Debt Collectors - How to Deal with Them, Your Rights, Complete Guide, FAQs & More
There’s a chance you may be contacted by a debt collector if you’ve owed a debt for some time.
They get in touch with you in regards to your debt in one of two cases.
The first is if your creditor has asked them to collect their debt from you.
The second is if your creditor has sold your debt to them.
In either case, it’s important that you know what your rights are and what a debt collector can and can’t do.
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What is a Debt Collection Agency?
A debt collection agency is a company or organisation which specialises in collecting debt from debtors.
They can either be hired by your creditor who may be having trouble collecting debts from you or your creditor can even sell their debt to the agency.
If this happens, then the agency becomes the legal owner of your debt.
How Do I Deal with Debt Collectors?
If a debt collector is trying to get in touch with you, it’s important that you don’t ignore them.
It may seem tempting but oftentimes, ignoring a debt collector only leads to even more trouble. Instead, I suggest that you cooperate with the debt collector as much as you can. Make sure that the debt they are contacting you in regards to is indeed yours.
After that, you can discuss your situation with them to reach a payment plan that is acceptable to them as well as affordable to you. The most important thing to keep in mind when dealing with debt collectors is that they do not have any extra-legal powers.
They cannot forcibly come into your home and are not allowed to pressure you into paying any more than you can afford.
How Can I Find Which Debt Collectors I Owe?
There are several ways through which you can find which debt recovery agencies you owe money to.
One of the best ways of doing this is by getting a hold of your credit file and going through it in detail.
It lists your financial dealings in detail and will definitely mention any debts that you have pending which you need to attend to.
Should I Pay Debt Collectors?
When a debt collector contacts you, the first thing you should do is ask them about the details of the debt they’re contacting you in regards to and then determine whether it belongs to you or not.
There’s a chance that a debt collector may be contacting you about a debt that isn’t even yours.
In that case, you don’t have to pay that debt. There are also some other cases in which you don’t have to pay debt collectors. For example, if your debt is statute-barred or if you’ve already paid off the debt.
That being said, if your debt is legitimate, then you definitely have to pay debt collectors. If you can’t afford to pay it, then I suggest seeking debt advice from an independent charity.
Can a Debt Collector Refuse My Payment Plan?
The short answer to this is yes.
However, keep in mind that in most cases, a debt collection agency is working on behalf of your original creditor. Thus, the ultimate decision is usually being made by the creditor. The debt collection agency would just be conveying the decision of the creditor to you.
The ultimate decision being made by the agency can happen if they are the legal owner of your debt. This happens when your creditor sells your debt to them.
A creditor is allowed to sell your debt to a third party if there’s a clause in your original credit agreement that mentions this. In this case, the original creditor completely ceases to be involved in your debt and you have to pay money directly to the agency.
If a debt recovery agency refuses your payment plan, I suggest seeking debt advice from an independent charity such as StepChange. You can also opt to contact your creditor and tell them about your situation in detail. Make them understand that you’re doing your best to pay them back considering your financial situation.
What Will Happen if I Ignore Debt Collection Agencies?
Ignoring debt collection agencies is never a good idea even if you believe the debt isn’t yours.
If the debt isn’t yours, then ignoring a debt collector will not make them stop contacting you. You will constantly be annoyed by letters, phone calls and even house visits if you don’t act to prove to them that the debt does not belong to you.
If the debt is indeed yours, then ignoring them is an even worse idea. Not only does this make you vulnerable to more drastic action by your creditor, but it can also cause your debt to grow. This is because your creditor can keep adding interest and additional charges on your debt while you refuse to address it.
How Long are Debt Collectors Allowed to Try and Collect Debt from Me?
The short answer to this is six years. However, there are certain debts such as mortgage shortfalls which have a limitation period of twelve years rather than six years.
Not to mention that the limitation period has certain rules in order to be in place. Making a payment towards your debt or even acknowledging your debt in writing resets the limitation period. A debt becomes unenforceable only if your creditor has not contacted you regarding the debt in over six years.
What is a Debt Collector Allowed to Do when Trying to Get Me to Pay My Debt?
It’s understandable to be intimidated when a debt collector contacts you but you must keep in mind that they are bound to operate under strict guidelines defined by the Financial Conduct Authority. These guidelines are in place to protect you from any kind of unfair treatment.
Many people often confuse debt collectors with bailiffs who have some extra-legal powers. Debt collectors, however, do not.
Considering how a lot of people confuse debt collectors with bailiffs, it’s easy to see why so many people are clueless about what debt collectors can and can’t do. They cannot forcibly enter your home and you don’t even have to open the door for them if you don’t want to.
