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When we find ourselves facing mounting personal debt, it can be difficult to get an accurate handle on the reality of the situation, and the solutions that are possible. This is partly because personal debt can cause a huge amount of stress, and partly because there are vast numbers of individuals and organisations that exist solely to prey upon those made vulnerable by the money they owe. 
 
When the bills begin to pile up, we can feel a growing sense of panic and desperation, but it is often at this point that we are bombarded with information about debt management companies of all descriptions. We can also begin to worry about debt collection – whether we will have to face debt collection agencies, the protocols surrounding bailiffs, and what our rights and responsibilities are in this regard. Once we cut through the noise and speculation, however, the best solutions are much easier to find. 
 
Debt collection 
 
If you fall behind on payments or fail to make any payments on bills at all, then creditors can take action to reclaim the debt. These actions generally fall on a sliding scale through which creditors can escalate as necessary. When a bill is unpaid, or an account is in arrears, most creditors will begin with formal written contact. This can then build to court action if the situation is not remedied and is why it is important that you do not simply ignore or delay addressing the issue. 
 
Anxiety around personal debt can increase as creditors escalate through the sliding scale of possible actions. Written communications regarding the debt may begin with letters directly from the creditor but can then proceed to solicitor’s letters reiterating the need to clear the debt, and threatening legal action. From this point, the possibility of home visits becomes increasingly likely, further exacerbating stress. This worry comes in large part from confusion about the role of bailiffs and debt collectors – terms that are often used interchangeably but, in reality, refer to two very different types of debt reclamation personnel. 
 
Debt collector 
 
When a creditor needs to reclaim a debt, they may pass the case to a debt collection agency or debt collector. A debt collector or debt collection agency has no legal powers and is simply contracted to deal with the hassle of chasing overdue payments. This is most likely to be by letters or phone calls, but some individuals and organisations operating in this field may, on occasion, use unannounced home visits as a way of applying pressure. The important thing to remember is that debt collection agencies and debt collectors are the people that get involved when court action has not yet been taken. They are not entitled to enter your home and they are not entitled to remove property from residential or commercial premises. The best way to deal with a debt collector or debt collection agency that visits you at home is to ask them to leave and to contact you in writing only. You should also seek professional guidance from insolvency experts, like Smith & Barnes Insolvency
 
Bailiff 
 
The point at which an outstanding debt results in court action is the point at which bailiffs can usually be involved. This is because they are enforcement agents with the legal power to collect a debt, including carrying out the removal of property. The only type of debt reclamation that can be enforced by a bailiff without court action is when the creditor is HM Revenue & Customs - but this would also follow written communication regarding the debt. As bailiffs are legally empowered, this means they will usually get involved when the debt takes the form of child maintenance payments, council tax arrears, unpaid criminal fines or local authority parking penalties. They have the right to remove property, but will usually not take this action on the first visit. 
 
Debt management companies 
 
When debts become overwhelming, engaging the services of a debt management company becomes a viable option. This is a proactive way to tackle the problem of a financial situation that has spun out of control or is in danger of doing so. Debt management companies are organisations that help you to understand your cashflow and can work with you to implement a Debt Management Plan. This usually consolidates your debt into a single monthly payment that is affordable for you. You make that payment to the debt management company and they distribute it among your creditors. 
 
There are a number of things that make debt management companies an attractive option for those struggling with monthly bills: 
 
Debts are streamlined and simplified, which helps you to budget 
The company deals with the creditors, so you don’t have to worry about debt collectors or bailiffs 
You can go about your life as normal, safe in the knowledge that your debts are being paid. 
 
There are some potential drawbacks to consider, however. 
 
Extending your time in debtWhile reducing your debt situation to a single, affordable monthly payment helps you to live your life as normal, it does mean that your creditors are receiving smaller amounts in each payment. This means it takes longer to clear those debts. Each creditor will have specific terms regarding Debt Management Plans, too, and not all will freeze interest and penalty charges. This means that your overall debt may be larger than it was originally. 
Your credit score may be affected – Entering into a Debt Management Plan can appear on your credit history for a number of years, which can negatively impact your credit score. 
Some debt management companies charge a fee – The services provided by debt management companies vary, with some charging fees of up to 17 per cent of the monthly payment. This can add thousands of pounds onto the total debt, keeping you in debt for far longer. 
 
Trust the experts 
 
As with all financial decisions, it is essential to seek expert advice as early as possible in any debt situation. Many debt management companies are highly professional organisations, but there are also many unscrupulous operatives ready to prey on people made vulnerable by difficult situations. Smith & Barnes Insolvency Practitioners are licensed professionals, providing quick, efficient and personalised service to those struggling with personal debt. Using a low cost, fixed fee structure, the team can negotiate, implement and manage a personal debt solution that uses your surplus monthly income. Call today to find out how Smith & Barnes can help you. 
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