Debt collectors

For many people, there is a level of confusion surrounding the issue of debt collectors and bailiffs. It’s important to remember they are two very different things and become involved with debt at different stages of your debt collection.

What is a bailiff?

A bailiff is someone who works on behalf of a court to collect debts. They can repossess your home or belongings – which are then sold to repay what you owe. There are four types of bailiff: private, county court, Sheriff and magistrates court – you can read more about each of these here.

There are various rules and regulations to ensure bailiffs do not cause undue stress to those they are collecting debts from.

The Taking Control of Goods: National Standards 2014 is important to note as it outlines what bailiffs can and can’t do as part of the debt collection process. You can find out more information about this here.

What is a debt collector?

A debt collector is NOT a bailiff. They are technically a company or agency who has been sold your debt by your original creditor or who has been tasked with collecting the debt on their behalf. In either instance, the original creditor you borrowed from will no longer contact you for payment.

In this guide we will refer to these as both a debt collector and a debt collection agency.

There are a wide range of debt collection agencies across the UK available for creditors to use – with some organisations even operating worldwide. The company used to collect your debts will depend on the type of debt, as some of them specialise in certain debts or industries.

How does debt collection work?

A debt collection agency will only be involved if your debt has been in arrears for a significant amount of time. This means you should be thinking about how you can tackle this debt – we recommend speaking to a member of our team about your options and considering a suitable debt solution.

There are two ways a creditor can work with a debt collection agency.

1. The creditor will sell your debt to this company for a reduced price. This means they will receive a lump sum of money instead of waiting for payment from yourself. The debt collection agency then becomes the legal owner of the debt and can collect it from you.
2. The creditor asks the debt collection agency to contact you but they are still the owners of the debt and the money owed. The collection agency is simply paid a percentage of what is collected to account for their services.

One positive result of a debt collector getting involved in your case is that interest and charges on your debt will usually stop being added. This is because, for a debt collection agency to get involved, your debt is likely to have already defaulted, meaning the account is closed and no more interest can be added.

Can more than one debt collector be involved?

No, only one debt collection agency should be contacting you. Some have more than one trading name and a quick online search can confirm if two company names are part of the same business. If the addresses on letters from two companies are also very similar it’s likely they are the same organisation.

It’s very important that if more than one collector is demanding payment – and you can’t confirm if they are part of the same company – that you speak to your original creditor about the situation to confirm which debt collector you should really be dealing with. They should then contact the other company and tell them to stop demanding payment.

What can debt collectors do if you don’t pay?

A debt collection agency only has the same powers your original creditor has. This means they will call you to chase for the debt or send letters notifying you of how much you owe.

However, they can still take legal action against you – such as applying for a CCJ – if you refuse to cooperate, so bear this in mind. It’s important you respond to any correspondence a debt collector sends you and do not ignore any contact you receive from them.

What rights do debt collectors have?

A debt collector does not have the right to enter your home. They may, however, send a notice through your door to make you aware that they are sending a field agent out to visit your property. This causes many people to panic, but it’s important to remember they have no power to force entry into your home, seize goods or demand money from you.

If a debt collector agent does visit your home you do not have to let them in or even open the door to them. If you do, then you should also ask to see their ID – every debt collector agent should carry this and if they cannot prove who they are you can refuse to speak to them.

It’s also very important that you do not make any payments in cash. Instead, you should call the debt collection agency and pay over the phone, or arrange for a monthly payment to be set up.

If you believe that you are being harassed by a debt collection agency it’s very important you make a complaint. We have more information here about what is allowed and what to do if the debt collector has broken any rules.

How to deal with debt collectors

First, check that the company contacting you is registered with the Financial Conduct Authority (FCA) and that they have a consumer credit licence. You can contact the FCA directly to check that the debt collector is on their records and is a real company.

We deal with a wide variety of debt collectors and may also be able to help you to confirm if a company is legitimate. Contact us if you would like to speak to someone about a debt collection agency who has contacted you.

Debt collectors may ask you to pay the full amount or larger instalments of what you owe. It’s very important you make them aware of any ways in which you are seeking help for your debts and only pay them what you can afford.

It’s important you cooperate with them, but do not stretch yourself if they are being demanding. Ensure you are making some form of payment and tell them which debt management company you are working with – such as PayPlan.