Debt collection is a multi-million pound industry nowadays. People across the UK will all know someone, or even have first-hand experience, with debt and debt collectors. Sometimes this debt can be known as non-consumer debt or business debt, but other times it can be what’s known as personal debt, or consumer debt.

But just what is personal debt? We’ll take a look at what personal debt is, and the difference between personal debt and the other debts you might incur. You may be looking to sell your personal debt, like you would sell other debts like business debt. 

We give you a full guide about the rules and regulations that surround whether you can sell your personal debt or not, and go through some of the more commonly-asked questions at the end of the article too.

What is personal debt? 

Personal debt is also sometimes known as consumer debt. It is the result of purchasing goods that can be ‘consumed’. These include many different things, such as the following items:

These are just some examples of the more common types of personal debt that you can incur. Like all debt, personal debt can have huge consequences on your life and finances. 

Credit cards are the biggest thing to watch out for here – you may easily end up spending more than you can pay back.

What is business or non-consumer debt?

To put it simply, business debt, or non-consumer debt, is basically anything that doesn’t qualify as consumer debt. 

If you at what you originally used the money for and what you purchased with it, if it isn’t anything to assist with your personal, familial, or household expenses, then it will likely be a business debt.

Things like taxes and medical bills are considered non-consumer, or business, debt, and it can be interchangeable on things like mortgages (if it’s a mortgage on your business property, it is business debt), car loans (if it is a business vehicle, it is a business debt) and credit card debt (if it is a business expense incurred on a business card). So it’s a little confusing to switch between them.

Selling debt

Now we have a clearer idea of what the two types of debt (consumer and non-consumer) are, we can have a look at the process of selling debt, and whether you can or should sell your personal debt.

Selling debt is commonly done by big companies who might have some outstanding fees due to them, but they themselves no longer have the resources to recover these sums of money. 

They then go and sell the debt that you owe them to a third party, which is frequently a debt collection agency. This now means that you will either have to pay back the company via the debt collection agency, or you will owe the debt collection agency instead of owing the original creditor. 

Can I sell my personal debt?

Personal debts which you may want to try and pursue getting back can include sums of money lent to partners or friends, and maybe that relationship has soured. If you were considering selling your personal debt, you’d have to make sure the sum was quite substantial.

If you were to try and sell a debt that involved someone owing you £50 for instance, you could very easily end up spending much more than that just trying to get it repaid to you. If the amount is more substantial, it could be worth selling your personal debt rather than simply writing it off.

Debt collection agencies

If you are asking the question ‘can I sell my personal debt’ then you will be wondering ‘who do I sell my personal debt to’. Luckily, in the instance of selling a debt, you’ll find debt collection agencies very receptive and eager to purchase your debt. 

Debt collection agencies are the most sure-fire way of collecting a debt that’s owed to you. Most people will be frightened into paying straight away, so it is definitely the best port of call. 

Selling the debt outright

There will be two options open to you with regards to selling your personal debt. One is to sell it outright, which would result in you not receiving the full amount of money owed to you, only the amount that the debt collection agency pay for the debt. 

This in itself could be considerably less than the money originally owed to you, depending on how likely the debt collection agency thought that the person who owes the money would be to pay. However, it is a guarantee that you would at least get some funds recouped.

No win, no fee

The second option in the instance that you plan on selling your personal debt is getting them to recoup the funds on your behalf. In these instances, they often work to what’s known as a ‘no win, no fee’ basis. 

This basically means that you won’t be charged a fee by the debt collection agency if they fail to win the debt. This option will be able to win you nearly all the money owed back, but it may take longer to organise, and the debt collection agency may add additional interest and charges to the amount dependent on how long it took to recoup the debt.

FAQs

Now that we’ve covered the best options available to you with regards to selling your personal debt, we’ll go through some of the more frequently-asked questions about personal debt and debt collection in general.

How far can a debt collection agency go to get the money back?

A debt collection agency can go as far as applying for a County Court Judgment in order to get your debt paid up. This means taking the person who owes the debt to court and potentially bankrupting them.

What happens if they ignore the debt collection agency?

With personal debts, being approached by a debt collection agency might well be enough to scare the offending party into paying up. If they do ignore the debt collection, they may well be taken to court if matters are escalated.

What happens if they don’t pay?

While it could be argued that we all must pay our debts, there’s a clear-cut reason for why you wanted to sell your personal debt. Some people just don’t want to part with their money – it’s easier getting blood from a stone, you might say. If they don’t pay, the debt collection agency will be able to escalate matters quite rapidly in order to recoup the funds.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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