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Being in a difficult financial position is challenging enough for most people. Trying to make repayments to your creditors for things like credit cards, loans and overdrafts aren’t always easy with the everyday cost of living increasing each year. So, what happens when you start defaulting on your payments?
If you miss more than one payment to any of your creditors, they will likely contact you via telephone or write to you, to see if you’re able to come to an arrangement to pay your outstanding debt. If you’re unable to come to a suitable arrangement, and start failing to make your obligatory payments on time, whether these are due weekly or monthly, your debt will likely be passed on to a debt collection agency. Please note, that every creditor will have different guidelines, when considering what a ‘suitable’ arrangement is, as well as how quickly they are likely to take any further action before they start the recovery process.
Your debt has now been passed on to a debt collection agency, what do you do? If you’ve been in arrears for a period of time (this will vary for each creditor), you will most likely be contacted by a debt collection agency. Although this may sound intimidating, remember that it’s a normal stage in the debt collection process to recover any unpaid debt.
It’s very important to remember that debt collection agencies are not bailiff or enforcement agents. This means that they do not have the same rights.
Need help with debt collection agencies or any other debts that you may have? Call our specialist advisors today on 0800 121 48 63 or complete the online form on this page to request a call-back.
A debt collection agency is a private company which specialises in recovering any outstanding debt. They are used when the original creditor is unable to recover debts themselves.
Here’s a quick example: You owe £1,500 on a credit card. You’re unable to make payments. The credit card company (the creditor) sends you letters and tries to call you to see what’s going on and to come to an arrangement. You continue to default on your credit card repayments. The creditor decides to pass your debt onto a debt collection agency. The debt collection agency will now chase you up for the outstanding balance until the debt has been cleared.
Here’s a quick example: You owe £1,500 on a credit card. You’re unable to make payments. The credit card company (the creditor) sends you letters and tries to call you to see what’s going on and to come to an arrangement. You continue to default on your credit card repayments. The creditor decides to pass your debt onto a debt collection agency. The debt collection agency will now chase you up for the outstanding balance until the debt has been cleared.
Have you been visited by a debt collection agency for unpaid debt? Call our expert advisors today on 0800 121 48 63 or complete the online form on this page to request a call-back. Our friendly team will be happy to discuss a number of solutions available to you.
Most debt collection agencies will usually use one of two different methods when recovering any outstanding debt.
The original creditor may sell or assign the outstanding debt to a debt collection agency because the amount you pay each month isn’t satisfactory. Previously, you would have agreed to terms and conditions that allow your creditor to carry out this debt collection process if you default on your account. The debt will likely be sold at a reduced amount to the debt collection agency, so they, the creditor, receive a fixed amount of money. The debt collection agency has now become the legal owner of the debt. They will profit by trying to recover the full outstanding balance from you.
The original creditor (the company you owe money to) will still own the debt. They will decide to use a debt collection agency to contact you. This debt collection agency will have an agreement with your creditor(s), whereby they will be paid a percentage of any money they’re able to recover.
To distinguish between these debt collection agency recovery processes, please check any letters that you receive from the creditor or the debt collection agency. Look to see who you are asked to make payments to. If the debt collection agency instructs you to continue making payments to the original creditor, it’s most likely that the debt will still be owned by them.
Has a debt collection agency contacted you to recover any outstanding balances that you may owe to one or more creditors? Call Refresh Debt Advice and speak to one of our specialist advisors today on 0800 121 48 63, alternatively, you can complete the online form on this page to request a call-back.
It’s important to know that debt collection agencies are not granted any special legal powers to aid them in the debt recovery process. They’re unable to take any additional action that the original creditor would not be able to take themselves. This means that they have to use a similar process and follow the same guidelines as the original creditor when recovering the outstanding balance.
Debt collection agencies will use a number of different methods to contact you. The two most common ways to correspond with you will be through letters you receive in the post and phone calls made to you. However, they can also use alternative communication methods such as emails and text messages. It can often be a difficult and worrying experience when you receive telephone calls and/or letters from the debt collection agency.
