What is debt?

Debt Collectors

A debt collector will write to you after a debt is well overdue, they may

• be acting as an agent for the creditor to whom the debt is due

• they may be a division of the creditor used to chase overdue debts

• they may be a debt collection company who has taken over the debt or bought it and hope they can recover that price and make a profit.

• some debt collectors act in the guise of solicitors which give the appearance of being ready to take the matter to court

Typical actions

• writes to you to threaten legal action adding costs and interest on top of the debt

• advising you about credit status being affected

• tell you about extra costs which can be added to the debt

Typical outcomes

• letters are ignored - eventually they may stop or an agent will call and discuss the debt and try and collect regular payments

• the debtor has left the address and may or may not be traceable to a new address.

• the collection agency may appear again under a different name (which is the same debt collection firm as such)

• if the sum is small the letters may stop, the larger the debt the longer collection methods may be pursued.

• Actions may continue for up to 6 years, after that collection may be impossible legally.

Options

• Offer a sum of HALF the debt or less as a full and final settlement - they may refuse and try for me, so TIME the offer and INSIST it is accepted in writing - keep a copy of that acceptance letter.

• Offer instalments INTEREST FREE over a long period 5 years or more and make payments by STANDING ORDER or payment book.

• Ignore the letters - they may then do one of three things

  • stop the letters and give up  - practically a 50p letter to 1,000 debtors which gets £2,000 in is a profitable system!

  • send an agent to your house to assess the case and try to get payments in full or part

  • take court action - this is very rare for smaller debts as it costs the creditor potentially hundreds of pounds and there is little or no risk in winning the case.

• Deal only by LETTER - do not talk by telephone as there can be no proof of what is said which may work against you later.

• Make written notes of all telephone calls and visits and what was agreed or said.

Comments

Debt Collectors main aim is to get money legally owed from you and reasonable collection costs. By law you are protected from undue harassment and collection methods which may be misleading or unfair.

Debt collectors must be licensed and those licenses can be revoked if firms act outside the law - report transgressors to the Office of Fair Trading http://www.oft.gov.uk/

Useful web sites

• http://news.bbc.co.uk/1/hi/business/

• http://www.cpa.co.uk/

• http://www.oft.gov.uk/News/