Debt Collection Agencies


If you’ve fallen behind on your credit card or mortgage payments, there’s a chance you’ll be contacted by a debt collection agency – a company responsible for collecting unpaid debts. This can be a stressful experience, but it helps if you understand how these agencies operate.

In this guide we’ll explore what debt collection agencies are, how they work, what powers debt collection agencies have in the UK, and how you can protect yourself if an agency gets in contact with you.

What powers do debt collection agencies have?

Debt collection agencies don’t actually have special legal powers. They’re not officers of the court, so they can’t do anything different to your original creditors.

What are debt collection agencies?

Debt collection agencies are companies who are brought in by your creditors – the people who owe money to – when you have failed to repay your debts.

If you have repeatedly failed to repay a debt, or your bills are overdue and you have ignored calls or emails from your creditors attempting to collect payment, they may decide to hire debt collectors to do the job on their behalf.

How do debt collection services work?

Debt collectors operate in one of two ways. The most common agencies are those who collect debts on behalf of a creditor, and get to keep a portion of the money raised – which could be anywhere between 25 and 50% of the total fee.

The other type of debt collectors are essentially debt buyers. Their business model is to buy entire debt portfolios from creditors who don’t believe they’ll get their money back. The agency will then attempt to collect those debts for a profit.

Because they only make money when your debt is paid, they can be very persistent when it comes to the debt collection process. There are a few debt collection agencies who are authorised and regulated by the Financial Conduct Authority (FCA), but sadly, some prefer to test the boundaries of what’s appropriate.

What does the debt recovery process involve?

The debt collection process in the UK usually involves three main stages: Being contacted in writing about outstanding debts, being given the opportunity to repay what you owe, and facing the possibility of legal action.

We explore each stage of the process in more detail below.

You’ll be contacted in writing

Debt collection agencies will typically contact you in writing before making a debt collection claim, to notify you of unpaid debts. This may then be followed by phone calls asking you to repay what you owe.

You’ll be given the opportunity to pay the debt

Once debt collection agencies have notified you in writing, and potentially contacted you over the phone, you will be given the opportunity to repay the debts owed. They’ll usually offer you the chance to repay what you owe through a structured payment plan, rather than all at once.

They may seek legal action

If you choose not to repay your debts, or are in dispute over the money owed, you may be threatened with legal action. Collection agencies can apply for court orders like County Court Judgements (CCJs) that will order to repay the amount owed, or you may face more serious consequences.

If a debt collection agent attempts to force entry into your home, you are within your rights to ask them to leave.

What powers do debt collection agencies have?

While being pursued by a debt collection service can be uncomfortable, it’s important to remember that they don’t have any special legal powers. They’re actions are limited to:

  • Sending letters and emails
  • Calling you on the phone
  • Seeking legal action

While it’s possible that an agency will pursue legal action against you, you can stop the process in it’s tracks by contacting them and letting them know you’re willing to pay back what you can afford.

What are debt collection agencies not allowed to do?

When you’re dealing with a debt collection agency, UK laws and restrictions apply. There are certain activities debt collection agencies aren’t allowed to engage in.

They can’t harass you over your debts

While a collect agency might contact you by writing, phone call, or even text in order to collect a debt, they can’t do so repeatedly. If you are being bombarded with messages, or a debt collector contacts you outside the hours you deem appropriate, this is considered harassment.

They can’t contact your friends and family

Similar to the above, UK debt collection agencies aren’t allowed to contact your friends and family. They are only allowed to be in direct contact with the person who owes the debt, so if they’re harassing your family over money you owe, they’re overstepping the mark.

They can’t claim they have legal powers

While it’s possible for a collection agency to take legal action against you, this can only be done through a court of law. They will make an application for a court order and the court will decide whether or not to grant it. The agency itself doesn’t have any legal powers, nor should they claim to.

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Can a debt collector enter my home?

Not without your permission. A debt collection agency can legally enter your home, but first they have to:

  • Contacted you in writing about the initial debt
  • Notified you of their intended visit in advance
  • Enter your home without your permission

If a debt collection agent attempts to force entry into your home, you are within your rights to ask them to leave. If they refuse, or act inappropriately, you can file a complaint with the creditor or bring it to the attention of the Financial Conduct Authority (FCA).

Can a debt collection company seize my property?

If you have given a bailiff permission to enter your home to collect a legitimate debt, they do have the right to seize certain items by way of payment.

Debt collection agencies are not bailiffs, however. Bailiffs are acting on the authority of the court and have certain legal powers. A debt collection agency has none, so they have no right to seize your property.

With a lower credit score, you may find it more difficult to access new credit in the future.

Will debt collection activity impact my credit score?

Your debts will only be passed from your original creditor to a debt collection agency if they’re well past due, and this kind of debt collection activity can be harm your credit rating.

Any visit you receive from a debt collector, as well as other forms of debt collection activity like phone calls and emails, have the potential to be listed on your credit report.

This kind of activity sends a clear signal to lenders that you are someone who has had trouble repaying what you owe, so your credit score will decrease as a result. With a lower credit score, you may find it more difficult to access new credit in the future.

How can I protect myself against debt collection agencies?

Dealing with debt collection agencies can be stressful, especially if you’re not sure the extent of their powers, but there are certain steps you can take to protect yourself against debt collectors.

Know your rights

The best first step when dealing with companies who are collecting debts is to know your rights. Certain agencies will push the boundaries with you in order to collect payment, and will try to harass and coerce you into repaying if you give them the chance.

That’s why it’s so important to know what debt collection agencies can and cannot do. Remember: They have no special legal powers, they can’t enter your home without your permission, and they have no legal right to seize your property.

They might make threatening noises about taking your to court, but unless they have an extremely strong legal standing, all a collection agency can really do is call you or leave messages for you asking for payment.

Make a payment plan with creditors

If your debts have been passed to a debt collection agency and you’re becoming tired of being hounded for payment, you might decide it’s worthwhile to simply pay the money. If that’s the case for you, you should get in touch with the original creditor.

Even if you can’t afford to repay the total amount at once, your creditors may be willing to agree to a payment plan over months or even years. It’s in their interest to get their money back, even if it arrives gradually.

Seek debt advice

You can’t pay a debt with money you don’t have. If you’re being harassed by debt collectors over a debt you can’t afford to repay, you should seek professional debt advice immediately.

There are organisations out there who specialise in dealing with debt collectors, can offer you free financial advice, and might even be able to set up an affordable payment plan with creditors on your behalf.

Where can I get debt advice about dealing with collection agencies?

If you have outstanding debts you simply can’t afford to repay, or you’re facing harassment from a debt collection agency, we can help.

Your Debt Expert are industry experts in debt management and repayment. We have years of experience dealing with debt collectors and setting up debt repayment plans on our clients’ behalf.

For free initial advice from a company you can trust, get in touch with one of our friendly advisers today on 0800 082 8086.

Where can I get more advice on Debt Collection Agencies and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 082 8086 or click the button below to get started.