Getting a letter from a debt collection agency is one of those things that makes most people's stomach drop. But it is also extremely common, and understanding what is actually happening makes it much less frightening. Your creditor has either sold the debt to a collection agency or appointed one to recover it on their behalf. Your legal obligations and your rights are the same either way.
Do not ignore it
The worst thing you can do is put the letter in a drawer and hope it goes away. It will not, and ignoring it removes options that are available to you now but not later. Debt collection agencies are permitted to take further action, including applying to court for a County Court Judgment, if they do not hear from you. Responding early keeps you in control of the process.
Ask for proof the debt is yours
You have the right to ask a debt collection agency to confirm that the debt is yours and to provide details of it. Write to them requesting a copy of the original credit agreement and a full statement of account showing how the balance was calculated. They must respond before taking further action. This step is especially important if you do not recognise the debt or believe the amount is wrong.
Check whether the debt is statute-barred
In England, Wales and Northern Ireland, a debt becomes statute-barred if no payment has been made and no written acknowledgement of it has been made for six years. A statute-barred debt is not legally enforceable, although it may still show on your credit file. If the debt you have been contacted about is old, check the date of your last payment or written acknowledgement before responding.
Know your rights around contact
Debt collection agencies in the UK are regulated and must follow FCA guidelines. They cannot contact you at unreasonable hours, use threatening language, pretend to have more legal powers than they do, or pressure you into paying more than you can afford. If you feel a debt collector is behaving unfairly or breaking the rules, you can report them to the FCA and make a formal complaint.
Get free advice before you pay anything
Before making any payment or entering into a repayment arrangement, it is worth speaking to a free debt advice organisation. StepChange (stepchange.org), National Debtline (nationaldebtline.org), and Citizens Advice can all help you check the validity of the debt, understand your options, and negotiate an affordable arrangement if the debt is genuine. Their advice is free, impartial and confidential.
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Ask Fin provides general guidance only, not regulated debt or legal advice. If you have received contact from a debt collection agency, speak with a free debt advice charity.