Can I sell my personal debt? Debt Collection Agency Guide

If you’ve received a surprising letter from a debt collector, you might feel a bit lost. Don’t worry; we are here to help you understand and manage this situation. Each month, over 170,000 people come to our site for advice on debt problems, so you’re not alone.

In this guide, we’ll explore:

• Understanding what personal debt is.
• How you may be able to sell your personal debt.
• The role of debt collection agencies.
• Whether selling debt can affect your credit score.
• Where to get professional advice for your situation.

We know it’s tough to get a letter about a debt you didn’t know about. Some of our team members have had the same problem, and research shows 64% of UK adults find interactions with current debt collectors stressful¹. It can be scary and confusing, but the good news is that there are ways to sort it out.

Here are your options in this situation and some tips on managing personal debt.

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:

• Payday Loans
• Mortgages
• Student Loans
• Credit cards

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.

Believe it or not, one in 10 Buy-Now-Pay-Later shoppers have been chased by debt collectors, rising to one in eight young people².

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. 

In order to better understand how debt collection services work, it’s important that you know debt collectors’ rights when pursuing a debt. Here’s a quick table summarizing what debt collectors can and can’t do.

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.

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. 

» TAKE ACTION NOW: Fill out the short debt form

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.

Will Debt Collectors Affect My Credit Score?

Yes, debt collectors can affect your credit score, but not in the way that many people think.

Once you have missed a few payments or defaulted on an account – which negatively impacts your credit score, too – your debt might be sold to these collectors, it will appear as a second collection account on your credit file, and the original entry may be marked as ‘sold’ which doesn’t look good!

 If they don’t add a second entry to your credit file, the entry for your original debt can be changed to add the debt collection company’s information. 

While it is unlikely that they will do this for smaller debts, they have the legal right to.

These collection accounts will negatively impact your credit. They are visible for 6 years and will impact your ability to get credit or use some credit products during this time.

This is because companies use your credit file to see if you are a ‘high-risk’ customer – someone who might have difficulty paying their bills on time. If you continue not paying until you have a CCJ against you, you have had such trouble paying back your debt that someone had to go to court about it.

Understandably, companies are going to be reluctant to give you credit!

After 6 years, it is no longer visible on your credit report, and you should find it easier to get credit again.

You also need to be aware that any debt solutions that you use will also be visible on your credit file for 6 years, and your credit score may be affected. However, once these 6 years are over, your debt solution will no longer be visible, and you may find it easier to get credit again.

Thousands have already tackled their debt

Every day our partners, The Debt Advice Service, help people find out whether they can lower their repayments and finally tackle or write off some of their debt.

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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.

References

1. InDebted, Debt Collectors Survey
2. Citizens Advice