Latest news with #debtcollection
The Independent
18-07-2025
- Business
- The Independent
Martin Lewis' charity says DWP is ‘more aggressive than banks' in clawing back debt
The Department for Work and Pensions (DWP) is carrying out 'aggressive and rapid' debt collection practices which are more severe than most banks, a charity founded by Martin Lewis has claimed. The Money and Mental Health (MMH) Policy Institute says that the way the DWP treats people who are overpaid benefits is 'harsh', and risks putting vulnerable claimants at risk. Benefit overpayments occur when someone is paid more by the DWP than they are entitled to, most often because of a change in their circumstances or due to a an error by the department. While these overpayments can accumulate over the course of many months without the claimants' knowledge, the DWP can rapidly begin taking payment within weeks of spotting the issue. Agents can then directly deduct 15 per cent of someone's monthly universal credit payment to recoup these overpayments. This can be a significant loss of income, MMH argues, with 15 per cent equating to a deduction of around £60 a month for a single adult aged 25 and over. Meanwhile, commercial lenders would need to go through the courts to recoup debts, in a process which could take months. Ahead of an expansion of the DWP's debt recovery powers, researchers from MMH argue that its powers should be reformed to be more manageable for those on low incomes. The Public Authorities (Fraud, Error and Recovery) Bill currently passing through Parliament will give the DWP more ways to recover debt, including forcing banks to share account holders' transactions, and being able to make direct deductions even from people no longer on benefits. The charity also argues that many people are unaware they are able to call the DWP to try to negotiate an affordable repayment plan. This process could be brought more in line with consumer laws they add, with creditors like banks and energy companies required by regulation to engage with people who owe money. The charity, which carried out research into the issue, said one person commented: 'Having money deducted from my benefits has made it difficult for me to make ends meet and some days I have been not eating because I can't afford to, which is leaving my mental health in tatters.' The charity also said that debt management standards guidance on how to protect people in vulnerable circumstances from harm, including people with mental health problems, should be strengthened for all government departments. MMH chief executive, Helen Undy, said: 'When people are paid more in Universal Credit than they are entitled to, it's often through no fault of their own, and sometimes the first they know of it is when the government takes sudden and brutal steps to claw those payments back. 'Many people we work with are already running out of money for food before the end of the month, suddenly taking £60 from what they have left plunges them into further financial hardship and needless distress.' Ms Undy adds that the charity would 'like to see better standards applied across all government debt collection,' adding: 'It cannot be right that the state is lagging far behind the standards that consumer creditors have to meet in treating people fairly and with respect if they fall behind on payments.' A DWP spokesperson said: 'While we would urge people to report a change in circumstances to avoid falling into debt, we understand debts do occur and will always support those struggling with repayments to agree affordable plans. 'We have introduced a new Fair Repayment Rate, which caps debt repayments made in Universal Credit at 15%, allowing 1.2 million households to keep more of their Universal Credit. 'Our new Fraud Bill will help us to identify overpayments at the earliest stage so we can help prevent people falling into debt, and to do so in a way that is fair and proportionate.'
