WAS IT COINCIDENCE THAT I GOT A MESSAGE FROM A FIRM I OWE MONEY SOON AFTER I MISSED MY COUNCIL TAX PAYMENT?

FIRST PUBLISHED BY:   THIS IS MONEY

TIMELY TEXT: WAS IT A COINCIDENCE THAT I GOT A TEXT MESSAGE FROM A CREDITOR URGING ME TO GET IN TOUCH A WEEK AFTER I MISSED A COUNCIL PAYMENT?

I had a text on my mobile phone out of the blue from a creditor urging me to get in touch if I was experiencing financially difficulties just a week after missing a Council Tax payment. Do banks/mortgage lenders or even the councils send out advisories as to who might be struggling financially? If so isn’t this a breach of confidentially? It doesn’t feel like a coincidence as I have never missed a payment and the creditor has a secured loan i.e a second charge on my property.  

Linda Mckay of This is Money replies: Struggling borrowers such as yourself who are juggling many different debts including a mortgage, second charge or credit cards may have trouble in meeting all the demands of creditors. Can creditors spot financial difficulty and if so how? I asked experts in the field for you. Joanna Elson OBE, chief executive of the Money Advice Trust replies: The crucial issue here is whether or not this is a creditor through which you pay yourCouncil Tax. If they are not, then something may be amiss and a breach of confidentiality under the Data Protection Act is worth exploring. 

In this case the first thing to do is to write to the creditor and ask what information they used to identify your supposed financial difficulty. A missed Council Tax payment may show on your credit file, and so a creditor could possibly spot this while carrying out a genuine check on your file. However, if this is the case you should ask the creditor to justify why they were looking at your file, as creditors can’t simply do so on a whim. Alternatively it may have been a phishing text with coincidental timing.

However, if this is a creditor through which you pay your Council Tax, then there has been no breach. Indeed we encourage creditors to proactively contact customers they identify as being at risk of financial difficulty.  Of course much of our support for such practices depends on the nature of how the creditor contacts such an individual and what advice they provide. 

For example if a creditor notices an individual frequently incurring charges for dipping into an unauthorised overdraft and they then contact that person to signpost them to relevant sources of free debt advice, such as National Debtline, My Money Steps or Citizens Advice, the person may be able to resolve their financial situation more quickly and less painfully than might have been the case had the creditor simply ignored the issue and continued collecting overdraft fees and charges.

We conducted research into the merits of proactive contact with struggling borrowers last year, and found that the results of these practices were overwhelmingly positive, with people resolving their financial problems before they became particularly serious. Anyone who is struggling with their finances is likely to find a far better outcome the earlier they start to deal with their problem, and the first step is to seek free, independent advice.

James Jones, of leading credit agency Experian replies: Councils do not share data about Council Tax payments with lenders through the credit reference agencies (CRAs), so the text from your mobile phone provider will not be because you missed a Council Tax payment. Many lenders that do share credit data through the CRAs do get your permission to consult it on a regular basis. If, while doing this, they spot a missed payment elsewhere or simply that your overall financial situation is deteriorating, they may take action such as getting in touch to offer help.

If you’re concerned about the information on your credit report, it’s easy to get hold of a copy. If you do this and find a mistake you can make sure it is corrected. You can also use a ‘notice of correction’ to explain the reasons for any correct missed payments or other adverse information in the past.

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

ARE YOU PAYING TOO MUCH COUNCIL TAX - CHECK HERE?