Martin Lewis calls for end of ‘thuggish’ debt letters during coronavirus as it could make people suicidal

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THUGGISH letters which ruin the lives of people with problem debts should be stopped during the coronavirus crisis, Martin Lewis has urged.

Currently, the Consumer Credit Act (1974) dictates what appears in letters to overdraft, credit card, store card, payday loan, and personal loan borrowers, according to the Money and Mental Health Policy Institute.

Martin Lewis (pictured) has called for lenders to stop using “threatening” debt collection letters during the coronavirus crisis

But the charity, which was founded by Martin alongside his MoneySavingExpert.com consumer help site, warns that such letters contain threatening and confusing language, which could push struggling people to the brink.

More than 100,000 people in problem debt attempt suicide each year in England, the charity says.

And this problem could be heightened due to the coronavirus crisis, as while bailiffs have suspended debt collections, lenders are still forced by law to send debt letters to anyone in arrears – even if they’ve taken out payment holidays.

Around 1.86million mortgage payment holidays have been issued as of May 28, according to trade body UK Finance – the equivalent of one in six mortgages.

UK Finance adds that 877,800 credit card customers and almost 608,000 personal loan borrowers had taken out payment freezes as of May 21.

Martin and the Money and Health Policy Institute are now calling for the law to be updated as part of coronavirus crisis financial support measures to ensure letters are less distressing – something UK Finance says it supports.

“The fact that lenders are forced by a decades-old law to send thuggish letters to people with debt problems is staggering,” Martin said.

“These letters ruin lives, and many lenders say they don’t want to send them, but the law gives them no option.

“In the next few weeks, we’ll have the perverse situation where lenders will be compelled to send threatening letters to millions of people, even if they’ve been given permission for a temporary break from debt repayments.

“That will cause distress and confusion at a time when people in financial hardship, and many struggling with mental health issues, least need it.

“The government has put support systems in place covering a chunk of the population. Yet at such a sensitive stressful time, it needs to change the rules on debt letters.”

A HM Treasury spokesperson said: “We are aware of the concerns raised and are looking into the issue carefully.

“The outbreak has affected the lives of many – which is why we’ve introduced an extensive package of financial support that is helping millions of businesses and individuals through these challenging times.”

A UK Finance spokesperson added: “Lenders want to support customers who might be facing financial difficulty, and at the same time, must comply with the legal requirements regarding debt collection – which includes using specific wording in any customer correspondence.

“The industry recognises that the current requirements can be confusing and off-putting, especially when customers and lenders have agreed changes to contractual payments, which is why we support changes to the legislation in this area.”

Coronavirus support available for struggling borrowers includes up to six month mortgage repayment holidays, and up to three month payment freezes for high cost credit loans and for IVA repayments.

If you’re struggling, here’s how to get out of debt in eight simple steps – and get advice for free.