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Debt Collection Agency – All You Need to Know with FAQs

Scott Nelson MoneyNerd Janine Marsh MoneyNerd
Scott Nelson MoneyNerd

Scott Nelson

Debt Expert

Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.

Learn more about Scott
Janine Marsh MoneyNerd

Janine Marsh

Financial Expert

Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.

Learn more about Janine
· May 25th, 2024
Could you legally write off some debt? Answer below to get started.

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This isn’t a full fact find, MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Receiving a letter from a debt collection agency can be a surprise. You might be puzzled about where the debt came from or worried about how to pay it. Over 170,000 people visit our website each month to find answers to these questions, so you’re not alone.

In this guide, we’ll help you understand:

  • What a debt collection agency is and how it works.
  • How to know if the debt is real or not.
  • What to do if a debt collector contacts you.
  • Ways to manage or even write off some of your debt.
  • How to get help if you can’t afford to pay your debt.

Research shows that 64% of UK adults find interactions with current debt collectors stressful1. So, we understand how you feel.

But don’t worry; we have a team of experts who know a lot about debt. We want to provide useful information that can help you figure out your next steps and the best way to move forward.

Let’s dive in.

Could you legally write off some debt?

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

What is a Debt Recovery Agency? 

Debt collection agencies are companies that specialise in chasing debts. This means that they will contact you in regards to any debts you have and get you to pay up. 

There are two main types of scenarios through which a recovery agency might get involved. These are: 

  1. Your Creditor has Hired a Debt Recovery Agency 

Creditors often specialise in lending and collecting their debts. However, most of them do not specialise in chasing down debts if they are unable to get them repaid in a straightforward manner. For cases such as these, creditors might hire a debt recovery agency for third-party collection, which would then contact you on behalf of your original creditor in order to recover your debt and pay it back to them. 

In this case, your original creditor is still the one to whom you owe the debt. 

  1. Your Creditor is Dissatisfied with the Amount You’re Paying them, and so They have Decided to ‘Sell’ Your Debt to a Collection Agency 

The original contract you signed with your creditor gives them the authority to do this if your account has defaulted. 

This involves your creditors essentially ‘selling’ your debt. Debt collection agencies buy billions of debt annually at rock bottom prices – at an average of 10p to £1! 2

It’s an attractive option for creditors who aren’t confident you’ll be able to pay them back within a reasonable amount of time.

After this, your original creditor is completely out of the picture, and the collection agency that are now chasing the purchased debt becomes the legal owner of your debt, i.e., they are not working on anybody’s behalf. You would have to pay the money directly to them. 

What can they Do? 

Keep in mind that a recovery agency, as well as debt collectors that are employed under them, do not have any extra-legal powers over you. They cannot threaten or force you with any kind of legal action as they don’t have that authority over you. 

Not to mention that all collection agencies operating within the UK are authorised and regulated by the Financial Conduct Authority. They have strict guidelines in place that determine how debt collection services should operate. 

If you feel that a collection service is violating any of the guidelines regulated by the Financial Conduct Authority, you can opt to report the debt collector to them. 

Keep in mind that you are the one in control.

While a debt collection agent is allowed to call you on weekends or at irregular hours, they can’t be unreasonable, and this behaviour can be seen as harassment. They can also not visit you at your home if you tell them not to. Debt collectors also cannot take your possessions or your wages forcibly in order to cover your debt.

If you think that a debt collection agent or agency has not stuck to these rules, you can make a complaint. I detail this process below.

Collection agencies can take you to court if you refuse to pay legitimate debts. However, this is unlikely to happen if you prove to them that you are trying your best to pay off your debts, considering what you can afford.

As long as they’re satisfied that you’re working on paying off your debts to the best of your abilities, they will not take you to court. 

Your Rights

I’ve put together this quick table that will help you better understand your rights when dealing with debt collectors. For more information, be sure to check out our detailed guide.

