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DCAs to give debtors 30 days grace - 03/04/2009
Collections agencies have agreed not to chase debts for 30 days when debtors seek advice from accredited debt advisers.
The 30 day breathing space, agreed between the Department of Business, Enterprise and Regulatory Reform (BERR) and the Credit Services Association (CSA), will start once an accredited debt adviser has been appointed to help a debtor.
The guideline is being written into the CSA’s existing code of practice and forms one of a series of measures discussed by the trade body with BERR on how to alleviate the pressure on struggling debtors.
Consumer minister Gareth Thomas said: "This new 30-day rule will give people a breathing space to help them take control of their finances as well as encourage them to seek help from debt advisors. I welcome the CSA’s recognition that this is an important and sensible commitment to have made to borrowers."
The agreement means that debt collection agencies will not contact debtors to pursue debts for 30 days once they have been informed that an accredited debt adviser has taken on the case. This will allow an adviser to negotiate with creditors and the collection agency so that a repayment plan can be agreed.
CSA members will also be required to inform borrowers of the availability of accredited advisory services from bodies such as Citizens Advice Bureaux, AdviceUK and the Consumer Credit Counselling Service.
Kurt Obermaier, executive director of the CSA, said: "It is acknowledged that the present economic environment is placing greater pressure on debtors and debts are increasingly being passed to agencies for collection.
"Both the industry and BERR have discussed proposals that might improve the relationship between creditors and debtors, and this is the first in a series of announcements we expect to make in the coming weeks."
The debt collection industry has not previously been able to extend further periods of credit to a debtor.
Obermaier added: "The contract is not ours. If, for example, the department of work and pensions (DWP) instructs us to collect a debt on their behalf, that debt may already be a year old and it has not been within our gift to further extend the period before that debt can be collected.
"In working with BERR, however, we now have the support of government and an agreement to allow a further breathing space in the hope and expectation that this will ease the pressure on the debtor and more likely result in a positive outcome for all."
Collections agencies have agreed not to chase debts for 30 days when debtors seek advice from accredited debt advisers.
The 30 day breathing space, agreed between the Department of Business, Enterprise and Regulatory Reform (BERR) and the Credit Services Association (CSA), will start once an accredited debt adviser has been appointed to help a debtor.
The guideline is being written into the CSA’s existing code of practice and forms one of a series of measures discussed by the trade body with BERR on how to alleviate the pressure on struggling debtors.
Consumer minister Gareth Thomas said: "This new 30-day rule will give people a breathing space to help them take control of their finances as well as encourage them to seek help from debt advisors. I welcome the CSA’s recognition that this is an important and sensible commitment to have made to borrowers."
The agreement means that debt collection agencies will not contact debtors to pursue debts for 30 days once they have been informed that an accredited debt adviser has taken on the case. This will allow an adviser to negotiate with creditors and the collection agency so that a repayment plan can be agreed.
CSA members will also be required to inform borrowers of the availability of accredited advisory services from bodies such as Citizens Advice Bureaux, AdviceUK and the Consumer Credit Counselling Service.
Kurt Obermaier, executive director of the CSA, said: "It is acknowledged that the present economic environment is placing greater pressure on debtors and debts are increasingly being passed to agencies for collection.
"Both the industry and BERR have discussed proposals that might improve the relationship between creditors and debtors, and this is the first in a series of announcements we expect to make in the coming weeks."
The debt collection industry has not previously been able to extend further periods of credit to a debtor.
Obermaier added: "The contract is not ours. If, for example, the department of work and pensions (DWP) instructs us to collect a debt on their behalf, that debt may already be a year old and it has not been within our gift to further extend the period before that debt can be collected.
"In working with BERR, however, we now have the support of government and an agreement to allow a further breathing space in the hope and expectation that this will ease the pressure on the debtor and more likely result in a positive outcome for all."
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