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Dealing with debt collection agencies. Your rights.

If your debts have been in arrears for a while or you’ve been sent default notices, you’ll almost certainly start to hear from debt collectors.

This sounds intimidating, but it’s a normal stage in the collection process for most debts. The most important thing to remember with debt collection agencies is that they're not bailiffs.

What is a debt collection agency?

Debt collection agencies are companies who specialise in collecting debts where the original creditor can’t get arrears repaid.

There are many debt collection agencies in the UK. Some are small and specialise in collecting only certain types of debt. Others are very large companies operating across several countries.

Debt collectors usually work in one of two ways:

  • The original creditor sells or ‘assigns’ your debt to the collection agency because the amount you’re paying isn’t enough for them. The contract you signed with the original creditor allows them to do this after your account has defaulted. They sell the debt at a reduced amount so they get a quick lump sum of money. The collection agency becomes the legal owner of the debt and makes their profit by collecting the whole amount from you.
  • The original creditor still owns the debt, but they use a collection agency to contact you. The collection agency will often be paid a percentage of the money they collect.

You can usually tell which of these applies by checking where letters from the collection agency ask you to send payment. If they ask you to continue paying the original creditor, the debt will still be owned by them.

What can a debt collector do?

Debt collection agencies don’t have any special legal powers. They can’t do anything different to the original creditor.

Collection agencies will use letters and phone calls to contact you. They may contact by other means too, such as text or email.

We've put together an example of a debt collection agency letter so you can see what information they'll normally contain.

Letters or calls from collection agencies can be worrying, and they may threaten to take court action or send someone to your home but they’re not allowed to lie or mislead you about their legal powers or make an excessive amount of phone calls.

They could take court action or make you bankrupt if you don’t pay. But this is rare, especially if the collection agency is aware that you’re seeking help with your debts from an organisation like us, and you’re willing to pay what you can manage.

What should I do if a debt collector contacts me?

Don’t ignore letters or calls from a debt collector. They won’t go away and they’re more likely to take further action if you don’t reply to them.

Some may ask you to pay back the debt in full or in large instalments. You should offer to pay them only what you can realistically afford. 

If you’ve been contacted by a collection agency, you should get in touch with us for free and impartial debt help before your situation gets worse. We can help you put together a budget and work out how much you can afford to pay.

If you’re not happy with the amount of calls or the way a collection agency is speaking to you, make a complaint.

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Will the debt collectors visit my house?

A collection agency can send someone to your house. They may call this person a ‘doorstep collector’ or ‘field agent’.

In practice it’s not common for debt collectors to visit you at home.

If a debt collection agent calls at your house, remember:

  • They are not a bailiff (enforcement agent) or a sheriff officer. Pretending to be one of these can be a criminal offence
  • You don’t have to open the door or let them in
  • They must show proof of ID
  • They must leave if you ask them to
  • They can’t take anything from your house

If a collection agent visits you at home, you don’t have to make cash payments to them. It’s much safer to call the company later and set up a standing order at an amount you can definitely afford.

If you pay a collection agent in cash, they’re more likely to keep coming back for more payments. If you do make any payments at the door, makes sure you get a receipt.

Will a collection agency add more interest and charges?

If the debt has been sold to a collection agency, interest and charges will usually stop. The original creditor may already have stopped these after the account defaulted.

However, in rare cases a debt collection agency may continue adding interest and charges. They can only add amounts which are allowed in the contract you signed with the original creditor.

If the debt is still owned by the original creditor, they may continue adding interest and charges while the collection agency is contacting you, but this is not common.

Problems with debt collection agencies

I’ve got more than one collection agency contacting me about the same debt – which one do I pay?

Only one company should contact you about a debt. If you’re being contacted by more than one debt collection agency at the same time, it’s best to contact the original creditor to explain what’s happening. They should tell you which company is dealing with your debt and stop the other company contacting you.

Some debt collection agencies use more than one trading name. This means it can look like you’re being contacted by more than one company, but it’s actually the same company using different names. Check the addresses on letters – if they’re the same or very close, you’re probably dealing with the same company. Using several names is confusing and you could ask the collection agency to contact you using one trading name only.

A collection agency is contacting me about a debt that isn’t mine

This is rare, but sometimes happens if a collection agency is trying to trace someone with a similar name to yours. You should contact the collection agency and explain they’ve got the wrong person. Sometimes it may be difficult to persuade them you’re not the person they’re looking for.

If they don’t stop contacting you, make a complaint to the collection agency and contact the Financial Ombudsman Service for further help if your complaint hasn’t been dealt with in eight weeks.

How do I know the debt collection agency is real?

All debt collection agencies in the UK must be regulated by the Financial Conduct Authority (FCA) and they must hold a valid consumer credit licence.  You can contact the FCA to check if a collection agency is licensed.

Most collection agencies are also members of trade bodies such as the Credit Services Association. If their letter shows the logo of a trade body, you can also contact them to confirm they’re real.

You can also contact us if you’re unsure. We deal with all UK debt collection agencies and we can tell you if a company is legitimate.

Can you help with debt collection agencies?

Letters or calls from a collection agency are a warning sign that your debts are getting out of control. That means you should get free and impartial debt help now.

Online debt advice is available 24 hours a day. It’s free and confidential and only takes 20 minutes to build a budget and get your personal action plan. 

Or you can call our Helpline for expert advice on 0800 138 1111 (Free from all landlines and mobiles. Monday to Friday 8am to 8pm, Saturday 8am to 4pm*).

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They were a pillar of support to me." (Leslie, Essex)

Foundation for Credit Counselling (trading as StepChange Debt Charity) is a company limited by guarantee registered in England and Wales (Company No: 2757055 ) and a charity registered in England and Wales (Registered Charity No: 1016630). Registered office: Wade House, Merrion Centre, Leeds, LS2 8NG. Consumer Credit Counselling Service (Scotland) trading as StepChange Debt Charity Scotland is a company limited by guarantee registered in Scotland (Company No: SC162719) and a charity registered in Scotland (Registered Charity No:SC024413). Registered office: 33 Bothwell Street, Glasgow G2 6NL. Authorised and regulated by the Financial Conduct Authority.