HELP WITH DEBT
HELP WITH DEBT
What is a Debt Collector?
If you’ve been struggling with debt for some time, debt collectors and agencies may be familiar to you.
The majority of companies concentrate on lending you money and collecting it each month, not chasing accounts that are in arrears. As such, debts are often passed or sold to a debt collector or purchaser.
This is perfectly legal under the Consumer Credit Act, which dictates that debts regulated under it can be passed on or sold at any point after payments have stopped and an account is in arrears.
Once a debt is with a collection agency or purchaser, the original lender will take a step back and let them do all the work to get the debt paid.
Why are debts passed or sold to Debt Collectors?
Lenders are generally understanding to some degree, but if you fall into arrears and are unable to clear them, they will put pressure on you to bring the account up to date.
More often than not, lenders will go down the debt collector route if an account has been defaulting for quite some time. It is normally their attempt at collecting the debt before taking further action, which means you are in danger of being taken to court or having a CCJ taken out against you.
How does it work?
This differs from company to company depending on how they operate and their terms and conditions. Some may not be as sympathetic as others and some may give you more time before sending the debt to a collection agency.
If your debt is passed over, the agency will collect the debt on behalf of the lender. It will still be owned by the original company, and the agency will take a percentage of the money collected.
If your debt is sold, the purchasing agency will then legally own it. In these instances, the lender will generally sell the debt at a reduced rate in order to remove the account from their records.
Are they different to Sheriff Officers?
Sheriff officers work for the court, whereas debt collectors work on their own or for an agency. They are also able to remove items from your home if the court order requests it.
Put simply, Sheriff Officers are able to enforce debts; debt collectors cannot.
You can find out more about Sheriff Officers here.
What can Debt Collectors/Debt Collection Agencies do or not do?
Debt collectors are only able to carry out the same process as the original lender, they have no legal powers.
They will contact you by phone, letter, SMS and email, generally notifying you of the balance you owe and to try and arrange payment. However, they are still able to take legal action against you by applying for a CCJ if you do not pay.
As such it’s important to respond to anything they send you to stop it escalating to these stages.
Agents are able to visit your property, but they do not have the right to enter your home unless you invite them in. Generally, you will be sent notice to warn you of this beforehand.
If an agent does appear at your door, they cannot demand that you pay right there on the spot or take goods from your home. If you do make a payment, always ensure that you do not pay them in cash in case of a scam.
They must also show you ID, and you are within your right to tell them nothing should they refuse. If you feel they are harassing you or using harsh tactics, call their office and file a complaint.
Will they add charges or interest to my debt?
Generally, once a debt is sold to a Debt Collector or Collection Agency, interest and charges are stopped. However, this differs between companies as some will still continue to add them after you have defaulted, although only at the rate dictated in your original contract.
If the debt is still owned by the creditor, it is highly likely that interest and charges will continue to be added.
What should I do if I am contacted by a Debt Collector?
You should always respond. Ignoring phone calls and letters from a Debt Collector can often lead to them taking further action against you, which will cause you more problems in the long-run.
It’s always best to seek advice as soon as they contact you. Work out how much you can reasonably afford to pay per month and then propose this to the collection agency. They’re often very willing to work with you to create a payment plan.
If you are being contacted by debt collectors and are experiencing financial distress, call us today on 0808 2085 198. Our advisors are always on hand to off you free and confidential advice.