Whether they have a past-due cellular phone bill, credit card balance, or utility payments, UK consumers may find themselves dealing with a debt collection agency. When a creditor makes multiple attempts to collect a debt and these prove unsuccessful, it may turn the debt over to a debt collection agency. The agency works on behalf of the creditor, collecting debts for a flat fee or a percentage of the total debt owed.
Yes, debt collection agencies will accept partial payments for outstanding debts in most cases and approve various debt solutions such as IVAs and Debt Management Plan payments. We can also negotiate full and final settlements and payments and in some cases get some of the debt written off.
In the UK, the Office of Fair Trading (OFT) licenses and regulates debt collection agencies
It establishes guidelines regarding how these agencies may operate and provides examples of practices considered unfair. Though the guidelines are not considered law, they are summaries and interpretations of different legal areas. The OFT uses compliance with the guidelines to determine whether a debt collection agency is qualified to have a credit license.
Though harassment of debtors is considered an unfair practice, requesting that debtors repay debts in full is not. Most collection agency representatives attempt to recoup full payment of debts as soon as possible. Therefore, during their initial contact with a debtor, they may state that the full debt balance must be repaid immediately. Many consumers are not in a position to pay this amount or they would not have gotten into debt in the first place.
Though it may seem scary to get a call from a debt collection firm, consumers should not be too alarmed
The important thing is that they make an effort to repay the debt. If they offer to make the repayment in instalments, many debt collection firms will accept this. The collection firm cannot collect money that is not there so offering to make affordable repayments is better than promising to pay large amounts and breaking this commitment. Some collection agencies require debtors to verify their financial situation by completing a budget statement.
It is in the best interest of the collection agency to accept any payment offered rather than getting no payment at all
Even if the agency takes a debtor to court, the court will only mandate that the debtor make affordable repayments so the agency will be in the same situation as if it had accepted the initial offer from the debtor. Creditors prefer to have consumers repay as much debt as possible instead of closing an account with a negative balance.
By being honest with a collection agency, a debtor can arrange an affordable repayment.
The debtor should request everything in writing so there is no misunderstanding about the arrangement. If a debt collector threatens a debtor or attempts to gain unauthorized access to the property, the debtor should contact the police immediately. A debt collection agency does not have the same power as a bailiff appointed by the court.
Debtors should remain calm when dealing with a debt collection agency and should not provide bank information when discussing repayment. Instead, they should send a postal order or a cheque each month for the agreed amount. By taking steps to repay their debts, consumers begin getting themselves back on the right financial track.