Anger as Government says people heavily in debt can pay off bailiffs with credit cards

Bailiffs have been given permission to collect debts by credit card from people who are already struggling with monthly bills.

Campaigners have already told ministers that allowing people to pay debts such as speeding tickets or council tax bills by credit card would make their situation worse.

The Tories said the news was “bizarre”, adding to existing concerns about debt collectors marching people to cash machines to force them to pay up.

Anyone who is owed money can go to court to seek an order forcing the debtor to pay them. If they do not have enough cash, bailiffs can retrieve goods to the value of the debt.

Trials have now started to allow people in debt to pay their bills by credit card in the south east of England, according to guidance issued by HM Courts Service.

There are now plans to expand the scheme nationally, after a period of evaluation. Bridget Prentice, Justice minister, told MPs that a “national roll-out of credit and debit card facilities is currently under consideration”.

The Conservatives criticised the plans. Grant Shapps, the shadow Housing minister, said: “You couldn’t make it up. Labour ministers have actually given the go-ahead for aggressive bailiffs to collect debts by credit cards.

“This callous approach will give the green light for aggressive bailiffs to demand credit card payments with menace, pushing some of the most vulnerable in our society deeper into debt.

“The fact that ministers have approved this plan signals how they have lost touch with reality.”

Paying debts by credit cards will almost certainly leave the person more heavily in debt. The average APR interest rate is around 16.3 per cent, although for those with bad credit records, the interest rate could be as high as 30 per cent to 40 per cent.

A low income family putting a debt of £1,000 on a credit card charging interest at 40 per cent, would have to pay an extra £400 of debt every year.

The minister also admitted that campaigners have expressed alarm that allowing people in extreme debt to pay back money on credit cards could make their situation worse.

She said: “Those consulted expressed some concern that accepting credit card payments for a debt, particularly one which may have arisen from a consumer credit debt, may exacerbate a debtor’s difficulties.”

She added that this was balanced by “the large majority of court users where a debt has arisen from a genuine dispute for a small claim.

“Not providing these facilities would be denying those debtors a very convenient way to pay their debt.”

A Ministry of Justice spokesman said: “Magistrates’ courts already accept cards to pay fines and other penalties in criminal cases.

“People will still be able to pay by cheque or cash, this will just give people more payment options. Where a debtor may face difficulties paying a judgement, they can arrange to pay in instalments, rather than paying in full.”

There is evidence that bailiffs are getting increasingly desperate in the way that they try to recoup outstanding debts.

In January last year, Andy Miller, a 78-year-old man from Accrington die in the street after being driven to a cash machine by a bailiff to pay off debts accrued on a speeding ticket. He had just been released from a spell in hospital.

Earlier this week it emerged that a couple were asked if they would like a new credit card with the same company that is repossessing their home.

Geoff and Linda Solly and their two daughters are waiting to be evicted from their Hertfordshire home in the next few days after Abbey, now Santander, took out a repossession order.

The bank has frozen the couples’ bank accounts, including the children’s savings accounts. Mr Solly was declared bankrupt a year ago and that order has now been discharged.

source Telegraph.co.uk