This is an actual search question, and clearly concerns people who face debt problems.
The short answer is most certainly ‘no’; debt negotiation should be quite a regular thing. Though few of us really want to do much of it. But it is the best way of managing problems and resolving them, as well as limiting them in the first place.
First let’s consider what we actually mean. The idea of negotiation itself is fairly clear; it means talking towards an agreement. Perhaps dialogue is a better word than talking, since there needs to be another party to talk to.
Really you might be said to be in negotiation from the moment you seek a loan, a credit card or a mortgage. Often one feels powerless to influence events, since all the cards are with the lender! Or, at least, that is how the lender likes you to think.
In fact, certainly in England and Wales, you have some powerful forces on your side and this beefs up your strength in negotiation. It is worth understanding a little of those supports.
If we look back 150 years, to the times that Charles Dickens wrote so powerfully about, we know there were debtors’ prisons and the most terrible conditions for debtors in them, and for their families. It is a useful reminder of how far we have moved into a fairer and more reasonable society.
Leading the charge for that fairness is The Office of Fair Trading. There are two things the OFT does which are very important for all borrowers, and especially for those facing debt crisis.
The first is licencing. No person or body may be involved in credit or its collection as a business in England and Wales unless they have either a Consumer Credit Licence, or a Business Credit Licence from the OFT. And the licence requires agents of any such business to be trained with the conditions of that licence in mind.
The OFT has proved fairly robust in monitoring licence use and in keeping organisations to the terms of that licence. Licences are revoked where the terms are abused, and mention of action, with organisation names, are on the OFT website.
It would be a major matter to revoke the licence of, say, a large credit card issuer. But faced with clear breaches I am coming to believe the OFT would revoke their licence, and I suspect the big companies are coming to believe it too.
The OFT is charged with ensuring also fair trading.And it has recently both collected and enlarged a section of rules into the Consumer Protection Regulations 2008. It wants to stamp on unfair practice, and these are a great help towards that.
A further support in the credit field is The Banking Code, and for those with a debt crisis particularly section 14. This is a voluntary code and not all organisations have signed it. But its terms have a powerful support as I explain below.
When it has proved impossible to reach an agreement with a creditor both the creditor and the debtor have the right to take the matter to the Financial Ombudsman Service. Because of the growing problem of debt, and because a number of creditors like to play hardball, the FOS is struggling with a heavy workload.
But while the matter is with the FOS the creditor should not pursue any collection procedures - those which relate to the subject of complaint, anyway.
And the FOS, which has the power to instruct creditors, does expect creditors and debt collectors to observe the terms of The Banking Code.
So yes, you should negotiate. And yes, it can produce results for you.
Joseph Harris - Debt Control Man
author: Control Your Debt Crisis on Your Own Terms
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