Living with money worries is often the cause of sleepless nights, especially if you’re concerned about debt collectors taking you to court.

When you fall into arrears on a credit card or loan, the creditor can launch legal proceedings against you to recover their money along with any interest that has built up. Some providers have their own ‘collections and recoveries’ teams, responsible for chasing outstanding payments, although they could also sell on what you owe to a debt collection agency.

Receiving a final warning letter is always distressing, but try to remain calm and check your rights. Some creditors are prepared to settle the case out of court through mediation or a structured repayment plan, as long as you’re willing to discuss your situation and tell them what you can afford to pay each month.

The worst thing you can do is ignore any letters you receive because your lenders may pursue you through the courts, to the point where bailiffs are sent to seize your assets. Even in cases where you may be able to challenge the claim – for example, if you believe the amount owed is incorrect – you must still complete all the forms you receive, outlining the grounds for dispute.

One of the best ways to avoid court action* is to work with free debt advice service like PayPlan, which can help you put together a realistic repayment plan.

Bankruptcy may be the best solution for some people facing severe financial difficulties, though luckily it’s not the only way to stop your creditors calling you. An Individual Voluntary Arrangement (IVA), for instance, is a formal agreement between you and your creditors that sets out what you will pay each month for a period of five to six years, when the outstanding balance is written off.

Other options include Debt Management Plans (DMP), which is a more informal agreement, and Debt Relief Orders (DRO) for people with no assets.

If you are concerned about being taken to court because of your debts, contact our team for free and confidential advice.

*this will depend on the debt solution.