We all have taken out debt consolidation loans or increased our debt levels without considering the consequences of what should happen if I fail to make the repayments. Poor debt management will mean that your creditors will take more of an interest in you when you start having problems. So what can creditors do to recover their money?

There are two ways credit companies can recover their debts: the easy way and the hard way.

The easy way is for them to threaten you with all sorts of actions, bullying you into paying more than you can afford. Rather than selling the debt on or employing the services of a bona fide debt collection company, the credit company will try to recover the money themselves. One of the ways they try to do this is through intimidation. The debt recovery section may call you and inform that you will receive a visit, at home, from one of their agents. Obviously, if you do not fully understand the law relating to debt collection, you'll think that they have some kind of legal backing for their visit.

First things first; to do anything they need a Court order. So you can ignore any of their threats of "sending someone round to your house" because they do not have any legal standing to be there, unless the agents are from a bona fide debt collection company. Whilst debt collection companies do have a licence for carrying out site visits, they and the credit card representatives do not have a right of entry. Imagine if they did, police wouldn't have to worry about entry warrants, they would just get round the local debt collector to enter a property, since the majority of us have debt. That's right - even County Court Bailiffs and High Court Enforcement Officers can't force their way into your house without the necessary documentation. So, if anybody comes round to your house and they do not have the correct papers for access to your house, you are within your rights to tell them to hop it.

Well, this is the hard way for both parties. A creditor firstly needs to obtain a Judgement against you for the recovery of their money. This can be done in several ways:

This does not mean that you are going to the electric chair for an unpaid debt. A warrant of execution empowers a Bailiff or High Court Enforcement Officers to go to your house with a view to obtaining payment or remove goods or chattels (personal possessions) to be sold at auction to pay off your debt. Your possessions will not be removed there and then, what they do is take "walking possession" of your goods. What this means is that they will make an inventory of all your goods and leave them with you for about a week. If, after the time period, you have not come up with the money they will then remove all the items and sell them at auction. There are, however, restrictions on what can't be taken eg beds, tools for work etc.

If anyone has attended an auction then they will realise that the return on goods is very low. Therefore, this is not a very effective way of debt recovery and consequently not that popular with creditors.

Fi fa is an abbreviated Latin term fieri facias, which means that you cause to be made. This is similar to a warrant of execution but applies to debts which exceed £600 but is made in the High Court. A High Court Enforcement Officer has more of an incentive than a Bailiff to get in contact with you and recover the monies due as they are paid on commission which is added to the debt. They also don't have the same type of restrictions which are imposed on Bailiffs, which means that they call on you at any time of the day. However, although High Court Enforcement Officers can force entry into commercial premises, they do not have the right to force entry into your home.

A creditor can seek a court order to compel your employer to make regular deductions from your earnings which are sent, by the court, to your creditor. However, an earnings attachment cannot force your income below survival level.

This is an application where the debtor, under oath, is interviewed. The debtor will be asked questions to establish if they own any other assets which they have not declared. Failure to attend a court summons such as this may result in a warrant for your arrest being issued for contempt of court. If, however, you don't own any other assets, then this is a waste of time for you and the courts, and the creditor foots the bill.

This is an order issued by the court which, unless otherwise directed by them, instructs a third party (the garnishee) eg a bank, not to release any funds held on behalf of a debtor. The order compels the bank to pay the amount frozen to the Court to pay off the Judgement.

This is an order which takes control of all your assets and income and places it in the hands of a trustee. The trustee will administer your estate to try and recover as much money as possible for the creditors. This will involve the compulsory sale of your property, assets, car, shares and anything else of particular value.

If you are worried about creditors taking action against you speak to a professional debt advisor. Alternatively post in our debt forum where you'll receive advice from people who have been or are in a similar situation as yourself.

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