If your company is struggling on a financial level, you might find that keeping up with the debts you have to pay back to your creditors is difficult – if not impossible.

When you end up behind on your payments, the chances are you’re going to experience some communication with the people you owe money to, and it’s important that you maintain direct and honest contact with your creditors if you want to avoid the strain of extra pressure.

While it’s fair to say that pressure from creditors can be a huge burden to business owners, knowing what your rights are, and what your creditors are allowed to do, can be important when it comes to managing the situation.

Remember – ignoring the issue is never the answer.

What rights do creditors have?

Creditors have a number of tools at their disposal designed to help them recover the money they are owed.

For example, they have the right to charge interest on late payments, or pursue legal action such as county court judgements and statutory demands.

Usually, a creditor will take you to court to begin a formal insolvency procedure which might lead to bankruptcy after you are unable to issue repayments for a certain amount of time.

Typically, this will only happen after you have been served with a statutory demand requiring a debt of more than £750 which you have failed to comply with for over 21 days.

Often, creditors choose to pass the task of obtaining payment on to a debt collection agency, or they may choose to sell your debt onwards to a third party – which can make it more difficult for you to negotiate your payments.

Creditors also have the right to serve a written notice to you, which requests repayment of the loan, alongside any interest that is owed as a result of late payment.

What rights do you have?

While your creditors have the right to demand repayment for the money that they have loaned to you, there are boundaries to how far they can go. If they overstep their rights, you may be able to seek a court-based remedy that reduces or eliminates your debt entirely. For example:

  • Your creditors are not allowed to harass or intimidate you – while you have a duty to keep your creditors informed of your situation, that doesn’t mean they can call you frequently at unsociable hours, or make threats against you.

    Your creditors are also not permitted to follow you on social media for the purpose of digital harassment.

  • Your creditors cannot break data protection laws – this means that they cannot start calling your neighbours, employer, friends, or relatives in an attempt to access repayments from you.
  • Your creditors cannot threaten to take court action if they do not have the right to do so, or tell you that you will be imprisoned if you fail to pay your debts.
  • Your creditors cannot demand that you make larger repayments than the amount you actually owe – although they are allowed to place additional interest on your original debt.

Speaking out against harassment

While the most obvious way to alleviate creditor pressure is to find ways of repaying the debt that you owe, this is not always immediately possible for every business or individual.

In some circumstances, the best thing that you can do is speak directly to your creditors regarding your current financial situation to determine whether a plan for repayment can be negotiated that is in the best interests of both parties.

Remember, if you choose to file a complaint, you will need to include documents and evidence to support your claim, such as the letters received from your collection agency, recordings of phone messages, and so on.

Dealing with Ccreditors

Dealing with creditors and collection agencies can be highly intimidating and frustrating, but it’s important to remember that just as they have the right to seek out their money in a number of different ways, you have the right to speak out against harassment and threats.

If you feel that your creditors are being unfair in the way that they are dealing with your debt, you can speak to them about your concerns, or seek help from an alternative agency.