Often, these letters will refer to court action taking place or alerting you that they will be sending someone to your address to recover the money owed. Fortunately, debt collection agencies are unable to give you misleading or ill-informed details about their legal standing. Additionally, they are not allowed to make an immoderate number of phone calls.
If you fail to make payments, a debt collection agency could take court action, however this isn’t likely to happen if you decide to contact Refresh Debt Services as soon as possible.
Our expert advisors will take into account details of your current financial situation and help you find the right solution that meets your needs. We’re able to mediate and negotiate an affordable and sustainable repayment plan for you.
Speak to a specialist money advisor today on 0800 121 48 63 or complete the online form on this page to request a call-back.
The first thing to remember is, do not ignore any phone calls or letters you receive from the debt collection agency. By doing this, you may make the situation worse, as they will be more inclined to take additional steps to recover the outstanding debt if you don’t contact them.
The last thing you want at this stage is for the situation to negatively escalate further. Knowing your rights and what to do at each stage will help you cautiously manage the situation as effectively as possible. Ultimately, resolving the problem and allowing you to move on from all of this.
A debt collection agency may ask you to repay the outstanding debt in large instalments or even in full. In the majority of these circumstances, neither will be possible. This is why we recommend you offer to only pay them what you’re able to realistically manage through instalments. It can also be useful to provide them with an income and expenditure sheet detailing your current financial position. This can be used as evidence to show that you’re not overspending on unnecessary things and you’re only covering priority living expenses.
If you believe that the debt collection agency is calling you excessively or you’re unhappy with the language or tone of voice used to speak with you, we advise you to make a complaint. You should write to their complaints department giving them as much detail as possible, include time and dates where possible. It’s also a good idea to send your complaint via email and send letters using a recorded delivery service.
Have you been contacted by a debt collection agency? If yes, contact Refresh Debt Services to speak to one of our friendly specialist advisors for free and impartial advice. We’re able to understand your current financial situation and advise on a range of solutions, helping you become debt free
Different rules apply to enforcement agents and debt collection agencies when it comes to taking your possessions.
There are separate rules that bailiffs (now commonly referred to as enforcement agents) have to follow in relation to what they can and can’t take from your home.
Unlike enforcement agents, agents or doorstep collectors from debt collection agencies are unable to remove your goods. They are not granted the same legal powers as an enforcement agent, and they can only visit your property to discuss a repayment arrangement for your debts
In some instances, a debt collection agency may instruct a doorstep collector or agent to visit your home
However, in practical terms, this is very unlikely to happen. Most of the time, debt collection agencies will communicate with you through telephone calls and letters sent through the post.
It’s important to remember that if a debt collection agency instructs a field agent or doorstep collector to visit you at your home, these are not bailiffs, enforcement agents or sheriff officers (Scotland only). If they give you false or misleading information about their identity, you should contact the police immediately, because posing as a bogus official is a criminal offence, meaning that they are breaking the law.
If a debt collection agent does visit you at your home, remember these following tips:
In the event that a debt collection agent visits your home and asks you to make repayments for your outstanding balance. You should contact the agency directly to set up a direct debit or standing order, instead of paying by cash. This will give you proof of payments made as these will be recorded on your bank statements. If you’re only able to pay via cash, request to see the ID of the field agent beforehand, and remember to get a receipt of any payments you make.
Have you been visited by a debt collection agent for outstanding arrears? Speak to one of our friendly money advisors today by calling 0800 121 48 63, alternatively, you can complete the online form on this page to request a call-back.
Under no circumstances should you let a debt collection agent pressure you into making any repayments that you’re unable to afford.
Different rules apply to enforcement agents and debt collection agencies when it comes to taking your possessions.
There are separate rules that bailiffs (now commonly referred to as enforcement agents) have to follow in relation to what they can and can’t take from your home.
