Debt Collection Help & Advice


Debt Collection Help & Advice


When you fall into debt, you’re usually in debt to a specific creditor (the person or company you owe money to). If your creditors struggle to get you to repay, however, they may pass your debts to a debt collection agency – debt buyers who pay to take over the debt recovery process.

In this guide, we’ll explore what debt collection agencies are, walk you through the debt collection process, and discuss your rights if you are visited by a debt collector.

What is a debt collector?

Debt collectors pursue debt on behalf of other businesses. They can work for almost every type of creditor, from banks and credit card companies to high street shops and online catalogues. Usually, agencies operate under a ‘no win no fee’ model, where they take a percentage of any money they recover.

Most companies only focus on lending money and collecting it each month, and don’t specialise in chasing accounts that are in arrears. That’s where debt collectors come in.

This is all legal under the Consumer Credit Act, which dictates that debts regulated by 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 aren’t able to clear your debt, 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 some time. This is their way of collecting the debt before further action is taken against you. The next step would be taking you to court or having a CCJ made against you.

How does the debt collection process work?

The debt collection process differs from company to company depending on how they operate and their terms and conditions. Some lenders may not be that sympathetic or flexible. Others 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 debt collectors 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.

Essentially, sheriff officers have the power to enforce debts, while debt collectors don’t.

You can find out more about sheriff officers here.

What powers do debt collectors and debt collection agencies have?

Before they visit your home

Debt collectors are only able to carry out the same process as the original lender. They have no legal powers.

They’ll attempt to make telephone contact first. If they can reach you via telephone call, they may send a letter, SMS, and/or email, generally notifying you of the balance you owe and to try and arrange payment. They are also 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.

When they visit your home

Agents are able to visit your property, but they don’t 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 can’t demand that you pay there on the spot or take goods from your home. If you do make a payment, always make sure that you don’t pay them in cash – it could be a scam.

They must also show you ID. If they refuse to do so, you have every right to ask them to leave. If you feel they are harassing you or using harsh tactics, call their office and file a complaint.

Will debt collection agencies add charges or interest to my debt?

Generally, once a debt is sold to a debt collector or debt collection agency, interest and charges are stopped. However, this differs between companies as some will continue to add them after you have defaulted. They can only do this at the rate dictated in your original contract.

If the debt is still owned by the creditor, it’s highly likely that interest and charges will continue to be added.

What should I do if I am contacted by a debt collection agent?

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 best to seek advice as soon as a debt collector contacts 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.

Should I pay if I'm visited by a debt collection agent?

When a debt collector or company visits your home, they may ask you upfront for payments towards your debts. They can be very persuasive, and may even mention court action if you don’t pay (even though debt collection agencies have no legal powers.)

If a creditor sends a debt recovery agent to your home, you shouldn’t ignore them, but it’s not advisable to pay them either. Industry experts would always advocate paying the creditor directly, rather than going through a debt collector.

Certain creditors have their own powers of collection in any case. If you’ve entered a credit agreement with a bank, for example, and are refusing to repay money owed, it’s within their terms of service to take it directly from your bank accounts, and there’s no exact limit as to how much they can take.

What happens if I've already paid a debt collector?

The problem with paying debt collectors is that they don’t operate in the same way as creditors. People often find that once they start paying debt collection agencies, it doesn’t make them stay away. In fact, it can encourage agencies to come back looking for more money.

If you do pay the debt collectors when they visit you’re home, it’s important you ask for proof of the transaction. They should be able to provide you with a receipt that proves you’ve paid a fee, which is useful should there be any complaints about the debt collection process in future.

Where can I get debt advice and more information on debt collection?

If you’re in debt, you may have to deal with debt collectors calling you, posting letters through your door, or even a person visiting your home looking for payment. It’s stressful, and leaves people worrying not just about their financial situation, but often causes mental health problems as well.

Carrington Dean can help. We’re Scotland’s biggest debt management company, and we specialise in giving people the tools and the information they need to deal with debt collectors.

If you are being contacted by debt collectors and experiencing financial pressure, call us today on 0808 2085 198. Our friendly, professional advisers will be only too happy to give you free and confidential advice, and help you reach a positive outcome.

We've helped so many others just like you.