Stopping creditors from chasing you, and asking for breathing space.
If you’re struggling with money, you may be getting phone calls and letters from your creditors chasing you for debts. However, most creditors will agree to stop contacting you for a short period if you need time to get in touch with a debt advisor or work out how you’re going to deal with your debt.
This ‘breathing space’ can help you focus on what to do next, without the worry of receiving calls from creditors demanding payments.
‘Breathing space’ during the coronavirus outbreak
During the coronavirus outbreak, lenders are likely to afford you more time, or offer other options, such as payment reductions or payment holidays in addition. It’s worth asking your creditors if these options are available.
What breathing space should creditors give?
If you contact a creditor to explain that you’re in financial difficulties and you’re seeking help from a debt advice organisation, most companies will give you at least 30 days breathing space.
They should also do this if you can show that you’re making an effort to sort out your debts.
During this time they should put a hold on letters and phone calls demanding payment. They may not be able to stop all contact; some letters must be sent by law, so a creditor may be unable to stop statements being sent.
The 30-day period is meant to give you time to get debt advice, work out how you’ll deal with your debt, and how much you’ll be offering to pay to your debts each month. Most creditors should also give you an extra 30 days if you let them know you need more time. The creditor may continue to add any interest or charges as normal during the breathing space.
Contacting my creditors
You’ll need to contact each of your creditors to let them know you’ve taken advice from a debt advice organisation. You can do this by letter or email, over the phone or in person. Your creditor may want some proof that you’re trying to sort out your debt problem, such as your personal reference number. If you’re dealing with your debts on your own, explain what you’ve done so far and what you plan to do next.
Why do creditors provide breathing space?
Most creditors want to treat you fairly and help you deal with your debt problems. Giving you time to get independent debt advice is an important part of this, and will usually make the creditor’s job easier.
On top of this, a requirement to offer breathing space is included in the industry
codes of practice that cover almost all of the major UK lenders and debt collectors.
· Credit Services Association code of practice
· Finance and Leasing Association lending code
· Lending Standard Board lending code
If the creditor is a member of any of these organisations they should give you breathing space if you tell them you’ve contacted a debt advice agency.
Other codes of practice may also include similar provisions to offer breathing space.
Will breathing space affect my credit file?
If you’re given a period of breathing space to help you deal with your debt, any payment you miss may be recorded on your credit file. This could affect your chances of obtaining credit in the future.
Do all creditors offer breathing space?
Not all companies will offer breathing space to help you deal with your debts. Most large companies will be covered by the codes of practice above, but smaller lenders may not be.
The breathing space requirements apply mainly to consumer credit debt, such as bank accounts, credit and store cards, personal loans, catalogues and car finance, among others.
Some types of debt won’t usually offer any breathing space, especially priority debts such as fines, court judgments or decrees, rent arrears, council tax arrears or child maintenance (CSA) arrears.
What if a creditor doesn’t offer any breathing space?
If a creditor has refused to offer breathing space, and you feel this is unfair, you can make a complaint. Each company will have a complaints procedure, which will inform you how to start the complaint process.