Lloyds TSB Debt Recovery – Do You Need to Pay Them?

When you get a letter from Lloyds TSB Debt Recovery, it can be surprising and a bit scary.

But don’t worry; you’re not alone. Each month, over 170,000 people come to our website seeking advice on issues just like this one.

In this article, we will help you understand:

•  Where the debt might have come from.
•  How to check if the debt is really yours.
•  What to do if you believe you can’t afford to pay.
•  Your options if you can pay, but don’t want to.
•  Ways to deal with Lloyds TSB Debt Recovery.

Our team knows about debt because some of us have been there and research shows 64% of UK adults find interactions with current debt collectors stressful¹. We have faced debt collectors, and we understand how you might be feeling.

We’re here to help you. This article will provide helpful tips on dealing with Lloyds TSB Debt Recovery in a calm and smart way. So, let’s get started.

What are the reasons for contact?

The debt collection business is extremely profitable, as so many people are dealing with debt problems. Debt collectors, including Lloyds TSB Financial Management Unit Debt Collectors, come in a range of different forms.

There are those debt collection agencies that work as independent businesses, and there are also some who work as part of the original creditor (the company you owe the money to), such as a credit card company, bank, or perhaps another financial institution. You may also find that there are individual sole trader debt collectors.

Independent debt collection agencies and sole trader debt collectors have one main thing in common; they use the same business model. Debt collection agencies buy billions of debt annually at rock bottom prices – at an average of 10p to £1²! They start making a profit when they collect some or all of the debt.

They do not particularly care about the ins and outs of why you owe the debt. They just know that you owe it, and it is your responsibility to pay it back. They are not particularly interested in hearing about you and your personal circumstances. To put it simply, they might not be particularly pleasant or caring people.

The former Office for Fair Trading (OFT, 2010) said that, unfortunately, poor practices amongst debt collectors “appear to be widespread”.

» TAKE ACTION NOW: Fill out the short debt form

Is it actually your debt?

If the debt does not look familiar, is this actually your debt? The first thing you should always do is establish where the debt originated from and how much money you are due to pay. It is extremely likely that the original debt will have been inflated by the charges and interest which have been added on, and as a consequence, the value could be much higher than what you believe you owed.

You can write to Lloyds TSB Financial Management Unit Debt Collectors and ask them to send you a copy of the agreement in its original format. If they are unable to provide this, you will not be required to send any payment to them.

But even if it is your debt, you may not have to pay it.

If it has been 6 years – or 5 years in Scotland – since you last paid towards your unsecured debts and you have not written to your creditor about your debt during this time, it is statute-barred.

This means that the debt is not enforceable. It still technically exists, and you still technically owe the money, but there is no legal way for you to be forced to pay or for the debt to be enforced.

Keep in mind that not all debts become statute-barred!

Any HMRC debts, for example, will stay enforceable for decades. Any debt that had a County Court Judgement (CCJ) attached to it during the 5 or 6-year window it will be enforceable for a while. 

What if you can pay but you don’t want to?

If you are responsible for the debt, then the best option is to take care of the debt, if you have the financial capabilities to do so.

If paying the debt would leave you in a situation where you are unable to service other essential credit such as your rent or mortgage, then you should try to come to an arrangement with Lloyds TSB Financial Management Unit Debt Collectors to pay it back. You might even want the option of offering them a partial payment, which will allow you to clear off the debt.

Know Your Rights

Debt collection agencies must abide by certain rules when trying to recover money that is owed to them; however, it’s not uncommon to have them break some of those rules. To avoid being taken advantage of and have an edge over the situation, it’s important that you know your rights and those of the debt collectors contacting/visiting you.

Please check out the table below summarizing what debt collectors can and can’t do.