Unlike enforcement agents, agents or doorstep collectors from debt collection agencies are unable to remove your goods. They are not granted the same legal powers as an enforcement agent, and they can only visit your property to discuss a repayment arrangement for your debts
Interest fees and charges will usually be frozen if the debt has been sold by the creditor to a debt collection agency. This is likely due to the original creditor freezing these before you defaulted on the account
Unfortunately, under some conditions, the debt collection agency may decide to continue applying interest fees and charges to the outstanding debt. However, they’re only able to apply these fees and charges in accordance with the terms and conditions you agreed and signed to with the original creditor when you took out the credit e.g. credit card, loan, overdraft.
If the outstanding debt has not been sold to the debt collection agency but has been passed on to them for the recovery process, the original creditor may still decide to apply interest fees and additional charges. This can happen regardless of being contacted by a debt collection agency.
You should only be contacted by one debt collection agency about your outstanding debt. If you have been contacted by more than one agency in relation to the same debt, you need to contact the original creditor as soon as possible, to request an explanation as to what is going on.
The creditor that you’re in arrears with, will be able to look into the case for you. Through their investigation, if they confirm that there has been a mix up in the process, they will be able to inform you about which debt collection agency you should be now dealing with, whilst cancelling any further action from the second company.
In some instances, a debt collection agency may use more than one trading name when recovering debt. What does this mean? This means that it may look like you have been contacted by multiple companies, however, it will actually be the same debt collection agency who trades under different names. To get further clarification on this, look for the correspondence address on any letters you receive from them. If the addresses match or are very similar, you are most likely being contacted by one debt collection agency.
To stop this confusion and avoid being given any misleading information, you should write to the debt collection agency directly, and request that they only contact you by using one trading name. We also recommend you report any suspicious correspondence and/or behaviour to both the police and Trading Standards.
Under rare circumstances, you may receive communication about a debt that doesn’t belong to you. This could be because they’re searching for someone with a matching name to yours, or the agency doesn’t have the latest address for the person they are chasing.
If you receive a letter about this, simply write ‘not at this address’ on the envelope and place it in the nearest post box. The letter will be returned to the original sender. If you continue to receive these letters, you should send a letter of complaint via email and post to the company to inform and update them about what’s going on.
The key thing to remember is that if it is not your debt, you are not liable to make any payments to it.
Debt collection agencies in the UK should be regulated by the Financial Conduct Authority (FCA) and will hold a valid consumer credit license agreement to trade.
Debt collection agencies in the UK should be regulated by the Financial Conduct Authority (FCA) and will hold a valid consumer credit license agreement to trade.
Most debt collection agencies within the UK will also be members of a trade body such as the Credit Services Association (CSA). You may see logos of a trade body on any correspondence you receive via email or post. You can also contact each one of these trade bodies to confirm that they do actually work with the debt collection agency.
If you’re still unsure and need further clarification, we can look into this for you. We liaise with most debt collection agencies in the UK and we’re able to confirm if the company you have been contacted by is legitimate.
If you do owe the outstanding balance and you’re able to clear the arrears in full, the best solution is to just pay it.
This will help you prevent any unnecessary hassle and/or action taken by the debt collection agency. If you have decided to settle the debt, either directly with the creditor or the collection agency, make sure you ask the company to update your credit file to state that the debt has been satisfied and there is nothing outstanding.
A creditor or debt collector will need to be granted court permissions before they are able to deduct any money from your wages/salary. They will only be able to gain this approval if you have previously had a County Court Judgement (CCJ) in place for a set period of time (this can differ depending on the type of debt and the amount owed).
A creditor or debt collector will need to be granted court permissions before they are able to deduct any money from your wages/salary. They will only be able to gain this approval if you have previously had a County Court Judgement (CCJ) in place for a set period of time (this can differ depending on the type of debt and the amount owed).
Creditors and debt collection agencies are unable to apply for an attachment of earnings order if you’re unemployed, self-employed or if you’re in the armed forces.
Yes. Our friendly team understands how worrying it can be when you start to receive phone calls, letters, emails and text messages from debt collection agencies.
It can be a difficult experience when you’re no longer in control of your debts or financial situation. This is why we offer free impartial advice and guidance to help you find a solution that’s right for your individual circumstances.
Need help with debt collection agencies or any other debts that you may have? Call our specialist advisors today on 0800 121 48 63 or complete the online form on this page to request a call-back.
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