Debt collectors are normally sent by creditors to collect payment for an outstanding debt. This article answers the question, what is a debt collector and how they differ from bailiffs.
Is a debt collector the same as a bailiff?
You should be mindful of the fact that a debt collector is not the same as a bailiff and they have no right to seize goods or enter your property. A debt collection agency does not send bailiffs. Instead, they try to come to an arrangement with you on how you’ll pay the debt. If a debt collector does call you are under no obligation to speak to them. They also have no powers whatsoever to enter your premises. Please see our article, how to deal with bailiffs for more information on dealing with bailiffs.
Please note, it is possible to get private debt collectors to collect your behalf but it may be expensive. A cheaper option may be to go through the courts.
How do I know which creditors I owe money to?
One way to find out about the debts that you have is to apply for a credit report from Equifax or Experian This .should outline all of your creditors and the amounts you owe. You can then contact the creditors to inform them of your current contact details and make an offer of repayment.
If a debt has not been acknowledged or had any payments made towards it for 6 years then it may be statute-barred (see our article on how to deal with debt for more information). This means that you are still liable for the debt but the creditor cannot enforce the debt through the courts. This prevents them from taking action through the courts to recover the money but does not stop them from calling you and sending letters. If you are concerned that you will not be able to repay your debts it is advisable that you approach your local Citizens Advice Bureau or another debt counselling charity for advice.
Can a debt collector come to my home?
If creditors do not receive any response or information then they may take further action (i.e. send a debt collector or court action). In the case, they receive a response then they are less likely to take further action. If you provide them with an update, a letter, something outlining your current circumstances they may put a note on your account and allow you a short period of time to provide them with further information. A financial statement outlining your income, daily living costs and debts is the usual tool for doing this.
If a collections company wishes an agent to come to your house and talk to you about the debt then you can simply contact them and decline their offer of a chat. They do not have any powers to force this issue but they are allowed to ask the question about whether they can come round for a chat about it. Anyone, even complete strangers, can ask you that question and you can always make a decision about inviting someone to your home or not.
If you are receiving letters addressed to someone else who is not living at your address, then the best thing to do is to return them to the sender. If a person ever knocks on the door and asks to speak to that person then you would tell them that the person does not live in the property and has not done so for a while. They will then have no further need to attend the property and will have to make their enquiries about the person they are trying to find elsewhere.
Can debt collectors clamp my vehicle?
A debt collector cannot immobilise a mobility lease vehicle. Clamping, Immobilising and towing away vehicles is restricted to public bodies and organisations that have lawful authority to do so. As a couple of examples; Driver and Vehicle Licensing Authority (DVLA) can clamp or tow away vehicles as part of its work in combating evasion of Vehicle Excise Duty, or the Vehicle and Operator Services Authority (VOSA) to prevent the use of unroadworthy vehicles on the road. If you raise a complaint with the bank about your liability for the debt then it can be investigated further, if you are unhappy with their response then you are able to escalate the complaint to the financial ombudsman service.
Please note, debt collectors have no rights to seize a vehicle. Also, a vehicle that is solely required for business/employment purposes is exempt from seizure.
How to pay a debt collector?
The first thing you should do is put together a list of all the income coming into the household and all the expenditures (rent/mortgage, council tax, food, car costs, TV license, etc) leaving the household. This is known as a financial statement. You should subtract the total cost of your expenditures from your income. If there is money left at the end of the month this is known as your disposable income and it is from this money that you will repay your creditors. If there is no money or the figure is a negative figure, please seek free debt advice.
You should then make a list of all your creditors. Put the largest creditor first, and then the next largest, the whole way down to the creditor you owe the least to. Add up the total amount that you owe to your creditors. For each creditor do the following calculation: Creditor A / Total amount of debt * 100% = _%
The percentage figure you arrive at for each creditor will be the same percentage of disposable income that you will allocate to that creditor. This process is known as ‘pro-rata’.
You should then write to each creditor, enclosing a copy of your financial statement and an offer of payment, based on the calculation above. The creditor will then respond to you letting you know whether they have accepted your offer or not. If they do accept it, it is up to you to ensure that this payment is made every month.
Alternatively, you should seek free debt advice from an organisation that will be able to fully assess your situation and give the appropriate advice.
What will happen if I can’t afford to pay the debt collectors?
If you do not pay your debt to debt collectors, you cannot go to prison for normal credit/debt. Unless it is council tax or another preferential debt there is not a chance. Any debt collector who threatens you with prison is committing an offence under the Administration of Justice Act. If you ignore a debt, the creditor can take you to county court. This does not mean prison but it can be expensive and will have a serious effect on your ability to get credit in the future.
We should all pay our debts, assuming you do owe the money, but at a rate, you can afford. If you do owe the money then you need to make an offer to the creditor based on your income and expenditure. And then you need to make those payments (see the section above).
Can a debt collector threaten me with bankruptcy?
