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What happens if you can’t pay your creditors? Find out about different types of debt, your rights and how Debt Movement can help.

Creditors Debt - Help and Guidance

A creditor is a person, organisation or company that you owe money to. In most cases, you will be charged interest on your arrangement with creditors across a set period. Often you can choose a low monthly payment but add to your repayment term, or choose a higher monthly payment to pay your borrowings off more quickly. However, defaulting on payments can lead to problem debt.

Types of Creditors Debt


Real Creditor
A real creditor is a bank, building society or other financial institution that has the right to be repaid.


Secured Creditor
A secured creditor requires assets or property to be used as security on your loan. They have a legal right to take possession of these assets should you default on your repayments.


Real Creditor
A real creditor is a bank, building society or other financial institution that has the right to be repaid.


Unsecured Creditor
An unsecured creditor is one with whom you have not agreed to the use of assets or property as collateral.

What Happens If I Can’t Pay My Creditors?

If you fail to keep up with your payments to creditors, you will be contacted by them for payment in the first instance. If they are unsuccessful in recovering the money owed, the way that they proceed will differ depending upon the creditor.

In most cases, if a lender has not received a payment or an agreement to pay within a set time, your debt will be passed onto a collection agency. This is something that you should try to avoid if possible because your credit file will be negatively affected and many creditors will mark your account as default at this stage.

What Are My Rights?

You have many rights as a consumer when it comes to a creditor/debtor contract. This contract will detail the terms and conditions of the agreement, so always be sure to read these terms carefully before entering into an arrangement with creditors.

If you fall behind on payments, all creditors have a right to recover money owed to them. However, they must adhere to a strict code of conduct detailed by the FCA. You can read more about how creditors should behave in our Debt Help section on Debt Harassment.

Many people don’t realise that it is not the end of the road. If you find yourself struggling to make payments, contact your creditors as soon as possible. Many creditors will allow you to stop or reduce interest rates for a set time to allow you to catch up.

How Can I Manage Creditor Debt?

If you owe to multiple creditors, it is important to keep on top of repayments and ensure that you don’t allow yourself to get into arrears. Prioritising your debts should be your first port of call. Make sure you pay first those with high-interest rates and those with a right to more extreme action to recover the debt, such as Council Tax and Income Tax.

To avoid getting into problem debt, you can take a look at our Debt Help section about Managing Debt for helpful tips on priority debts and budgeting. Or, if you’re struggling to keep up with repayments and would like to speak to a member of our friendly team to discuss other debt solutions available to you, call Debt Movement today or request a callback.