Dealing with debt collectors: 3 simple rules

Chris Smith

August 5, 2014

November 13, 2018

Dealing with debt collectors: 3 simple rules

If your debt has been passed to a debt collection agency, they are likely to apply more pressure for payment than the company or government body that you owe money to. But that doesn't mean it's time to panic - you just need a solid, sensible approach. If you've been contacted by a debt collector, follow these three simple rules to help you deal with the situation with ease.

1. Know the facts

Much of the panic that sets in when people receive a letter from a debt collector comes from not knowing what's about to happen. The easiest way to calm this anxiety and take a businesslike approach is to arm yourself with the facts:

  • Organise your finances so you know what you can afford to pay, and can prove it. If you have a lot of different debts, use our free money management software to get a clear view of the situation
  • Research the debt collectors. They will have done their research on you, so level the playing field by making sure you know who they are, if they're legitimate, and what previous clients/debtors have to say in financial advice forums - some debt collection agencies are more understanding and ethical than others
  • Know your rights. If you're concerned about specific practises, you can find out whether they're legal by searching the Financial Conduct Authority's policy statement, or checking with the Office of Fair Trading (OFT)

2. Communicate actively and openly

Hiding from the situation is not an option with debt collection agencies, and trying to lie or cheat will only encourage further action on their part. Be pro-active and conduct your dealings reasonably and openly:

  • Call or write to the agency explaining your situation
  • Try to open discussions regarding a payment plan. Be open and honest about what you can afford and be ready to prove it when challenged
  • If you can only afford part payment of a debt, pay that and ask for a receipt. Even a token payment shows willingness to clear the debt, but don't offer too little a contribution
  • Put everything you discuss in official letters and keep records. That includes writing to confirm the results of phone conversations

3. Take action

If you really can't afford to pay what they're asking, you have several courses of action you can take:

  • Try and access more funds. Extra hours at work, a second part-time job or benefits are all options that can help you out of trouble
  • Get debt advice. It could be that you are eligible to write off debts with a Debt Relief Order, or that you'd be better off going bankrupt. Free, impartial charities like National Debtline and Step Change can help you decide what to do
  • Complain. The Financial Ombudsman Service can help deal with unfair practises, and the OFT also accepts complaints
  • If you have experiences with debt collection agencies you'd like to share, let us know in the comment field below.

Posted by Money Dashboard

  

Chris Smith

Money Dashboard

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