Debt Collectors Can But They Can’t
Contact you by phone or mail. Call you after 9pm or before 8am.
Conduct home visits (on rare occasions) and knock on your door. Forbily enter your home, or stay if you ask them to leave.
Threaten to take you to court by suing you for payment on a debt. Harrass you, including threats of violence, repeated calls and visits, or abusive language.
Negotiate a debt settlement. Tip: make sure to get this new arrangement in writing. Visit your workplace.
Access your bank account, but only after a court judgment has been made. Take anything from your home or threaten to do so.
Sell your debt. Speak to other people about your debt without your permission.
Contact you frequently. Keep doing so if you request that they reduce communications.

How a debt solution could help

Some debt solutions can:

  1. Stop nasty calls from creditors
  2. Freeze interest and charges
  3. Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:


Monthly income £2,504
Monthly expenses £2,345
Total debt £32,049

Monthly debt repayments

Before £587
After £158

£429 reduction in monthly payments

If you want to learn what debt solutions are available to you, click the button below to get started.

Get Started

What Should I Do if they Contact Me? 

I always recommend responding to debt collectors – even just to question the debt’s validity. Remember, you have the right to request proof of the debt. They have to prove it or they can’t charge you.

You must make sure that you don’t ignore a debt collector when they attempt to contact you. If your debt is legitimate, then ignoring debt collection agencies will just make it worse. 

What if the Debt isn’t Legitimate?

This is the very first thing you must make sure of. Ask the debt collector for some ID; they are legally obligated to prove they work for who they say they work for. Once you are satisfied that the collector is who they say they are, ask them what debt they are contacting you in regards to. 

If you do not recognize the debt that they are talking about, tell them so and tell them that you’ll look up whether or not you have such a debt. 

Afterwards, you should look through your credit report to make sure that you’re not forgetting about any debt that you have. If you’re absolutely sure that the debt the collector is talking about does not exist, then you don’t have to follow up with them. 

Disputing a debt that you don’t recognise is not always necessary – if the debt collectors can’t proof that you are liable for it, you are under no obligation to pay.

If they contact you again, you can inform them that you don’t recognize the debt and that they should stop calling you. If they keep on calling you after you’ve proven that the debt isn’t yours, you have the right to report to the FCA in the UK. 

What if it is Legitimate?

On the other hand, if the debt they are talking about is legit and you are indeed liable for it, then I suggest you cooperate with them as much as possible. Explain to them that you are doing your best to pay off what you owe. 

You may be able to negotiate an alternative payment structure or payment plan to help you. Keep in mind that the repayment of debt that you are liable for is the easiest way to get your credit file healthy, and get debt collectors off your back!

If you have a copy of your income and expenditures, it’s a good idea to send it to them in the form of a letter. This will help you prove that you’re doing all you can to pay back what you owe and will also work towards making your debt collectors more understanding of your situation. 

If you feel that you are unable to pay off the money you owe, you don’t have to worry as there are several different options for you in the UK that you can opt for. Some of these options are an Individual Voluntary Arrangement (IVA), a Debt Management Plan (DMP) or a Debt Relief Order (DRO). 

» TAKE ACTION NOW: Fill out the short debt form

What about Old Debt?

If it has been 6 years – or 5 years in Scotland – since you last paid towards your unsecured debts and you have not written to your creditor about your debt during this time, it is statute-barred.

This means that the debt is not enforceable. It still technically exists, and you still technically owe the money, but there is no legal way for you to be forced to pay or for the debt to be enforced.

Keep in mind that not all debts become statute-barred!Any HMRC debts, for example, will stay enforceable for decades. Any debt that had a County Court Judgement (CCJ) attached to it during the 5 or 6-year window it will be enforceable for the duration of the CCJ.

If you know that your debt is statute-barred, you need to tell the debt collectors and not just ignore them. You can write to them and explain your situation with my free statute-barred debt letter template. This won’t reset the 5 or 6 year timer for statute-barred debts.

If you are unsure about the status of your debt, I recommend getting some free advice from a debt charity. I have linked a few organisations towards the bottom of this page. This won’t restart the statute-barred timer either!

Can They Visit My House? 

While this is definitely a possibility, it is quite uncommon. You will more than likely receive a letter or phone call from a collection agency regarding the debt you owe as these options are much cheaper and less time-consuming than a home visit. 

That being said, you can definitely receive a visit from a collector. If this happens, keep in mind that they do not have any extra-legal powers. You don’t even have to open the door for them if you don’t want to. 

