What is debt collection?
If you have fallen into arrears with money that you owe then you may well find that your creditors use some form of debt collection service to recover their money. Here you will be actively encouraged to either repay what you owe or to surrender assets that can be sold to do so by individuals or by companies. This may be done after an application has been made in the courts or on a less formal basis.
Who collects debts?
In general terms there are two types of debt collector that you may come across in this scenario:
What can/can’t a bailiff/debt collector do?
- Bailiffs – bailiffs act to collect debts that have been subject to some form of court order. So, for example, if you breach the terms of a CCJ ordering you to repay a debt then the court can order bailiffs to try and take possession of your assets to recover the money that way. Bailiffs can be employed by courts directly or can be private debt collection agencies that are used by the courts for this purpose.
- Debt Collection Agencies – these agencies are private companies that collect debts on behalf of their clients. So, for example, if you fail to make payments on a credit product or a bill then the company may employ debt collectors to collect the money on their behalf. This can also involve the company ‘selling’ on your debt to the collection agency. Here, you then owe the debt collector the money and not the original creditor.
To be honest people get pretty scared at the concept of debt collection. There have been way too many cases of debt collectors harassing consumers and causing them real stress to recover money. The problem is, if you are having this kind of problem for the first time, then you may not know enough about your rights to manage the situation well.
But, bailiffs and debt collectors are legally bound to act in a certain way. They have to adhere to fair practices as laid out by the OFT (Office of Fair Trading). So, it is important to know what they can and cannot do in their efforts to recover the money that they owe. Let’s take a look at the basics:
Debt Collection Agencies
- Bailiffs and private debt collection agencies do not all have the same powers and what they can and can’t do will depend on the debt that they are collecting. Bailiffs generally have more options open to them legally than private agencies because they will be working on behalf of a court. For example, bailiffs sent out by your local court to recover court fines cannot force their way into your home when they visit you for the first time – this includes entering your home after you open the door by pushing past you or preventing you from closing your door. They can only enter if you let them in (which you do not HAVE to do) or if you leave a window open or a door unlocked. At this stage forced entry is illegal.
- If you owe money to the Inland Revenue and related agencies then bailiffs have more rights. They can, for example, use a warrant from a magistrate to break into your home to gain entry perfectly legally.
- Bailiffs employed to evict you because of non-payment of your mortgage or rent are also allowed to force entry to start the eviction process.
Which of my possessions can be taken?
- Debt collection agencies have less leeway than bailiffs and, for example, can only visit your home if they have the necessary license to carry out a visit.
- Agencies have no rights to enter your home and you are perfectly within your rights to refuse to let them in or to discuss your situation with them on your doorstep. If you do let them in then you have the right to ask them to leave (and to expect them to do so) at any time.
- Agencies are held to fair practices and cannot harass you. They are not supposed to make an excessive number of phone calls or visits, for example. And, if they call you and leave a message to call them as soon as you return then they must explain why and who they are. They also cannot call you at work, contact your neighbours pretending that they thought they were you or try to catch you when you leave work on days when they know you have been paid. They are also not allowed to park company vehicles with ‘debt collection’ or similar terms written on them outside of your home. If anything like this happens to you then this is a case of harassment.
- They also should not make false claims about what will happen to you if you do not repay what you owe. They cannot, for example, try to scare you into paying by telling you that they have the right to take your possessions without a court order or to take you to a criminal court when this is not legally true.
- Debt collectors cannot pretend that they are bailiffs.
If you agree/have no option but to allow bailiffs to seize your property to repay what you owe then you do need to know what they can and cannot take. They cannot, for example, remove what are known as essential goods, including:
- Electrical appliances such as cookers and fridges
- Most items of furniture
- Assets/items which you use for work purposes (i.e. computing equipment or tools)
They can, however, remove goods such as:
- TVs and non-essential electrical equipment
- Items outside of your home such as your car and anything you have stored in a shed or garage that is not locked.
In many (but not all) cases you will not lose property that it not your own. So, for example, your spouse’s property will generally be safe here unless you are both liable for the debt.
How to deal with a debt collection visit
You can negotiate with bailiffs/debt collectors with a view to sorting out the situation. So, you could, for example, be given extra time to come up with the cash you need before your property is removed or you could come to an agreement that involves regular repayments. If you feel that your debt collector is acting unfairly then you should contact your local Trading Standards Officer to make a complaint and to get help.