The Independent
16-07-2025
- Business
- The Independent
Charity highlights ‘harsh treatment' of people who have been overpaid benefits
A charity set up by consumer champion Martin Lewis says the approach to collecting benefits overpayments should be urgently reformed. The Money and Mental Health Policy Institute said some people are being subjected to sudden and severe debt collection practices, causing financial hardship and distress for people in vulnerable circumstances. Benefits overpayments may happen when the Department for Work and Pensions (DWP) pays more in benefits such as universal credit than someone is entitled to, perhaps due to changes in someone's circumstances or an error. The charity said that overpayments can accumulate for months unbeknown to recipients, but the DWP can rapidly take payment within weeks of identifying an issue. It added that the DWP can directly deduct 15% of someone's monthly universal credit payment if they have been overpaid benefits. For a single adult aged 25 and over, 15% of a monthly universal credit payment can amount to £60-a-month – causing a significant income shock for people who have a low income – the charity argued. It contrasted the situation with commercial lenders, who would go through the courts, a process which could take months, to forcibly take money from someone's income. The charity said some people may find the messaging that benefit money is going to be recouped from them alarming, with people receiving messages on their online accounts stating that they have been paid more in universal credit than they were entitled to and this will now be taken back. It said that while people can call the Government to try to negotiate an affordable plan, people may not clearly understand this from the messaging. Meanwhile, consumer creditors such as banks, credit card companies, water companies and energy companies are required by regulation to engage extensively with people who owe money, Money and Mental Health said. The charity, which carried out research into the issue, said one person had said: 'Having money deducted from my benefits has made it difficult for me to make ends meet and some days I have been not eating because I can't afford to, which is leaving my mental health in tatters.' It also highlighted that the DWP is gaining more powers via the Public Authorities (Fraud, Error and Recovery) Bill currently passing through Parliament. In particular, the DWP should proactively assess how much people can afford to repay, the charity said. It suggested that, for example, the DWP could mirror the approach taken by consumer creditors in assessing someone's income and essential outgoings, and then giving people a 'real chance' to negotiate an affordable repayment plan. The charity also said that debt management standards guidance on how to protect people in vulnerable circumstances from harm, including people with mental health problems, should be strengthened for all government departments. Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: 'The Government's harsh treatment of people who've been overpaid benefits is reminiscent of the carers' allowance scandal. 'When people are paid more in universal credit than they are entitled to, it's often through no fault of their own, and sometimes the first they know of it is when the Government takes sudden and brutal steps to claw those payments back. Many people we work with are already running out of money for food before the end of the month, suddenly taking £60 from what they have left plunges them into further financial hardship and needless distress. 'The Government has pledged to overhaul how it reclaims carers' allowance, now it needs to do the same for how it collects universal credit overpayments. Above all, that means proactively giving people a real chance to negotiate a payment plan that they can actually afford, instead of just taking money out of people's income with barely any warning. 'We'd also like to see better standards applied across all government debt collection. It cannot be right that the state is lagging far behind the standards that consumer creditors have to meet in treating people fairly and with respect if they fall behind on payments.' A DWP spokesperson said: 'While we would urge people to report a change in circumstances to avoid falling into debt, we understand debts do occur and will always support those struggling with repayments to agree affordable plans. 'Our new Fraud Bill will help us to identify overpayments at the earliest stage so we can help prevent people falling into debt, and to do so in a way that is fair and proportionate.' Agents within the Department's debt management team refer customers to the Money Advice Network who offer free, impartial and independent debt advice. The DWP also remains committed to the Treasury's Breathing Space policy, which provides those with problem debt the right to legal protections from creditor action for a set period to enable them to receive debt advice and enter an appropriate debt solution.
