New Debt Letters to Support People with Problem Debt

debt-letters

New Debt Letters to Support People with Problem Debt

Letters unchanged in 40 years

An apparent 100,000 people attempt to take their own lives each year because of unmanageable debt while a further 4 times that amount consider suicide according to government figures.

The true scale of the misery wrought by being in unmanageable debt will no doubt never be truly known but anyone who has had more loans than they know they should have or lost a job or major relationship while being in debt and consequently struggled to meet the repayments will tell you, it’s one of the worst things life can throw at you.

Only made worse by the knowledge you got yourself into your own mess and now can’t figure out how to extricate yourself from it. This includes products such as personal loans and payday loans in the UK.

Step forward the government (yes really!) with their new legislation for lenders which they hope to have ‘on the books’ sometime in December 2020 with actual implementation within 6 months from that date. It’s important to distinguish exactly what we’re referring to here and we specifically mean ‘default debt letters’ which a lender has a legal obligation to send you prior to taking court action for the non-payment of your debt.

This differs from ‘persistent debt letters’ which are sent to people who only ever pay off the minimum required on their credit cards. So just to make clear, we are here discussing default debt letters sent to a customer prior to any court action taking place.

These are statutory letters which have a set framework and to some degree, content and haven’t been changed in 40 years.  Which means the language and tone of the letters belong to another time. The use of legal language is also up for change as it can add to the overall sense of doom one feels when reading letters of this type. Combined with the capitalised text and it’s no doubt a recipe for depression in an already depressing situation.

Less Threat, More Understanding

So the government will take the advice of Money and Mental Health Policy Institute and their founder Martin Lewis who have been campaigning for a change in the use and format of default notices for some time. As Martin says ‘we’re delighted the government has agreed to back this element of our campaign and change the default demand rules. The last thing people struggling with debt need is a bunch of thuggish letters dropping through the letterbox, in language they can’t understand, written in shouty capitals alongside threats of court action.

And the timing is crucial, with millions of people facing debt and distress due to the pandemic, the sooner we end these out-of-date laws which force lenders to send intimidating letters the better. Today’s changes will make the most distressing debt letters much less intimidating, and crucially will also easily and calmly point people in serious debt to get the free, non-profit, debt advice they need.’

While lenders will now be able to make default notices much less threatening and in turn try to mitigate some of the stress of being in unmanageable debt, they will also be able to point the way to the free debt advice charities in the same letter helping the customer find their way to the best source of help for them.

Helping Through the Pandemic

This is part of the government’s package of measures designed to help customers and consumers weather the storm of the flu virus. It’s only a shame it’s taken this pandemic to bring these changes about but as always they are welcome and better late than never. This includes £38 million of extra funding for debt relief charities as well as working with the various lenders and the regulator in implementing payment holidays for mortgages, loans and credit cards etc.

We have written an earlier post on the situation with regard to payment holidays and your rights and obligations right here.

Here at Badger Loans we sincerely hope you have your finances under control and if you have any fear that you don’t please make sure you get the right help as soon as possible. A good place to start would be here.

The Badger  

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