Recently The Mental Health Policy Institute Charity, together with Martin Lewis, campaigned to change the rules regarding debt collection and specifically the wording on creditors’ letters to debtors who have fallen behind with payments.
The victory is in relation to the existing threatening language and outdated advice on letters sent to people who are struggling and in default with payments.
Regulations in the Consumer Credit Act (1974) stipulate that lenders must send intimidating letters to people who are seriously in arrears with debt payments. The letters at the present time can be seen to be quite intimidating and have large blocks of threatening and confusing language, written in capital letters. The letters also include outdated advice, for example telling people to consult a solicitor or Local Trading Standards, without the initial option of pointing them to more accessible debt advice services which are free to access.
Due to the oppressive nature of these letters the campaign was started by Martin Lewis and The Mental Health Policies Institute to get the law changed.
The government will now introduce legislation to change the language and presentation of information in letters sent out by creditors to debtors. It will cut the legal jargon and replace it with more widely understood language which will point people to free sources of debt advice. Underlined text will be used instead of capital letters to hopefully make the letters appear less threatening.
These changes will be implemented with regards to letters about regulated consumer credit agreements such as credit cards, personal loans, overdrafts, and motor finance.
The new changes are expected to come in to force in December 2020. Thereafter all lenders will be required to make the changes within 6 months.
It is certainly a good thing that customers receive more appropriate and supportive communications, rather than the overly aggressive bold print, letters in capitals type of communication which is presently sent. It is also an improvement that debtors are simply referred to debt advice agencies for free debt advice rather than confusing messages to contact solicitors or Trading Standards.
It is especially important that these changes are made as the letters are sent to some of the most vulnerable people in society with significant mental health problems. Sometimes, receiving such an aggressive letter is a tipping point which may mean a debtor with significant mental health problems, who has perhaps not told anyone about their troubles may reach a tipping point and sadly commit suicide. Unfortunately, this happens many times every week where debt in insolvency is sighted as a contributing factor in a person’s death by suicide.
The core advice remains the same, if you are struggling with debts you should seek initial free debt advice at the earliest opportunity as there are always options available to help you. You may then be advised to speak to a solicitor regarding a formal insolvency procedure such as Bankruptcy or an Individual Voluntary Arrangement or a Debt Relief Order. There are also informal procedures to help with problem debts such as Debt Management Plans.
Farleys’ insolvency team is here to help you manage your debts through any of the methods mentioned above. To speak to a member of the team please call 0845 287 0939 or send your enquiry through our online contact form.