Debt Advice Handbook Scotland 1st ed - with new materialChapter 3: The six stages of the debt advice process4. Stage 4: listing creditors and priority and non-priority debts Identify and list all debts
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Identify and list all debts
When collecting information from a client, it is important to obtain details of all the debts and creditors.
A client may not have all the information available during the initial interview. It is therefore important to agree how and when the information will be collected.
The client’s credit reference file can help with gathering debt information if the client does not have all the paperwork. Remember that not all debt information is contained in a credit reference file – eg, local authorities rarely register council tax or rent arrears. There are three main credit reference agencies in the UK: Experian, Equifax and TransUnion.
Information about all creditors and the debts must be recorded in the client’s case file.
The creditors
The following creditor information is required.
    •The name, address and telephone number of each creditor – the exact name of the company is important, as many creditors may have similar names.
    •Account/reference numbers – creditors may have a reference number to access information about a client, which should also be recorded.
    •Letter references and contact details – any correspondence from a company with a letter reference should be recorded, along with any contact details.
    •Agent’s details – if a creditor is using a solicitor or a commercial debt collector, their details should be recorded separately. Details of the person who made the most recent contact should also be recorded. If the collector has purchased the debt, they are now the creditor. If they have not and are acting on behalf of the creditor, they are accountable to the original creditor. Creditors should notify clients when debts are passed on or sold to third parties.
The debts
The following debt information is required.
    •Age of debt – when any credit was first granted, how long the agreement has run for and how long it has been unpaid for all factor into negotiation with creditors. Debts agreed upon a long time ago may be unenforceable through the courts, or their legal position may have changed.
    •Reason for debt – it is important to ask the client what the reasons for the debt are. This can help you understand the background as to why the client is in debt.
    •Priority of the debt – the debt should be recorded as priority or non-priority.
    •The written agreement – if a debt is based on a written agreement, check that the client has seen it and has a copy. Agreements should be checked for any defects which may affect their enforceability. A copy may need to be obtained from the creditor. A debt that is not based on a written agreement may be unenforceable.
    •Liability – check if the client is responsible for the debt. This includes checking who is named on the agreement or what names are on the bills. These may include the client and a partner, friend or a relative who acted as a guarantor.
    •Payments – the amount currently owing for each debt needs to be recorded and also whether the figure is approximate or exact. Contractual payments under any original agreement, any amendments, any arrears in payments and the payment method must also be noted.
The client should not be advised to stop or reduce payments to creditors before a repayment arrangement is agreed, unless it is clearly in their best interests to do so.
The client may need advice at this stage about:
    •dealing with doorstep collectors;
    •changing or cancelling standing orders;
    •direct debit arrangements;
    •continuous payment authorities;
    •opening a new bank account or building society account if the current bank or building society is a creditor.
Online credit reference services can be helpful. The services below are online and free to use and could assist an adviser to gather information the client may no longer have paperwork for:
Other credit reference agencies can provide a statutory credit report posted to an address. Some agencies allow a third party to request a report with the client’s consent. Agencies which provide this service are:
It is important that information is collected about all the client’s debts, including those which are not in arrears. Details of each creditor and their agents must be recorded. Information on the age and reason for each debt, as well as the liability and payments, needs to be recorded. If the client does not have details on their debt or creditors, a credit reference service can help to provide more information. After identifying all the debts belonging to a client, an adviser can then identify which are a priority.