If your business falls into insolvency, one of the most awkward and stressful aspects is when your creditors start to pressure you for repayment.
When the letters and phone calls begin, it can be difficult (especially when under the stress of dealing with an insolvent business) to determine what action from your creditors is reasonable, and which could be classed as harassment.
So, here are a few pointers to help you through this challenging time and recognise the signs of unreasonable creditor harassment.
Chasing or hounding?
Although receiving a reminder that you’re behind on your repayments and debts is never a pleasant experience, your creditors are perfectly within their rights to send you reminders by post, or telephone. In this case, the barrier between reasonable chasing and harassment is the frequency of the chases and where they arrive. While emailing you about your business debt once a day or week at your place of work would be acceptable, calls at all hours, multiple times a day with no consideration as to whether the debt is personal or business-related, could be considered harassment.
Appropriate or inappropriate language?
Business language is sometimes daunting to read, especially if demands are being made or alluding to possible legal action. However, there is a marked difference between the language used by an honest company merely reminding you to repay, and a foul-mouthed threat designed to intimidate people into coughing up cash.
If you spot threatening language or aggressive, manipulative tactics in your reminder letters, or even attempts to make you take out more credit to repay their debt quicker, you may have grounds to complain to the creditor or the financial ombudsmen.
Warning of legal action or threat of police?
Before legal action can be filed against you, you should have received letters reminding you to repay. If you’ve ignored these reminders or not contacted the creditor, they’re within their rights to pursue legal action. This legal action could be in a County Court Judgement (CCJ) or a statutory demand, however, it shouldn’t involve the police. While being in debt is a criminal offence in some countries, the UK is not one of them, and most threats of getting law enforcement involved won’t be genuine or enforceable. Financial issues such as repayments are settled through the county court, whereas criminal offences involving the police go through the criminal courts.
If a creditor threatens to involve the police, you have grounds to complain of harassment. The same applies to falsely informing you court action has been initiated or impersonating high court enforcement and police officers.
What should, or can I do?
If you’re finding your debts and pressure from your creditors are getting too much to manage, you can apply for an insolvency procedure that will halt creditor pressure and allow you to repay your debts at a tailored, affordable rate.
If you’re undergoing an insolvency procedure such as a Company Voluntary Arrangement (CVA), depending on the nature of their charges over your company, your creditors will be receiving monies owed to them through the distributions and shouldn’t be contacting you at all.
Although any contact from your creditors during an insolvent period could induce stress, that doesn’t automatically make it harassment. Creditors can chase you to repay your debts, and issue legal action if reminders are ignored. That said, they shouldn’t be contacting you at all hours, or at your home if the debt is business-related, and vice versa. The wording used should be professional, without resorting to making threats and using aggressive language. Finally, while your creditors are entitled to take legal action to reclaim their monies, any threats of police involvement or impersonation of court officers should be reported as harassment.