Have you been contacted by a debt collector? Here's what you need to know.

If you’ve ever been in debt, you may have had the unfortunate experience of receiving a demand for payment from a debt collection agency.

So, if you’re contacted by one of these agencies, what can you do about it? And if you’re currently in debt and struggling to repay what you owe, what options are available to you? Let’s take a look.

Being in debt

Getting into debt is never a fun experience. However, if your repayments are affordable, and you’ve the discipline to consistency chop away at your balance, then it will be possible to become debt-free.

It almost goes without saying but clearing debts should be a number one financial priority, with one primary exception—you’re borrowing for a planned purchase on a specialist 0% credit card and planning to fully repay your balance before the interest-free period ends.

If you are in debt and you don’t repay what you owe, there’s a real risk your debt will become unmanageable, especially if the interest on your balance begins to snowball. This can be a scary situation to be in, especially if you were already struggling with repayments and you encounter an unexpected financial situation, such as a loss of regular income.

While regulations have improved for borrowers in recent years, falling into a debt spiral is sadly becoming more and more common, especially with interest rates rising, and the soaring cost of living we are all facing right now.

If your debts are already unmanageable, it’s likely to be a stressful time. Sadly, being in debt may be difficult or embarrassing to talk about, especially to loved ones.

What is a debt collection agency?

The job of a debt collection agency is to collect unpaid debt from borrowers. Any private company can hire the services of a debt collection agency in order to help them recover debt from customers.

For example, mobile phone providers, utility companies, and ‘buy now pay later’ firms are likely to turn to debt collection agencies if they find it tricky to collect unpaid debt. For example, a private company may turn to a debt collection firm if they have no response following demands for payment. A debt collection firm may also be employed if a customer is refusing to repay what they owe, or disputes the amount owed.

Debt collection agencies often aren’t the kindest of firms to deal with. One provider was recently accused of sending letters that were ‘intimidating and confusing.’

You see, some debt collection agencies may give the impression they are the same as court-appointed baliffs (‘sheriff officers’ in Scotland) - they aren’t.

Debt collection agencies don’t have any legal powers. They can’t enter your property without permission. All they can do is request you repay your debt on behalf of the organisation they are working for. They may do this in writing, over the phone, or in person via a knock on the door.

If you do come across a debt collector in person, you can ask to see their ID. If you don’t wish to engage with them you can ask them to leave your property (or simply shut the door).

How to deal with a debt collection agency

While you can ignore debt collection agencies, they do have the right to try to reclaim any monies owed at the county court (just like any private company or individual has that right).

However, a collection agency will be less likely to do this if you get in touch with the organisation you owe money to. For example, if you happen to be in financial difficulty, consider yourself vulnerable, or you’re simply struggling to repay what you owe, you may be offered a repayment plan. This plan is likely to be a sum that you can afford and may be be spread over a long period of time.

Remember, it’s in the interests of the company you owe money to that you settle your debts. Going to the county court isn’t the ideal solution for either party. This is why it’s worth getting in touch as soon as you come into financial difficulty.

What about court bailiffs?

If you dispute the debt owed, then you may wish to argue your case at the county court. If you win the case — great!

If you lose however, you’ll be given a chance to settle your debts before any bailiffs are appointed. Court bailiffs do have the power to enter your property and take your personal items. However, bailiffs are only appointed if you don’t repay what the court says you owe. In other words, don’t confuse court bailiffs with debt collection agencies!

Court bailiffs have legal powers, debt collection agencies do not. Debt collection agencies can only request that you settle outstanding debts — regardless of the tone they might use in their correspondence.

Still struggling with debt?

Dealing with a debt collection agency — either in-person or via written communication — can be very stressful. If that’s you and you’re struggling to repay, the first step is to speak with the origination you owe money to.

They may be able to work out a repayment plan to suit both parties.

If you’re still struggling, then the good news is that there are a number of great charities out there to help, such as StepChange, the NationalDebtline, and the Citizens Advice Service. Some of these charities may even be able to provide free one-on-one support.

People fall into debt for a number of reasons, so never be ashamed of your personal finances. Remember, organisations providing debt assistance are there to help, not judge.

This article does not constitute any form of legal advice and should not be relied on or treated as a substitute for specific advice relevant to your personal circumstances.