Debt Collectors Can	But They Can’t
Contact you by phone or mail.	Call you after 9pm or before 8am.
Conduct home visits (on rare occasions) and knock on your door.	Forbily enter your home, or stay if you ask them to leave.
Threaten to take you to court by suing you for payment on a debt.	Harrass you, including threats of violence, repeated calls and visits, or abusive language.
Negotiate a debt settlement. Tip: make sure to get this new arrangement in writing.	Visit your workplace.
Access your bank account, but only after a court judgment has been made.	Take anything from your home or threaten to do so.
Sell your debt.	Speak to other people about your debt without your permission.
Contact you frequently.	Keep doing so if you request that they reduce communications.

Can I ignore them?

No, ignoring Lloyds TSB Debt Recovery is a bad idea. The consequences of ignoring Lloyds TSB debt can be very severe!

From my experience, ignoring your debts will result in debt collectors charging you more and more in fees and administration costs. If you carry on ignoring them, you may end up in court.

A County Court Judgement (CCJ) is an order from a judge that you have to follow. Failure to comply with the order can result in more legal action against you and possibly even bailiffs.

But sometimes, you don’t ignore debt collectors on purpose.

If you are in a similar situation, try not to panic.

You can apply to the courts and have your CCJ put aside because the debt collector hasn’t sent the information to the right house. You can even negotiate with the courts or the debt collectors to take off some fines or administrative costs. After all, it was their mistake and not yours!

I always recommend responding to debt collectors – even just to question the debt’s validity. Remember, you have the right to request proof of the debt. They have to prove it, or they can’t charge you.

What if I can’t afford it?

If you know that you have unsecured debts that you need to pay but can’t manage it financially, you may benefit from a debt solution.

There are several different debt solutions available today, so I recommend speaking to a debt charity. Their advisers will be able to walk you through your options.

Debt Management Plan (DMP)

A DMP is an informal debt solution that lets you pay off your debts via a single monthly payment.

Because it is informal, it is not legally binding so you are not tied into a DMP for a minimum number of payments.

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement between you and your creditors. You agree to pay a monthly sum that is distributed amongst your debts, and your creditors agree not to contact you during your IVA.

IVAs typically last for 5 or 6 years, and any outstanding debt is wiped off when it ends.

Keep in mind that IVAs are not suitable for everyone. You need to owe several thousand pounds to more than one creditor to be eligible. You also need to demonstrate that you have some disposable income every month.

Trust Deed

IVAs are not available in Scotland. Instead, you will need to opt for a Trust Deed.

Trust Deeds work in the same way as an IVA – you pay an agreed sum each month that is shared amongst your creditors, they can’t contact you, and any leftover debt at the end of your Trust Deed term is written off.

Debt Relief Order (DRO)

A DRO is a good option for those facing financial hardship with no assets and little income.

For 12 months, you make no payments, but your creditors freeze your interest and don’t contact you.

If your finances haven’t improved during this year, you may be able to write off your unsecured debts.

Bankruptcy

If you have debts but no realistic possibility of ever paying them off, you may need to declare bankruptcy.

Bankruptcy has an unfair stigma attached to it as it may be your only way of getting a financial fresh start. That said, it is a serious financial situation that should not be taken lightly.

Sequestration

Sequestration is the Scottish version of bankruptcy.

If you have little income and no valuable assets, you may be able to apply for a minimal asset process bankruptcy (MAP). A MAP is a quicker, cheaper, and more straightforward version of sequestration, so worth considering.

Can I complain about them?

If you think that Lloyds TSB has been unreasonable, behaved inappropriately, or you have been the victim of harassment by debt collectors, you can make a complaint. You can also make a complaint if you feel that they have broken any of the Financial Conduct Authority’s (FCA) guidelines.

Make your first complaint to Lloyds so that they have the chance to sort out the issue themselves. If you feel that they have not taken your complaint seriously enough or have not addressed your issue properly, you can escalate matters.

You can make any secondary complaint to the Financial Ombudsman Service (FOS). They will investigate and, if your complaint is upheld, Lloyds may be fined. You could even be owed compensation.

References

1. InDebted, Debt Collectors Survey
2. Jubilee Debt, A Fresh Start After Covid-19