade tools – to pay your creditors. Bankruptcy is usually considered appropriate only for people with large debts above £5,000.

Debt relief orders are relatively new and provide a simplified, quicker and cheaper alternative to bankruptcy. They are suitable for debtors who do not own property, have few or no assets, little disposable income and less than £15,000 of debt.