Dealing with debt collection agencies
Getting a stream of seemingly endless calls or demanding letters from your lenders can be unpleasant but not totally unexpected if you are not able to repay your debts. However, you may suddenly receive a request for payment from a debt collection agency which is different.
What is a debt collection agency?
These are private companies which have been tasked with the job of collecting outstanding debts on behalf of your original lender. Lenders employ the services of debt collection agencies when you have failed to reach an agreement for reducing the instalments or if there are unresolved arrears on an account.
Will I be taken to court?
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 or have their belongings repossessed. Lenders can serve CCJs requesting court action for unpaid debts – but referral to a debt collection agency does not mean that this will automatically happen.
Debt collection agencies are not bailiffs
The Financial Conduct Authority (FCA) regulate debt collection agencies and have clamped down on any rogue firms which are strictly banned from hinting that they have greater powers than they actually do. They may also not act in a manner which is overly aggressive or intimidating. Debt collection agencies are not the same as bailiffs. They have no powers to force entry into your home or repossess your belongings – nevertheless, you may find them rather persistent and unwilling to take no for an answer.
Why were my 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 with the lender to discuss your circumstances and arrange a repayment plan. If this happens, the debt collection agency will continue to try and persuade you to make payment in the same way as before. Once sold to the debt collection agency you will not be able to speak to your original lender about the debts.
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 or speak to one of our specialists for more advice.