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My Rights and Debt Collectors

What are the Rules Governing Debt Collection?

Your rights when it comes to debt collection depends on whether the debt is a consumer (personal) debt or a business (commercial) debt.

Rules for Debt Collectors – Personal Debt

The Financial Conduct Authority (FCA) regulates Debt Collection Agencies that deal with consumer credit collections and there are rules and regulations that govern what they can and can’t do.

Debt collectors are not allowed to:

  • Speak to other people about your debt without your permission, or threaten to do so. This would include your family, friends neighbours and your employer
  • Add interest or charges to the debt that are excessive compared to the costs they have incurred
  • Threaten or abuse you
  • Pretend they have legal powers that they don’t have  - for example threatening to send bailiffs round without first getting a court order, or making their letters look like they’ve come from a court.
  • Harass you.  This can include ringing you excessively or contacting you at unreasonable times.  You can request that all contact is in writing.
  • Mislead you.  For example by causing you to believe that you have to cover the costs of recovery if this was not in the contract.
  • Trick you into contacting them – for example leaving a calling card at your address that looks like you’ve missed a delivery

Debt collectors are allowed to visit you in person.  There’s no rule against this, but they have no more powers than someone ringing up on the phone, and they have to give you notice of the date and time of the visits.  The visitor has to explain who they are and what the reason for the visit is.  They cannot enter your property without your consent and they must leave if asked to do so.  They cannot visit you at an inappropriate location (unless you have consented to the visit there).

If you feel you are being harassed by a Consumer Collection Agency then the Citizens Advice agency has issued guidance about what you should do next.

Rules for Debt Collectors – Business Debt

While there is no regulatory body for Debt Recovery Agencies that collect business debts, they should follow these guidelines when dealing with cases.

A debt is considered 'statute barred' if the creditor has not contacted the debtor for a period of 6 years and no action has been taken on the account.

Although the debt is still legally acknowledged as being owed, the creditor is not able to take any legal action against the debtor in order to recover the debt. It is considered unfair if a creditor or debt collector misleads the debtor into believing the debt is still legally recoverable. For more information about what to do if you have forgotten to invoice a client please read here.

It is also considered an unfair practice if the debt collector presses for payment after the debtor has stated they will not be paying the money owed. This could amount to harassment contrary to Section 40(1) of the Administration of Justice Act 1970.

Just like for consumer credit, a debt collector that contacts you by phone, letter or visit, must state clearly who they are, where they are from, their role and the purpose of contact. If a debt collector attempts to use unhelpful technical language to confuse or mislead you, this is considered as an unfair practice.

Similarly, it is unfair for a creditor to mislead a debtor into believing legal proceedings will take place when attempting to recover a debt, so if you issue a Final Demand you must then act on it.

Creditors should not use more than one debt-collecting agency at any one time.

If a debtor queries a debt and money that is owed, it is unfair to continue with recovery proceedings during the time the debt is being disputed. If requested, the debt-collecting agency must provide details of an outstanding debt. It is not all up to the debtor to prove they do not owe a debt, is it up to the creditor to prove they do if the debt is dispute

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