Dealing with debt collection agencies
If you are experiencing financial problems you may have been struggling to pay your debts for some time.
Getting a stream of endless calls or demanding letters can be unpleasant but not totally unexpected if you are not able to pay what you owe. However, you may suddenly receive a request for payment from a debt collection agency and need advice on what to do next.
What’s going on?
If you have been unable to repay your debts and have not reached an agreement with your lender about reducing the instalments, you are likely to be contacted by a debt collection agency. These are private companies which are tasked with the job of collecting the money on behalf of your original lender.
Having your arrears passed to a debt collection agency can be rather daunting and many people wrongly assume that they will be automatically taken to court to have their belongings repossessed. A debt collection agency is not the same as a bailiff and has no powers to force entry into your home or repossess your belongings.
Unfortunately, in the past, the debt collection industry has gained a rather unpleasant reputation for not being honest about what they are allowed to do, or being overly aggressive. The Office of Fair Trading has clamped down on rogue firms and they are strictly banned from hinting they have greater powers than they do, or acting in a manner which is aggressive or intimidating. Nevertheless, you may find them rather persistent and unwilling to take no for an answer.
Why your debts have been passed on to a debt collection agency…
Your lender could employ the services of a debt collection agency when there are unresolved arrears on an account. If you clear the arrears, your lender will resume communication with you as before.
Debts sold to a debt collection agency…
This is usually the case if the amount you owe is particularly large, has been outstanding a long time or you have not been in contact. If this happens, the debt collection agency will continue to try and persuade you to make payment in the same way as before, but the difference is that even if you clear the balance, your lender will no longer be willing to have any contact with you. Your account with them will have effectively been closed.
In practice, whether your debt is sold or simply passed on to a debt collection agency should make little difference to your dealings with the agency. Do not allow yourself to be pressured into agreeing to make payments you simply cannot afford and remember that if they visit your home, you are not obliged to permit them entry. If in doubt, seek advice from a consumer organisation such as the Citizen’s Advice Bureau.