The Sun
09-07-2025
- Business
- The Sun
I thought I'd never get a mortgage after broadband firm ruined my credit score – you could make the same mistake I did
WHEN a letter from a debt collector demanding £120 for an unpaid bill landed on my doorstep last September, I thought it was a scam. I always pay my bills on time and other outgoings such as electricity and council tax are in my partner's name. 1 But then I discovered my old broadband provider EE had failed to cancel my old contract for a 5G router after I moved house a few months before. At the time I had called EE and said I wanted to take out a new contract, which they had agreed to but they kept billing my old address even though I had told them I'd moved. The situation left a black mark on my credit score, and it would take 10 years before it would be scrubbed off. I saw my credit score fall from fair to poor and started worrying I wouldn't be able to get a mortgage or a credit card. I also worried about whether I should pay the £120, even though I didn't owe the money. I spoke to EE who said they would listen to my original call and get back in touch - but they didn't. When I rang several weeks later, they said that the original call had been lost. They agreed to stop billing me but said I would need to settle the £120 with the debt collection company. A few months later I got a letter from the debt collection firm saying my account had been closed and I thought the issue had been resolved. But I soon discovered that my credit rating had fallen to poor and a mark had been left on my file. Such marks can stay on your file for up to six years. This is where I made my mistake. I didn't realise that EE should've removed the mark and I didn't know I could challenge it. Instead, I started trying to improve my score by doing things such as joining the electoral register. Registering to vote helps lenders verify your name and address, reduces the risk of fraud and makes it easier to get credit. I also ensured that I paid off all my other debt, such as payments I was spreading out on my Buy Now Pay Later. . Paying your monthly credit card bills or loan and mortgage repayments on time shows lenders that you are a reliable borrower and ultimately boosts your credit score. But still my poor score didn't move. When I contacted the EE press office, they apologised quickly. They said the debt had been wiped and helped remove the mark. It also paid me a £50 gesture of goodwill for the poor customer service it had offered. My credit score has now improved to fair, but there are ways to resolve mistakes. How to boost your credit score Your credit score gives an overall picture of how responsible you are with money. The score shows lenders whether you've been a reliable borrower in the past. If you've never used credit before you may have a low credit score and struggle to get accepted for credit. To boost your credit score, show lenders you are a stable, reliable individual by registering to vote. Being on the electoral roll confirms your address to lenders so can significantly boost your credit score – it can add 50 points, according to Experian. Get a copy of your credit report – you can get one for free from Experian, Equifax or TransUnion – and check it for mistakes. Make sure your personal details are correct and that any missed payments or black marks on your file are correct. If there are mistakes, ask the financial firm involved to correct them or ask for a note to be put on your file explaining them. Finally, consider getting a credit builder credit card. These are designed for people with poor or limited credit histories. This means you are more likely to be accepted but the interest rate may be higher and the credit limit lower than on mainstream cards. Some of these cards come with rewards too. HOW TO CHALLENGE A CREDIT MISTAKE If you think there is a mistake on your credit file and the company will not remove it, then you can complain to credit reference agencies. There are three main ones in the UK - Experian, Equifax and Trans Union - and there is also a service called Check My File, which lists all three. They have 28 days to remove the item or tell them why they don't agree with you. DON'T BURY YOUR HEAD IN THE SAND Receiving a letter from a debt collection agency is never pleasant, but it is important to get proactive and tackle the issue straight away. Ignoring it can result in a rising debt pile or even a court judgement against you and further financial penalties. Letters from collectors are often vague and do not directly state how much you owe or who you owe it to. So picking up the phone, and establishing what has happened can help you get the ball rolling. KEEP A PAPER TRAIL Like many other telecoms providers, EE mainly handles complaints and queries over the phone, not via email or letter. This can create a number of problems, as you may easily forget what you said in a call or important dates. If you find yourself in a similar circumstance, I would recommend emailing or sending a letter of complaint to the company. Include as much detail as possible, as this can act as proof if you chose to take the issue further, such as contacting the ombudsman.
