Expert loan views & facts
Who are debt collectors? What can they do?
25 June2008
If you’re behind on your loan payments, you might end up hearing from debt collectors. This is no reason to panic. Debt collectors aren’t going to confiscate any of your possessions – they’re not bailiffs and they don’t have any ‘special powers’.
Who are debt collectors?
Debt collectors aren’t court officials. They’re professionals who specialise in dealing with people who haven’t stuck to repayment terms. They’re likely to be called in if you miss multiple payments to a creditor and/or don’t respond to their phone calls and/or letters. A creditor might also instruct debt collectors if they think that pursuing the debt is taking up too much of their time, or that it’ll take you too long to pay it back.
Debt collectors might be part of the company you owe money to, as many companies have their own debt collection department which follows up on overdue debts.
On the other hand, the debt collectors might be an external agency. Sometimes, a creditor will hire a debt collection agency to collect a debt for them. But sometimes they’ll sell them the debt, which means you’ll owe the money to the debt collector, not the original creditor.
What can debt collectors do?
Whether they’re acting on behalf of a creditor or because they’ve bought the debt from your creditor, debt collectors have the legal right to pursue the debt using the same legal channels as the original creditor.
What can’t debt collectors do?
First of all, remember that debt collectors aren’t bailiffs – and it’s illegal for them to pretend they are.
Like creditors, they’re bound by the Debt collection guidance published by the Office of Fair Trading (OFT), which defines ‘unfair business practices’. A few examples of unfair practices:
Who are debt collectors?
Debt collectors aren’t court officials. They’re professionals who specialise in dealing with people who haven’t stuck to repayment terms. They’re likely to be called in if you miss multiple payments to a creditor and/or don’t respond to their phone calls and/or letters. A creditor might also instruct debt collectors if they think that pursuing the debt is taking up too much of their time, or that it’ll take you too long to pay it back.
Debt collectors might be part of the company you owe money to, as many companies have their own debt collection department which follows up on overdue debts.
On the other hand, the debt collectors might be an external agency. Sometimes, a creditor will hire a debt collection agency to collect a debt for them. But sometimes they’ll sell them the debt, which means you’ll owe the money to the debt collector, not the original creditor.
What can debt collectors do?
Whether they’re acting on behalf of a creditor or because they’ve bought the debt from your creditor, debt collectors have the legal right to pursue the debt using the same legal channels as the original creditor.
What can’t debt collectors do?
First of all, remember that debt collectors aren’t bailiffs – and it’s illegal for them to pretend they are.
Like creditors, they’re bound by the Debt collection guidance published by the Office of Fair Trading (OFT), which defines ‘unfair business practices’. A few examples of unfair practices:
- Using official-looking documents which look like court papers.
- Failing to provide information about the debt.
- Contacting you at unreasonable times, or too often.
- Threatening legal action which they know is not an option.
- Telling other people about your debt.
These are just examples, as anyone collecting money needs to abide by a lot of rules – and even if you don’t know the rules, they should. If you think they’re harassing you or pursuing you unfairly, contact a debt adviser.
You shouldn’t wait until your creditor turns to debt collectors. Sorting out your debts will be much easier (and probably cheaper) if you take action early on.
As soon as you realise you’re going to have a hard time making your monthly payment(s), get in touch with your creditor(s). The majority would probably rather accept lower payments for a while than get debt collectors / courts / bailiffs involved.