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Debt Collection Laws in the UK 

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Scott Nelson

Managing Director

MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

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Janine Marsh

Financial Expert

Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

Learn more about Janine
· Feb 6th, 2024
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Debt Collection Laws UK

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.

Confused by a surprise letter from a debt collector? Wondering if you really owe this debt? You’re in the right place.

We’re going to make sure you understand the UK debt collection laws for 2023. It’s important to know your rights and what debt collectors can and can’t do. 

In this guide, we’ll explain:

  •  Six common UK debt collection laws you should know.
  •  How to manage if you can’t afford to pay the debt collectors.
  •  Steps to take if you believe you don’t owe the debt.
  •  What action you can take if debt collectors break the rules.
  •  How and where to get free professional advice.

We understand it can be scary and confusing; some of us have been in your shoes. But don’t worry: you’re not alone. Each month, more than 170,000 people come to us for help with debt issues. so we’re here to help you feel more confident about dealing with debt collectors. 

Let’s explore the UK debt collection laws for 2023 together.

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.

Six Common Debt Collection Laws UK

There are many laws and rules that debt collection agencies and creditors must abide by when chasing money from debtors. We have put together seven of the most useful rules for debtors in the UK to be aware of.

By knowing the six debt collection laws below, you will know your rights and be able to deal with debt collectors in a more confident and better way.

#1: A Debt Collector Cannot Discuss Your Debts with Other People

Lots of people who have debt have not found the courage to tell the people they are close with about the fact they have debt or owe money.

It is common for debtors to not tell their close relatives and spouses that they are in debt because they feel embarrassed or don’t want to make them worry as well.

The stress and anxiety caused by the debt are increased by worrying that these people will find out about the debt. The good news is there are laws in place to block debt collection groups from discussing the debt with third parties.

This means your creditors or the debt collector chasing you is not allowed to discuss your debt with colleagues, bosses, employers, spouses and any other person. If they do, it is a serious offence. Confidentiality in debt collection is serious!

#2: They Cannot Pressure You into a Decision

There is no denying that debt collection agencies want the money as quickly as possible. As a result, they tend to apply pressure to make you pay. This may be through repeated communications or many other rule-breaking techniques.

If you tell anyone working for the debt collector company that you are deciding what to do, they should respect your statement and give you time to find the right debt solution for you. They can’t use unfair tactics to try to pressure you to pay.

#3: They Cannot Refuse to Explain Confusing Jargon

The world of finance is often confusing for the average person. Most people don’t have any financial knowledge further than a typical high street bank account. This is why consumer protection groups – like the FCA – try to keep a healthy level of transparency in debt collection.

And that’s okay because debt collectors are required by law to not use technical jargon on purpose to confuse you.

If they set out to make you confused because they use technical words that you don’t understand, you can ask them to explain what they mean.

The use of technical terms is often part of their pressuring techniques to make you just go along with what they say – or ask of you.

#4: They Must Adhere to Your Contact Preferences

Debt collector harassment is one of the biggest complaints among debtors and it is an illegal activity. Debt collectors will call, text and maybe even show up at your home to discuss the debt with you. If they do this repeatedly, then it is classed as harassment.

The best way to deal with this rule breach is to provide them with contact preferences, i.e. the times you are willing to speak to them on the phone. The company must then only contact you during these times.

#5: They Must Not Claim to Have Legal Powers

The term debt collector is used to discuss two groups within the debt collection industry, but these two groups have significantly different capabilities.

Debt collection agencies are one of these groups. They are really just administrators chasing debt, and they could lean on the courts to get their money.

But debt agencies may rely on another group to help get the money – bailiffs who can enforce the debt. Sometimes, these bailiffs who can repossess items to pay off the debt are referred to as debt collectors as well.

It is illegal for a debt collection agency to pretend or give the impression that they have the same powers as bailiffs. They cannot come inside your home, and they certainly can’t take your items to pay off the debt. This would be theft.

If this has happened to you, you should make a complaint. Misrepresentation in debt recovery is taken very seriously.

#6: They Must Prove You Owe the Debt

And we have saved the best for last. Just because someone says you owe the debt doesn’t mean they have the right to demand money. They must be able to prove that you owe the debt with a signed agreement or similar evidence.

Without proof that you owe the debt – even if you know you owe it – it is hard for the debt collection agency to convince the courts that you are responsible for the debt. And thus, it is difficult for them to get a CCJ to make you pay

» TAKE ACTION NOW: Fill out the short debt form

What Does the FCA Do?

The Financial Conduct Authority (FCA) publishes rules and guidance which debt collectors and creditors have to follow. If these regulations are not followed, the company can be fined or even closed down.

If you have been treated unfairly by a debt collecting company or a credit company, the FCA has the power to order that company to pay you compensation or any refunds that you are owed.

Keep in mind that the FCA does not investigate individual complaints.

If you need to complain about a company, you will have to contact the Financial Ombudsman Service (FOS).

Not sure if a company you are dealing with is part of the FCA? You can check the register.

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:


Situation

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.

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What If Debt Collectors Break the Rules?

As with all things, there are legal repercussions of breaking debt collection laws!

If the debt collectors or creditors you have been dealing with have broken these rules, you can make an official complaint. First you are required to complain directly to the debt collection company, and if the issue is not resolved, the complaint can be forwarded to the Financial Ombudsman

Our team at Money Nerd has written a complete guide on complaining to the debt collection ombudsman. Read it now to understand the process in detail – and you could be due compensation!

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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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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How do I Complain About Debt Collectors?

If you think that your debt collection company 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.

Make your first complaint to the debt collection company in question 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, your debt collection company may be fined. You could even be owed compensation.

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.

The authors
Scott Nelson Profile Picture
Author
MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh Profile Picture
Debt Expert
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.