CBS News
30-06-2025
- Business
- CBS News
5 options to consider if your debt dispute is denied by a debt collector
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. If your collection debt dispute was denied, it's important to understand that you have other debt relief routes to consider instead. Getty Images/iStockphoto Picture this: You spot a collection account on your credit report, you file a dispute, and … nothing. The credit bureau or debt collector denies your claim, saying the account is accurate. Now you're left with a ding on your credit, impacting your ability to borrow money at a low rate and leaving you with a growing sense of confusion over what to do next. But here's the thing: A denied debt dispute doesn't mean you're out of options. It might just signal the need to shift your focus from fighting to remove it from your credit report to resolving the debt itself. Whether the account is accurate or not, tackling it head-on with the right strategy could help protect your finances — and ultimately your peace of mind. There are a few different ways you can do that, and each option comes with its own set of potential benefits and downsides. So before you take steps to try and resolve your debt, make sure you understand your options and how they could impact your finances both now and in the future. Find out what steps to take to get rid of your high-rate debt today. 5 debt relief options to consider if your collection account dispute is denied If you've hit a wall with your debt dispute, here are some of the routes that might be worth considering next: Try to have a portion of the debt forgiven If you can't pay the full balance owed but want to resolve the debt, negotiating a settlement for less than the total amount might be your best option. This involves offering the debt collector a lump sum that's less than what you owe — generally about 30% to 50% less than the original balance — in exchange for the remainder being forgiven. This can be done either on your own or with the help of a debt relief expert. The latter could help increase your chances of a successful settlement. Either way, though, if you can have part of the debt forgiven, doing so could make it a lot easier to get rid of it for good. Chat with a debt relief expert about the solutions available to you now. Use a debt management plan to lower the rates and fees If the collection account is just one of several debts you're struggling to manage, working with a credit counseling agency on a debt management plan could provide the help you need. These plans roll your unsecured debts into a single monthly payment and often result in paying lower interest rates and fees than you originally owed. While debt management typically won't help you address any debts that are already in collections, some debt collectors may agree to participate if they have a relationship with the credit counseling agency or see that you're making a serious effort to repay. Either way, it's generally worth asking a credit counselor if this is an option for your situation. Wipe it out with a debt consolidation loan If you have good enough credit or a cosigner, consolidating all of your debts, including your collection account, into a single lower-rate loan could be a smart way to wipe out the debt and regain control of your finances. With this option, you'll use the loan to pay off the collection debt (and any other debts you want to get rid of) in full. You'll then repay the new loan in fixed monthly installments. This can be a helpful way to simplify your finances and avoid further damage to your credit, but it only works if you can qualify and stay current on the new loan. Inquire about assistance or hardship programs Some debt collection agencies or original creditors offer hardship plans or programs to those who are facing serious issues, like a job loss, medical problem or another major disruption. These programs can make it a lot easier to deal with your debt because they can reduce the total amount you owe, pause collection activity or allow you to set up affordable monthly payments. To take advantage of this option, you'll typically need to contact the debt collector directly and provide proof of your financial hardship. Not all agencies offer these programs, but it's still worth inquiring about before moving to more drastic solutions. Eliminate the debt by filing for bankruptcy If the collection account is part of a larger financial crisis and you see no realistic path to pay off that or the rest of your debts, filing for bankruptcy could offer a fresh start. Chapter 7 bankruptcy can eliminate most unsecured debts, including those in collections, while Chapter 13 creates a structured repayment plan over three to five years. It's not a decision to make lightly, as bankruptcy stays on your credit report for up to 10 years, but it can be a lifeline for those who have found themselves overwhelmed by their debt. Before you decide on this path, though, make sure you talk to a bankruptcy attorney who can help you determine if this is the right step. The bottom line If your collection account dispute is denied, it can feel like the system is stacked against you, but it could be a chance to pivot toward more meaningful solutions. While dealing with collections isn't easy, you're not powerless. Whether it's settling the debt, consolidating it with your other debts, entering a repayment plan or exploring more serious relief options, there are still ways to regain control. So, weigh your options, consider the routes that make sense and don't hesitate to seek professional help if you decide that the stakes are high enough to justify the cost.
BBC News
25-06-2025
- Business
- BBC News
Council tax: households owe billions ahead of bill rise
Struggling households owe billions of pounds in unpaid council tax, but bills are expected to keep rising in the years figures show £6.6bn is owed to local authorities in England, with an extra £642m having been added to those arrears in the year to data from Scotland and Wales means the total cumulative amount owed in the three countries has hit more than £ have called for a more sympathetic approach to council tax debt collection, rather than the use of bailiffs. While the government is proposing a change in the rules over the way unpaid bills are chased, the Treasury is also assuming council tax will rise by 5% a year in the can raise council tax by up to this amount, although they can go above this cap if they hold a local referendum or get approval from central government.
