Debt Collection

What to do when your debt is sold to a debt collection agency

There are many ways that someone can get into arrears with their debts. In many cases, it can be as simple as changing a bank account and forgetting to switch a direct debit, or perhaps an unexpected expense left you short one month. We’re not here to judge, and you may find it comforting to know that many thousands of people up and down the country, (and across the world for that matter) have had troubles with money and one point or another.

One of the darker sides of finding yourself in debt, and perhaps the biggest factor adding stress to your life, is the existence of debt collection agencies and the somewhat questionable tactics they use to make you pay. They’re one of the most misunderstood, and unsavoury industries present in the UK today. Many, many people have been in touch with these agencies and it’s often difficult to believe that the practises they use are allowed in modern Britain.

Debt Collector Practices

re many debt collection agencies across the country, including Moorcroft Debt Recovery, Lowell Financial and PRA to name but a few. They target outstanding debts rigorously, often using invasive tactics. But this article isn’t addressing the way that they chase the debt, it’s pertaining to the way that they attain the rights to your debt.

Lenders will often outsource accounts which are in debt in order to ensure that they can focus their attention on the rest of their business. Lenders will sell debt that has been deemed impaired, which means that they’ve fallen into arrears. Debt purchasers will purchase debt at a sometimes heavily discounted rate and then become entitled to chase the entire debt. The debt collection agencies can then apply charges and interest to the debt if it’s covered to the original agreement. This is a fairly profitable practice and goes some way to explain why they’re so relentless in their pursuit of those who are in debt.

It’s always advised that if you’re being chased for a debt and can’t remember whether the fees and interest being applied were in the terms of your original agreement, you should get in touch with the original lender to establish whether or no the debt has actually been sold.

Organisations who are being chased by debt collection agencies will be covered by something called the Consumer Credit Agreements which are required to be regulated by the FCA (Financial Conduct Authority) unless they are categorised as solicitors, where they will be regulated by the SRA (Solicitors Regulation Authority.) Over the past few years a number of debt collection companies have been disestablished as regulation has been tightened, and made more rigid. These rules are all in relation to treating people fairer and being stricter for violations of these terms.

The regulation includes:

  • They must ensure that they abide to data protection checks before they can discuss your debts and you payment plans. This has also been enforced further following the European GDPR legislation which came into effect in 2018 and allows people further power to question where a company found their details and what information they hold on them.
  • They also take more care that you understand the debt collection process, in particular, if a person is vulnerable, ie If they have health issues or disability. Or if they don’t understand because you speak English as a second language

A debt collection agency may send what they refer to as a field agent or a doorstep collector. They may visit and it is important to remember that they are not bailiffs and are not supported by any laws. You are not obliged to speak to them and if they can not make you feel uncomfortable. You can ask them for proof of ID before you discuss anything with them, something that is highly recommended. If you do get a visit from them, they can’t remove goods from your property and are not able to request any cash payments. If this happens it’s better to contact a debt relief company who can talk to them on your behalf and you won’t have to do anything like these CLICK HERE.

Whether you’re thinking about dealing with it yourself or employing the services of a relief agency who will take care of everything and in many cases can reduce the amount you owe, it’s important that you actually take action and the first thing you can do is evaluate your options. Things like an IVA or a repayment plan are viable options and with the help of a professional company, it should always be a figure that you’re comfortable with and that doesn’t leave you out of pocket. There are various debt management plans that charge a reasonable fee which is often deducted from your monthly payment.

Avoid Court Action

If you choose not to engage or take action it is possible that the debt collection company will take steps to collect the debt through court action, known as a Count Court Judgment (CCJ.) This is a judgment that will impact your credit file and will make it difficult to secure credit of any kind in the future. It’s an avoidable scenario and there are lots of other options, so take a look through our guides to find out more about how we can help you avoid court action or get in contact with a qualified Debt Adviser today.

 

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