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How companies collect debt

What happens when you begin to miss payments?

What is the debt collection process?

Different lenders have different ways to collect unpaid debts. The speed they act, their attitude when they contact you, and the further action they might take, all differ.

This means we can’t tell you exactly what will happen, and when, if you fall into arrears, but we can give a general idea of what to expect. 


Your creditors may also direct to you to a free advice agency like us for impartial debt help. The sooner you can get advice the better.

The missed payments will be recorded on your credit file so you’ll find it harder to get credit. But if your financial difficulties are short-term and you can pay off the debt or arrears at this stage, you may be able to keep your accounts open and continue paying them off as normal.

Stage 1: Missing one or two payments to a debt

Your creditors will start with reminders by phone or in writing, asking you to make up any missed payments (unless they had agreed to a temporary payment break) and bring your account up to date. The approach from your creditors may be sympathetic at this stage. They may ask you about your situation and if anything has changed which makes it hard to pay.

Stage 2: Missing three or four payments to a debt

Your creditors may be putting more pressure on you by now, and you may find the tone of their letters or calls becomes firmer. They may start to threaten further action. You’ll probably find many creditors are still keen to point you towards a free debt advice agency for help. If you’ve not already had advice, get in touch with us.

If your account is regulated by the Consumer Credit Act, you can probably expect a default notice soon, and shortly after that your account will default. This will have a big impact on your credit file and make it a lot harder to get further credit.

You’re probably getting to a point now where your accounts will be closed and further action is starting. Your creditors are likely to pass your debts to collection agencies too, so you may start getting contact from new companies.

Stage 3: Missing five or six payments to a debt

By now you’ll have had a lot of letters, phone calls and other contact from creditors.

Any regulated debts you have, such as credit or store cards, personal loans, payday loans, hire purchase, catalogues or overdrafts, are likely to have defaulted by now. These creditors may have taken some further action by this stage

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The most common action after an account has defaulted is for a creditor to pass it to a specialist debt collection agency. This has probably happened by now.

Other more serious action could have happened, or could be coming soon. For example, if you live in England, Wales or Northern Ireland, some creditors may be considering taking your debt to court and applying for a CCJ (County Court judgment).

Your credit file will be seriously affected by now, but that shouldn’t be your main priority. If things have reached this stage, it’s important to get advice and start sorting out your debts. It’s never too late to contact us to start getting your finances back in order.

  •   Debt collection: How companies collect debt
  1. What your creditors can and can't do: Find out what action your creditors can and can't take, and the process they use to collect debt
  2. Court action in England & Wales: If a creditor starts court action, you need to act quickly to prevent further action
  3. Court action in Northern Ireland: How to deal with a money judgment, and the process for recovering unpaid debts
  4. Court action in Scotland: What to do if you receive a decree, or are facing diligence
  5. Eviction and repossession: If you fall behind with mortgage or rent arrears you could lose your home

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