Most debt collectors will chase you until they receive full payment of the debt or you agree on a gradual repayment plan, but there are some exceptions.
What is a debt collector?
A debt collector is an individual hired to collect unpaid debts on behalf of a creditor (someone you owe money to). Some debt collectors work for themselves on a self-employed basis but most tend to work for larger debt collection agencies or debt collection companies.
Typically, debt collectors are hired when creditors have been unsuccessful in collecting delinquent debts and don’t have the time or resources to continue chasing them. Due to the costs involved in the debt recovery process, it’s usually more cost-effective to pass the responsibility to a third party.
Once a debt has been passed on to a debt collector, your original creditor will no longer contact you or chase you for payment – you’ll get a letter informing you of the new owner of your debt once it has been handed over.
Remember, just because your debt has been passed to a debt collector, it doesn’t mean your original creditor has given up. The debt collector will usually be paid a portion of the money collected but your creditor still receives most of the money they are owed.
Is a debt collector the same as a bailiff?
The terms ‘debt collector’ and ‘bailiff’ are often used to describe anyone who collects debts, but they are not the same.
For example, a debt collector usually works on behalf of a debt collection agency while a bailiff (officially called an enforcement agent) works on behalf of the court. This means that they have more legal power to enforce a debt and can take further legal action against you to get you to pay if necessary.
Similarly, most debt collectors are hired to recover consumer debts, such as payday loans, personal loans, and overdrafts, while bailiffs are authorised to collect debts of higher legal status, such as criminal fines, child maintenance arrears, and income tax.
Put simply, a debt collector has no more legal power than your original creditor and can only ask you to repay a debt.
How do I know if a debt has been passed to a debt collector?
If your debt has been passed to a debt collector, you’ll usually be informed as soon as possible via a letter sent to your address. They may even give you a last chance to repay what you owe before officially passing the debt on.
The letter will be sent from your original creditor and will outline the debt in question, including the new owner, how much you owe, and where you should send payment going forward.
Typically, a debt will be passed to a debt collector after you’ve continuously failed to meet the terms and conditions of your original credit agreement and have been served with a default notice.
When do debt collectors give up?
Typically, debt collectors don’t give up chasing payment of a debt until it has been repaid or an agreement has been made to repay the debt in regular instalments.
However, the length of time a debt collector can chase you for a debt in the UK is governed by the Limitation Act (1980). Most unsecured debts, such as personal loans, credit cards, and utility bills, have a limitation period of six years, which means that creditors can chase you for up to six years from the last payment or acknowledgement of the debt.
Once the limitation period has expired, it means the debt is statute barred and can no longer be legally enforced in court. If you’re still being chased for a statute barred debt, you must send evidence that the limitation period has expired.
There are some exceptions to the standard six-year rule and some debts can be chased for longer. For example, lenders can chase you for your mortgage principal for up to 12 years and debts owed to HM Revenue & Customs (HMRC) indefinitely.
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What happens if I ignore a debt collector?
If you’re being chased by a debt collector, you may be wondering what will happen if you try to bide some time by simply not responding to them. However, while debt collectors can’t take legal action against you, it’s still not wise to ignore them.
Further contact
Some debt collectors are only paid when they successfully recover payment of a debt so are unlikely to stop contacting you until they achieve this – even if you ignore them.
Some debt collectors also will ramp up their collection efforts when you ignore them to pressure you into paying what you owe. This could lead to constant letters, phone calls, and home visits.
Credit score damage
Having unpaid debts of any nature will harm your credit score for a number of years.
This damages your creditworthiness (the extent to which you are considered a reliable borrower), which makes it challenging to get a loan or a mortgage.
Legal action
Ignoring debt collectors could mean your original creditor takes legal action against you in the form of a County Court Judgment (CCJ), which will be visible on your credit file for six years.
Once it has escalated to this level, you lose the right to choose how to deal with the debt and the court will decide how it should be repaid.
How do I negotiate with debt collectors?
If you’re being contacted by debt collectors, it’s important to know how to negotiate a repayment plan. We’ve outlined the various steps you should know below:
Prepare yourself
Familiarising yourself with your rights under UK debt collection laws can help you navigate the process more effectively and recognise when you are being harassed or treated unfairly by a debt collector.
Reviewing your income, expenses, and debts can also help you get a better picture of where you stand financially and what you can realistically afford to pay.
Remain calm
It’s important to remain calm when talking with a debt collector – especially during your first contact.
This can help to establish a respectful relationship from the beginning and make it easier to make a suitable offer of payment.
Make an offer of payment
Before you make an offer of payment, it’s crucial you assess your finances to ensure you can afford the amount you are suggesting.
This may involve small payments over a long period or a lump sum payment if you can afford to repay the debt in full upfront.
Negotiate additional terms
Once you’ve made an offer of payment and the debt collector has accepted it, you can negotiate additional terms.
For example, you can ask them to freeze interest and fees to allow you to pay off the debt faster or reduce or pause your debt repayments until your financial situation improves.
Get any negotiations in writing
It’s important to get any negotiations confirmed in writing.
This will ensure you both understand the terms and conditions you should adhere to and is a good way to prevent any potential misunderstandings down the line.
Can I stop debt collection letters?
If you’re being chased for a debt, debt collectors are unlikely to give up and will continue sending you letters until you make full payment or arrange repayment of the debt.
However, you may be able to ask them to only contact you via letter to put a stop to any further phone calls or only contact you at certain times. They are bound by law to respect your preferences.
Furthermore, if you’re experiencing serious financial hardship (e.g. you’ve suffered a job loss or relationship breakdown) you may be able to apply for a debt respite scheme to stop all forms of contact and enforcement action for a set period.
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How do I complain about a debt collector?
Most debt collectors follow a strict set of rules when recovering debts, but there are some exceptions. This includes not adding any unnecessary fees or using threatening behaviour.
However, if you believe you have been harassed or mistreated by a debt collector, you should complain directly to the company they work for. In your complaint, you must provide as much information as possible.
If you’re not satisfied with the response to your complaint, you can escalate it to a third-party organisation, such as the Financial Ombudsman Service. They will investigate your complaint and aim to provide a response within 90 days.
Conclusion
If you’ve missed several payments on a credit agreement, your debt may be passed on to a debt collector or debt collection company. When this happens, your original creditor will stop contacting you and the debt collector will take over the recovery process.
Typically, debt collectors won’t give up until you repay the debt in full or make an arrangement to repay in debt in regular instalments.
The only time debt collectors are likely to stop is if the debt becomes statute barred, you apply for a debt respite scheme, or you come to an agreement with the debt collector.