You can also ask them to only contact you via letters if you feel uncomfortable with talking over the phone.
Can a Debt Collection Agency Take Me to Court?
A debt collection agency can definitely take you to court. If they are the legal owner of your debt, then the decision to do this would be made solely by them. However, if they have been hired by your original creditor, then the decision to use court action against you would be made by your creditor.
While they can definitely take you to court, this is typically their last resort when they feel that no other tactic is going to get you to make payments towards your debt.
If you feel that a debt recovery agency is going to be taking action against you, I suggest you seek debt advice from a professional. They can help you formulate a payment plan after reviewing your financial situation.
You can then propose this plan to your creditor or debt collection agency (depending on who the legal owner of your debt is) and get them to stop pursuing court action against you.
Here’s what you can do if a debt recovery agency does take you to court.
I Don’t Want Debt Collectors Coming to My Home, What Should I Do?
You shouldn’t worry too much as home visits are fairly rare for people who collect debts. This is because it costs money and is much more time-consuming than a simple phone call.
However, if you’d like to make sure you don’t get a home visit by a debt collector, you can write to them and explicitly tell them this. If they show up at your home after you’ve specifically told them not to, you can take action against them.
I’m Opting for a ‘Full and Final’ Settlement Offer. How Much Will my Debt Collectors Settle for?
This depends entirely on your situation and the amount of debt you owe. Typically, in a ‘full and final’ settlement offer, the lump sum given to the creditor/debt collection agency is typically less than the original debt amount.
Your creditor will only agree to this if they are dissatisfied with the monthly payments you’ve been submitting towards your debt; They would rather have a lesser lump sum payment now.
Again, in a situation like this, I suggest getting debt advice from a professional. They will analyse your situation and help you determine the amount that you should propose to your debt collectors.
How Can a Debt Collector Find Me?
In today’s digital age, everything is connected and it does not take a lot of resources to locate a person.
Even if you don’t have much of a digital footprint, debt collectors have several tools up their sleeve that they make use of to find you.
An example of this would be your credit report which has basic contact information as well as information about where you reside, etc.
Apart from that, a debt collector can also find you through government databases as well as by inquiring from government agencies that may have your details.
Some debt collectors also get information about you through Data Brokers which gather information about people through online surveys, etc.
You may have agreed to give up this information unknowingly such as through a license agreement for a software you may have installed years ago. Hence, this technique does not breach any data protection laws.
What Rights Does a Debt Collector Have?
As mentioned earlier, FCA guidelines are in place to protect you from unfair practices that a lot of debt collectors tend to employ. While some actions of a collector may seem intrusive, you may be surprised to find that they do indeed have the right to do them.
For example, you can’t stop a collector from contacting you entirely if the debt you owe is legitimate. Of course, it’s their job to secure that debt from you and it’s not something you can stop them from doing.
There are other actions which a collector certainly doesn’t have the right to do. For example, data protection laws ensure that a collector discusses your debt only with you; They are not allowed to share the details of it with any of your friends, family or acquaintances.
If you feel that a debt collections agent is doing something he or she does not have the right to do, you can take actions to hold them accountable.
How Do I Stop Debt Collection Letters from Coming to My Home?
If the debt isn’t yours, you can write to the debt collector and tell them to stop sending you letters. It’s a good idea to include evidence that proves the debt isn’t yours as well.
If they keep sending you letters after you’ve proven the debt isn’t yours, then you can report them to the Financial Conduct Authority.
However, if the debt is legitimate and yours, then you can’t stop debt collection letters from coming to your house. Of course, it’s in your credit agreement that your creditor has the right to employ an agency to pursue you for your debt and this is them exercising that right.
You can stop debt collection agents from visiting you at home and calling you but you can’t stop them from sending you letters.
Why Did My Creditor Sell My Debt to an Agency? How Much Do Debt Collectors Buy Debt for?
Creditors normally sell their debt to an agency when they feel that they’re going to have a hard time recovering it from you. Typically, an agency buys a debt for a lower amount than the debt is originally worth.
Your creditor is willing to make this compromise because they get a lump sum of money immediately rather than waiting months or years to get it from you in instalments.
If your debt has been sold to a recovery agency, you should expect to get a lot more calls and letters regarding your debt than you used to. A typical creditor does not specialise in chasing debts but a recovery agency does. They will be very persistent in contacting you until you are able to pay off your debts.
In the end, all I have to say is that knowledge is power. As long as you know what a debt collector can and can’t do, you can make the debt collection process a lot easier for yourself as a debtor.
Cooperate as much as you can with debt collectors so that the whole process is smooth and streamlined but also stand up for yourself and report them if you feel you are being treated unfairly.