You will then almost certainly be contacted by a debt collection agency on behalf of a business to collect the outstanding debt, after your debts have been in arrears for a while, and you will be sent default notices from the business you owe money to (creditor).

This can be quite intimidating, but it is a normal part of the debt collection process.

A debt collection agency is a company that specialises in recovering debts where the original creditor was not able too. Some debt collection agencies specialise in collecting only certain types of debt, where others will collect all types of debt.

Below are the 2 most common types of debt collection;

Debt Collection on Behalf of the Creditor

We will collect the debt on behalf of the client who is still owed the debt and has engaged a debt collector to collect the debt for them.

This is the process where by the agency will receive a percentage/fixed fee of the debt owed.

Collection Agency Owning the Debt

Debt collectors will often buy debts from creditors – this happens when the original owner of the debt (the entity you owe the money too) sells/assigns the debt to the collection agency.  The debt collection agency will then become the entity you owe the money too.

If you are not sure which of these apply to you, you are able to check by checking the letters from the debt collection agency ask you to send payment too.  If the letter asks that you continue to pay the original creditor it is likely they still own the debt.

What does a Debt Collection Company do?

As a debt collection company, we will use letters, emails and phone calls to contact you, while these can be worrying when you receive them it is in your best interest to deal with them as early as possible.

Only one debt collector should be contacting you about your debt, if you are being contacted by more than one agency for the same debt, you check with the original creditor to see what one they are using they should tell you which one they are dealing with and stop the other(s) from contacting you.

If you have been contacted by a debt collection agency do not ignore the letters or call, in doing so it will prompt the agency to seek further action, or legal action.  The agency will ask you to pay the amount in full, however if you are not able to, they can arrange a realistic instalment plan as a way to pay the debt.

If the debt has been brought by the debt collector any interest and extra charges will usually cease, however the agency is able to continue adding interest and extra charges but amounts according to the contract you signed with the original creditor.

If the debt is being collected on behalf of the original creditor, the original creditor may continue to add interest and extra charges during the collection process.

In the rare case that the debt collection agency is chasing you for a debt that is not yours, this could happen if they are trying to contact someone with a similar name as yours, you will need to prove that it is not you they are looking for.