Worried about debt collection agencies?

What to do if your debt has been passed to a debt collection agency? If your debts have been in arrears for a while, or you've been sent default notices, you'll almost certainly start to hear from debt collectors. 

This sounds intimidating but it's a normal stage in the collection process for most debts.

The most important thing to remember with debt collection agencies is that they're not bailiffs (or sheriff officers in Scotland). They have no extra legal authority. Debt collectors are either acting on behalf of your creditor or working for a company who has taken on the debt.

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What is a debt collection agency?

Debt collection agencies are companies who specialise in collecting debts where the original creditor can't get arrears repaid.

There are many debt collection agencies in the UK. Some are small and specialise in collecting only certain types of debt. Others are very large companies operating across several countries.

Debt collectors usually work in one of two ways:

1. The original creditor sells or 'assigns' your debt to the collection agency because the amount you're paying isn't enough for them.

The contract you signed with the original creditor allows them to do this after your account has defaulted.

They sell the debt at a reduced amount so they get a lump sum of money. The collection agency becomes the legal owner of the debt and makes their profit by collecting the whole amount from you.

2. The original creditor still owns the debt, but they use a collection agency to contact you.

The collection agency will often be paid a percentage of the money they collect.

You can usually tell which of these applies by checking where letters from the debt collection agency ask you to send payment. If they ask you to continue paying the original creditor, it's likely the debt will still be owned by them.

What can a debt collector do?

Debt collection agencies don't have any special legal powers. They can't do anything different to the original creditor.

Collection agencies will use letters and phone calls to contact you. They may contact by other means too, such as text or email. Letters or phone calls from collection agencies can be worrying. They may refer to court action or that they're sending someone to your home. However, they're not allowed to lie or mislead you about their legal powers or make an excessive amount of phone calls.

They could take court action if you don't pay. But this is less likely to happen if the collection agency is aware that you're seeking help with your debts from an organisation like us, and you're willing to pay what you can manage.

What should I do if a debt collector contacts me?

Don't ignore letters or calls from a debt collector. They're likely to take further action if you don't reply to them.

Some may ask you to pay back the debt in full or in large instalments. You should offer to pay them only what you can realistically afford.

If you've been contacted by a collection agency get in touch with us for free and impartial debt help before your situation gets worse. We can help you put together a budget and work out how much you can afford to pay.

If you're not happy with the amount of calls or the way a collection agency is speaking to you, make a complaint.

Will debt collectors visit my house?

A collection agency can send someone to your house. They may call this person a 'doorstep collector' or 'field agent'.

In practice it's not common for debt collectors to visit you at home; they're more likely to use letters or phone calls to contact you.

What proof must a debt collector provide?

If a debt collection agent calls at your house, remember:

• They must show proof of ID
• They are not a bailiff (enforcement agent) or a sheriff officer, and pretending to be one of these can be a criminal offence
• You don't have to open the door or let them in
• They must leave if you ask them to
• They can't take anything from your house

Find out more about the differences between bailiffs and debt collectors.

Should I pay a debt collection agency?

If a collection agent visits you at home you don't have to make cash payments to them. It's better to call the company later and set up a standing order after you've had a chance to work out what you can realistically afford.

If you do make any payments to a collection agent who calls at your home, make sure you see their ID first, and get a receipt for the payments. Don't let them pressure you into paying more than you can afford.

Watch: Dealing with debt collectors

I'm in a vulnerable situation - should I let the collection agency know?

Dealing with creditors can be even more difficult if you're in a vulnerable situation. Vulnerability can range from dealing with the loss of a loved one to chronic mental or physical health problems.

There are other vulnerabilities you may be dealing with, such as feeling anxious about speaking over the phone, or living with a learning difficulty.

It's important to let your creditors know if you're in a vulnerable situation. Once they're aware of any difficulties you're experiencing, they can offer you more support if you need it.

Will a collection agency add more interest and charges?

If the debt has been sold to a collection agency interest and charges will usually stop. The original creditor may already have stopped these after the account defaulted.

However, in some cases a debt collection agency may continue adding interest and charges. They can only add amounts which are allowed in the contract you signed with the original creditor.

If the debt is still owned by the original creditor they may continue adding interest and charges while the collection agency is contacting you.

I've got more than one collection agency contacting me about the same debt - which one do I pay?

Only one company should contact you about a debt. If you're being contacted by more than one debt collection agency at the same time it's best to contact the original creditor to explain what's happening. They should tell you which company is dealing with your debt and stop the other company contacting you.

Some debt collection agencies use more than one trading name. This means it can look like you're being contacted by more than one company, but it's actually the same company using different names. Check the addresses on letters - if they're the same or very close, you're probably dealing with the same company. Using several names is confusing and you could ask the collection agency to contact you using one trading name only.

A collection agency is contacting me about a debt that isn't mine

This is rare, but sometimes happens if a collection agency is trying to trace someone with a similar name to yours. Read our advice on what to do if you're being chased for a debt not in your name.

How do I know the debt collection agency is real?

Most debt collection agencies in the UK are regulated by the Financial Conduct Authority (FCA) and hold a valid consumer credit licence. You can contact the FCA to check if a collection agency is licensed or check the FCA register.

Most collection agencies are also members of trade bodies such as the Credit Services Association. If their letter shows the logo of a trade body, you can also contact them to confirm they're real.

You can also contact us if you're unsure. We deal with all major UK debt collection agencies and we can tell you if a company is legitimate.

Can you help with debt collection agencies?

Letters or calls from a collection agency are a warning sign that your debts are getting out of control. That means you should get advice now.

Take two minutes to answer a few simple questions, so we can understand the best way to help you.