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Debt advice when your debt has been passed to debt collectors

Debt Collectors Debt overview

Debt collecting agencies are the businesses that your creditors may pass your debt to in a bid to get your arrears repaid. There are two ways this works:

  1. Your original creditor sells or ‘assigns’ your debt to an agency – this is because the amount that you’re currently repaying is not sufficient for their needs. The contract that you have with the original creditor allows them to take this step once the account has officially defaulted. While this process involves the creditor accepting a lower ‘payment’ for the debt, it absolves them of ownership, with the collection agency becoming the owner of the entire debt, which is still owed by yourself.
  2. The original creditor still owns the debt, but they use a collection agency to chase it. In this case the collection agency collect a percentage commission once payment or payments are recovered.

Debt collectors and bailiffs are frequently mixed up with one another, or thought to be the same thing. The key difference is that while both can be called ‘doorstep collectors’, bailiffs have a legal right to visit your property in order to remove and then sell your goods to repay the debt. By contrast, while debt collectors can state in letters that they’ll visit your home, the chance of this happening is far less likely, and they can’t remove items from your property.

Worried about debts that won't go away?

Debt help tips for tackling Debt Collector Debts

  • Do not ignore any correspondence from a debt collection agency. They are likely to take a different approach should you avoid them, such as chasing the debt through court.
  • Only make an offer to repay an amount that you can reasonably afford. Back up any offer of a payment plan with a detailed list as to your income and expenditure.
  • If you’re in a situation that makes you vulnerable you should inform the debt collection agency in writing. Being vulnerable can range from coping with the death of a loved one, to suffering from mental or physical health issues. With this information the debt collectors you deal with will be in a better position to support you.
  • A debt collection agency is allowed to add further charges or interest to the debt, however they can only add amounts that are explicitly stated in the contract.
  • If a debt collector visits your house remember:
    • They don’t have the same powers as bailiffs; if they claim to be a bailiff when they are not they are committing an offence.
    • You aren’t obliged to open the door to allow them entry.
    • If you request that they leave your property they are legally required to do so.
    • They must present ID.
    • You don’t need to provide them with a cash payment there and then. It’s almost always better to contact the company in writing or by phone to set up a standing order arrangement that you can afford.

IVAs – A potential debt solution

Despite having less power than bailiffs, dealing with debt collectors can still be an intimidating prospect. If you feel as though there’s no way out of your current financialpredicament, an Individual Voluntary Arrangement may be a solution.

An IVA effectively ‘wraps’ up all of your debts into a single monthly repayment. To qualify you must have debts that total to more than £5,000 being owed to two or more creditors.

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

National Debt Help
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