The debt-collection sector is an area that definitely hasn’t been hurt by economic circumstances. In fact, it seems to be busier than ever. What’s more, its activities can cause even more problems for people who are already vulnerable. There are, however, ways to deal with overzealous debt collectors.
Understanding the debt-collection process
In simple terms, if you have a loan/credit, you will have a contract with the lender/creditor. If you fail to comply with your side of the contract, the lender/creditor can take enforcement action.
A typical enforcement process starts with gentle reminders. If these do not have the desired effect, the creditor/lender will escalate to demanding payment by a certain deadline. They will probably send written demands (physically or electronically). These will often be accompanied by further contact, often by phone.
If this still doesn’t work, lenders/creditors may escalate to legal action. Alternatively, they may sell the debt to specialist third-party agencies. These agencies will buy a debt for a percentage of its value. They will then try to reclaim the full amount from the debtor.
When debt collectors get involved
There are generally two stages where debt collectors can get involved. The first is at the initial escalation stage. The second is after a debt has been sold. In the first case, they will be working for the original lender/creditor. In the second case, they will be working for a specialist recovery firm.
What debt collectors can and can’t do
Debt collectors are allowed to contact people to attempt to recover debts. Guidance from the Financial Conduct Authority states they must avoid doing so “at unreasonable intervals”. Unfortunately, the FCA does not specify what this means.
Likewise, they must not behave in a way that could be reasonably construed as harassment. Again, however, there are no explicit guidelines on what this means. To a certain extent, this is understandable. A lot of human behaviour is highly context-dependent. At the same time, there is a strong case to be made for setting at least some basic, ground rules.
This argument is currently being made very publicly by Martin Lewis (of Money Saving Expert), backed by various charities. Whether or not it pushes the government to take action remains to be seen. Even if it does, it also remains to be seen just what exact form that action will take.
In the meantime, however, debt collectors will keep on operating. That means people will keep on needing to deal with them. Fortunately, it is entirely possible to do so with the right approach.
Put yourself in the driver’s seat
The key point to understand about debt collectors is that it is literally their job to get the best possible deal for their employer. What’s more, the law supports them on this. It, therefore, follows that dealing with debt collectors over the long term requires you to deal with your debt(s).
Although only you can deal with this, you do not have to deal with it alone. In fact, it’s often preferable to get help. Your starting point may be the internet. If, however, you are already dealing with debt collectors, then it’s advisable to get professional help as quickly as possible. This may be available for free.
Quite simply, as soon as you reach an agreement with the lender/creditor, they will stop pursuing you for the debt. Reaching an agreement does not necessarily mean paying back everything you owe. It means paying back as much as you reasonably can.
While this is being done, you can simply block debt collectors who try to contact you. For example, use profiles on your phone so that it only rings for designated callers/texters. If this is not enough, you may wish to see if you qualify for a formal and enforceable breathing space.
