Dealing With Debt Collectors

Have you received a letter from a company you've never dealt with claiming that you owe them money?

Back in May of this year I received an unusual letter from a company I’ll call xyz plc. (I’m not using the real name because I don’t want to create legal hassle for The Fool.)

The letter quoted a reference number and asked me to contact the company immediately by telephone about a personal matter.

A Google search quickly revealed that xyz was a debt collection agency. Most of the top matches came from forum sites with less than complimentary comments about its methods. 

Many of the comments suggested that the company often buys old debts that are statute barred because the lender has not contacted the debtor for six years and no action has been taken on the account (different limits may apply according to the nature of the debt or if you are in Scotland).

In my case, I’m certain as I can be that no debt exists. I’m pretty good at keeping on top of all my financial affairs and apart from my mortgage, the last debt I had was a small personal loan to buy a car and that was paid off in full more than ten years ago. So I felt quite happy in ignoring the letter and the identical one that I received a month or so later.

Red letter day

I had all but forgotten about the whole affair but a couple of weeks ago I received a third letter with copious amounts of red splashed across it. This one claimed that xyz had obtained my address by linking it to my previous abode using a credit reference agency. It also claimed I owed £674.07 to Lowell Portfolio 1 Limited and demanded payment within seven days or further action would be taken ‘as appropriate’. There were no details relating to who the original debt was owed to, when it related to or how the balance was made up.

It was tempting to ignore this letter as well but I looked at our excellent Dealing With Debt discussion board to see what other people had done in these instances. 

I’m familiar with some aspects of debt law but by no means an expert so I contacted the free debt advisory service National Debtline. They sent me an excellent information pack with a template letter to use confirming that I had no knowledge of the debt and outlining the various ways the three letters I had received appeared to be in conflict with the Office of Fair Trading’s debt collection guidance.

I sent my reply by recorded delivery and printed off the electronic proof of delivery. I’ve heard nothing since but should they persist I’ll be more than happy to report them to trading standards, the Office of Fair Trading and the Financial Ombudsman, especially as the last of these could involve them having to pay a case fee of £450. Of course, if it turns out that I do actually owe someone some money, I’ll have to cook some humble pie.

What should you do?

Opinion seems to be split about the best approach when you receive a letter such as this. These companies have also been known to contact people by telephone and even text message. In my case I only decided to respond once they demanded some cold hard cash and I will only liaise with them by letter so I have full documentary evidence should this be required at a later date. Things can get a little heated on the phone so I won’t call them.

If you don’t owe any debt then it should be relatively simple to resolve the matter with the standard letter although you need to be prepared to follow it up with formal complaints if necessary.

If it’s a valid debt then speak to a not for profit debt advice service such as National Debtline, CCCS or Citizens Advice about the best course of action and to clarify your rights. Under the Consumer Credit Act you’re entitled to ask for full documentary evidence including the signed copy of the original credit agreement provided you enclose a fee of £1. If this is not provided within 12 working days the debt could become unenforceable. There’s another template letter on the National Debtline website for this.

Debt collection law is complex and it’s easy to get intimidated in these situations. Get advice and remember that the law is there to protect you as well as the lender. Good luck!