If you prefer that they don’t visit your home in the future, you can tell them that, and they are obligated to respect your request as much as is reasonable, according to FCA guidelines. But they are allowed to contact you in some way.

You should preferably request them to contact you via either of these two ways: 


Phone calls are very common for a collection agency. The advantage of phone calls is that they are convenient and comparatively less time-consuming. 

The disadvantage of talking to collectors over the phone is that you won’t have any proof of any agreements that you make with them. I highly suggest for any significant agreement that you make with them, you must get it in writing. 


Being in contact with your collectors via letters is also quite common. The advantage of communicating via letters is that you’ll have all the proof you need to state your case in the case of any disputes during the debts collection process. 

The disadvantage of this is that it can be quite time-consuming. 

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.


I’d recommend this firm to anyone struggling with debt – my mind has been put to rest, all is getting sorted.

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Debt Solutions if You Can’t Afford to Pay

A debt solution can be useful if you are managing unaffordable debt.

If you’re thinking of opting for any debt solution, I highly suggest you seek advice from a professional who will be able to look at your situation in detail and walk you through your options. That way, you are going to go for the best debt solution for you.

There are several debt charities that offer these advisory services for free. I have linked them below.

Debt Management Plan (DMP)

A DMP is an informal debt solution that lets you pay off your debts via a single monthly payment.

Because it is informal, it is not legally binding so you are not tied into a DMP for a minimum number of payments.

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement between you and your creditors. You agree to pay a monthly sum that is distributed amongst your debts, and your creditors agree not to contact you during your IVA.

IVAs typically last for 5 or 6 years, and any outstanding debt is wiped off when it ends.

Keep in mind that IVAs are not suitable for everyone. You need to owe several thousand pounds to more than one creditor to be eligible. You also need to demonstrate that you have some disposable income every month.

Trust Deed

IVAs are not available in Scotland. Instead, you will need to opt for a Trust Deed.

Trust Deeds work in the same way as an IVA – you pay an agreed sum each month that is shared amongst your creditors, they can’t contact you, and any leftover debt at the end of your Trust Deed term is written off.

Debt Relief Order (DRO)

A DRO is a good option for those facing financial hardship with no assets and little income.

For 12 months, you make no payments, but your creditors freeze your interest and don’t contact you.

If your finances haven’t improved during this year, you may be able to write off your unsecured debts.


If you have debts but no realistic possibility of ever paying them off, you may need to declare bankruptcy.

Bankruptcy has an unfair stigma attached to it as it may be your only way of getting a financial fresh start. That said, it is a serious financial situation that should not be taken lightly.


Sequestration is the Scottish version of bankruptcy.

If you have little income and no valuable assets, you may be able to apply for a minimal asset process bankruptcy (MAP). A MAP is a quicker, cheaper, and more straightforward version of sequestration, so worth considering.

How Do I Complain?

If you think that your debt collection agency has been unreasonable or behaved inappropriately, you can make a complaint. You can also make a complaint if you feel that they have broken any of the Financial Conduct Authority’s (FCA) guidelines.

Fortunately, the debt collection complaints procedure is quite straightforward.

Make your first complaint to the debt collection agency directly so that they have the chance to sort out the issue themselves. If you feel that they have not taken your complaint seriously enough or have not addressed your issue properly, you can escalate matters.

You can make any secondary complaint to the Financial Ombudsman Service (FOS). They will investigate and, if your complaint is upheld, the debt collection agency may be fined. You could even be owed compensation.

Can They Affect My Credit Score?

Yes, debt collectors can affect your credit score.

Once you have missed a few payments or defaulted on an account with your original creditor – which negatively impacts your credit score too – and your debt is sold to collectors, it will appear as a second collection account on your credit file.

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 have a CCJ, 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.

Could you legally write off some debt?

Answer below to get started.

How much debt do you have?

This isn’t a full fact find, MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.


  1. Indebted Debt Collection Survey
  2. Jubilee Debt Campaign

CONC 7.3 Treatment of customers in default or arrears (including repossessions): lenders, owners and debt collectors

CONC 7.9 Contact with customers

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The authors
Scott Nelson MoneyNerd
Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.
Janine Marsh MoneyNerd
Debt Expert
Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.