How to Manage Debt Collectors
Debt collectors don’t have any legal authority over and above the lender you originally borrowed from. Bailiffs have more powers, but there are steps you can take.
Being hounded by debt collectors is distressing, but you have rights and there are things you can do if they overstep the mark. Here’s a rundown of what powers debt collectors do and don’t have, and tips on the best way to handle them.
What are debt collectors?
When you owe money to a lender and you’ve defaulted on the debt, they might sell it on to a third-party debt collection company, who may then pursue you more aggressively for payment.
But debt collectors are nothing to fear, and they don’t have any legal authority over and above the lender you originally borrowed from.
What debt collectors can do
- Contact you by letter, email, phone or text.
- Call you at work.
- Visit you at home (but it’s unlikely.)
- Take you to court. (This can be avoided if you offer them a payment plan or partial settlement.)
- Keep adding interest and charges. (Although in practice extra charges are usually stopped once the debt has defaulted with the original lender.)
What debt collectors can’t do
- Visit you at work.
- Send you to prison. (You won’t go to jail for non-payment of non-priority debts, such as credit cards, unsecured loans or store cards.)
- Take money from your wages without a county court judgment.
- Force entry to your home and remove goods.
- Harass or threaten you (e.g., calling you several times a day, at antisocial hours, threatening that you could lose your home, putting pressure on you to pay more than you can afford, lying about their legal powers, or telling someone else about your debts). If they do this, you can report them to the Financial Ombudsman Service.
What about bailiffs?
Bailiffs, or enforcement agents, are different from ordinary debt collectors in that they have the legal power to come to your home to try to remove goods equal to the value of your debt. This can include your car, household furniture and electronics.
Usually you will have advance notice that a bailiff will visit, and visits can take place at any time between 6am and 9pm.
Bailiffs are able to enter your home if doors are unlocked, so it is recommended to keep all doors and windows locked. The debt charity StepChange recommends fitting a door chain and ensuring that everyone in the house knows not to open the door to strangers.
When they visit, don’t open the door. You can talk to them through the letterbox or from an upstairs window. Alternatively, you can ask them to go back to their car so you can talk to them there, taking care to lock your front door behind you. Always ask for ID before starting any conversation.
As they are parked outside, cars are easy for bailiffs to get their hands on. If you have a car and are expecting a bailiff visit, consider parking your car well away from your home or in a locked garage.
You can also hide other belongings that bailiffs may take or get them out of your house before a visit. However, if you do this after a bailiff has visited and taken note of the belongings it’s a criminal offence.
How to handle debt collectors when they contact you
Firstly, burying your head in the sand won’t make the problem go away. But if you can’t face dealing with debt collectors yourself, speak to a debt charity and you’ll be given a debt adviser who can advocate for you.
Debt collectors often buy debts for less than they are worth, knowing that the borrower has already defaulted and there’s a chance they might not get any of the money repaid. For this reason, they will often accept a lesser amount or a repayment plan, and may also freeze interest to give you a chance to pay off the debt. You could ask them to accept a ‘full and final’ settlement offer, which means you offer to pay a percentage of the debt if the rest is written off. Send a copy of your household budget and any evidence that other creditors have accepted your settlement offers to help your case.
There’s a statute of limitations on debt, which means if you haven’t acknowledged or paid towards a debt in six years, it becomes unenforceable. If you’re being chased for debt that you don’t think is yours, or is too old to be enforceable, the onus is on the debt collector to prove you owe it.
If you’re finding it stressful to communicate with debt collectors by phone, you can request all contact to be made in writing. There are lots of free template letters available to download that ask collectors to prove ownership of debt, accept a settlement offer or freeze interest, and some can help if you need to file a complaint.
Image source: Getty Images
Hannah is an award-winning journalist with a background in the trade press. She writes about finance, asset management and business for Shares, Citywire, FE Trustnet, and interactive investor. Read more