Many debt collectors and agencies use the threat of bankruptcy. It rarely makes commercial sense for them to make someone bankrupt but you should treat the threat seriously.
It is against the OFT guidelines to pursue a debt which is in dispute and the creditor could get themselves in trouble if they actually bring the matter before a bankruptcy judge without resolving any outstanding dispute.
The crunch comes if you receive a statutory demand. A statutory demand may be served on you in person. If you get a statutory demand you should act immediately and get some advice from an insolvency practitioner or a local CAB.
Will debt collectors come after me?
If you receive letters addressed to someone who no longer lives in the house then you can put them back in the post and write on them to return to sender as the person is not known at your address. If anyone knocks on your door asking to speak to someone who does not live there then you are under no obligation to let them in and can simply say that the person does not live there.
You can show them proof of tenancy agreement, council tax bill if you wish but you can just tell them and you do not have to let them in your house. When collecting a debt owed they can only ask that the person liable for the debt must pay it back, if you are not linked to the debt in any way then you cannot be asked to pay it.
Please note, debt collectors can not come after anyone who is aged 17 or under. If you are a parent of a minor in debt, the debt collectors will come after you for the debts. You may want to read our article, how to deal with debts for more information on who is liable for debts.
Can debt collectors chase me overseas?
It depends on which country the debt is from and if the UK has a reciprocal agreement with that country. If it is a country that we have a reciprocal agreement with then the creditor will need to enforce it in the country the debt was obtained in and can then enforce it through the High Court in the UK. If the creditor does this they will then have the same rights of enforcement as if a UK creditor obtained a County Court judgment in the UK.
Please note, a creditor does have the power to collect on debt within the EU. Further to that, benefit offices throughout the EU are working in increasingly closer conjunction with one another with regard to recouping monies owed.
If you do not pay the debt then they will continue to pursue the debt, it is not going to be possible to define what they can, or will, do as this depends on the country you are in and how easy it will be to ask for the debt. In some countries actions can be taken in someone’s absence, eg. if you are pursued for English debt in England then it is possible to receive County Court judgments or even be made bankrupt. If you have a debt to the German benefits system then there should be some form of appeals and disputes process that you would be able to follow. You may need to seek advice from someone who deals with the German benefits system.
Can my bank transfer my debts to a collection agency?
It is perfectly normal for a bank to transfer your debts to a collection agency. If you look at the communications you have received from the collections agency you may find that it says they are acting on behalf of their client and in this case, the client would be the bank. This could simply mean that the bank has taken a business decision to outsource their debt collection work rather than employ additional staff to do this. The collections agency is working for the bank and nothing has changed about who owns the debt.
Sometimes financial institutions sell debts to debt purchasing companies who then own the debt and collect the money. Sometimes companies are bought and sold and you can end up owing money to a different brand. When these things happen it usually means that you simply change over to making payments to the new owner as there is no longer any debt outstanding with the original bank.
Are my benefits safe from debt collectors?
The answer to this question may depend on the type of benefit, the type of debt and the type of debt solution being used to deal with the debt. In bankruptcy, there is no requirement to make monthly payments into the bankruptcy by a bankrupt who is fully supported by benefits. However, deductions can be made from some benefits to pay debts owed and you can see details on the Gov.uk website.
It is possible to have deductions made from certain benefits (including income support, universal credits, income-related ESA, Income-related JSA and pension credit) for money owed on debts such as rent arrears, council tax arrears, child support maintenance etc. However, there is a limit to the number of deductions (3 maximum) that can be made at any one time and depending on your circumstances the deduction can be set to a minimum amount of £3.60/week (however this figure may change).
Debt collectors refusing a payment plan, what should I do?
Keep a record of when you contacted the collectors and what you offered etc. Then if they take you to court you can show how they acted unreasonably when offered payment by instalments. I would recommend that you try and set up a payment plan with them again to avoid court enforcement.
How can I stop debt collectors?
If you are receiving letters that are addressed to someone else, who does not live at your address, then returning them is the correct thing to do. If a person ever knocks on your door and asks to speak to that person then you would tell them that the person does not live in the property and has not done so how many years. They will then have no further need to attend the property and will have to make their enquiries about the person they are trying to find elsewhere.
If you feel someone else has acted fraudulently the best thing to do is to approach the police and raise a crime number so that the case can be investigated further.
How to make a complaint
If you do not believe that the debt is still due, or that you have suffered any sort of loss because they failed to notify you of the sale, then you can send a letter of complaint. In the case, you disagree with the response to the complaint you can escalate your complaint to the Financial Ombudsman Service. If you still owe the debt then coming to an arrangement to pay, as you had previously, may be required to ensure that the debt is repaid and does not risk further costs.
Another common mistake some creditors make is selling the same debt to different collection agencies by mistake. This might result in you paying more than once, which you should avoid doing. Instead, you need to ask them to check with the initial creditor. If you think it is the same debt only pay one company and stick to your guns. Ask the other company to check with the initial creditor.