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How companies collect debt

What happens when you miss payments?


What is the debt collection process?

The debt collection process is when the people you owe start taking steps to get money from you. It starts with reminders of missed payments and can lead to you being taken to court.

There are different ways to do this and lenders may vary on:

  • How quickly they act
  • How they deal with you when they contact you
  • What further action they take

Your lender may tell you to get free debt advice from a firm like us.

The sooner you can do this, the better.

Missed payments show on your credit file. This makes it harder to get credit.

Try to make an arrangement with the people you owe. It will look better on your credit file if you can pay off the arrears.

Stage 1: Missing one or two payments to a debt

The people you owe start with reminders by phone or in writing.

They ask you to:

  • Make up any missed payments
  • Bring your account up to date

Talk to them about a temporary payment break or reduced payments to avoid this.

They may also ask you about:

  • Your situation, and
  • Anything that makes it harder to pay

Stage 2: Missing three or four payments to a debt

The people you owe put more pressure on you at this stage.

You may find:

  • The tone of their letters or calls is firmer
  • They start to threaten further action
  • They point you towards a debt advice agency for help
  • Get in touch with us if you need advice

Soon you get a default notice.

You are probably getting to a point now where:

  • Your accounts will be closed
  • Further action is starting
  • Lenders may pass on or sell your debts to another firm
  • You may start getting contact from a new company
  • Your lender should tell you first

Stage 3: Missing five or six payments to a debt

You are now getting lots of letters, phone calls and other contact from the people you owe.

They may take further action now if your regulated debts have defaulted.

Regulated debts include:

  • Credit or store cards
  • Personal loans
  • Payday loans
  • Hire purchase
  • Catalogues
  • Overdrafts

Lenders usually pass debts to a collection company after a default.

Other more serious action could be happening or coming soon.

Creditors can take your debt to court and apply for a CCJ (County Court judgment) if you live in:

  • England
  • Wales
  • Northern Ireland

This affects your credit file, but that should not be your main priority.

It is still not too late to contact us for help.

  •   Debt collection: How companies collect debt

1. What your creditors can and cannot do

Find out:

  • What action your creditors can and cannot take
  • The process they use to collect debt

2. Court action in England & Wales

Act quickly if a creditor starts court action.

3. Court action in Northern Ireland

Find out:

  • How to deal with a money judgment
  • The process for recovering unpaid debts

4. Court action in Scotland

What to do if:

  • You receive a decree
  • You are facing diligence

5. Eviction and repossession

You could lose your home if you fall behind with mortgage or rent arrears.

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