I’ve had a letter from a debt collection agency
You will have received a letter from a debt collection agency, if a creditor has sold on your debt, or has instructed them to recover the debt on their behalf.
A creditor will usually pass debts to debt collection agencies if they are having trouble securing repayments from you, so it’s likely that you have frequently missed payments and be in some financial difficulty if you are being contacted by a debt collection company.
What action do I need to take against a letter from a debt collector?
With regards to the debt collection agency, you will need to respond to their letters or phone calls. Written communication is the wisest idea in this situation, and make sure to keep copies of any correspondence. Debt collection agencies can be more persistent than original creditors, but if you respond to their correspondence, letting them know that you are taking advice and will be in contact with them, they are not allowed to make unreasonable amounts of contact, or ‘harass’ you.
If you have a debt that has is now in the hands of a debt collection agency, it is likely that your financial situation as a whole is unmanageable and you should seek professional advice as soon as possible.
How can McAlister & Co help if I’ve been contacted by a debt collection agency?
McAlister & Co offer free and confidential initial debt advice. This means that you can contact us and tell us about your financial situation, and we can advise you of what we think the best course of action is.
A debt collection company can be dealt with in exactly the same way as any other creditor in a debt solution. For example, the debt that they are claiming can be included in an IVA, DMP, bankruptcy or Debt Relief Order and a debt collection agency may also be open to Full and Final Settlements proposals.
Dealing with debt collection agencies can be daunting. At McAlister & Co, a large part of our role is to deal with creditors and debt collection agencies on behalf of our IVA and DMP clients. Even during the set-up process of any debt solution, we are happy to speak with your creditors on your behalf to let them know that a proposal is being put together and as respected third-party intermediaries, this will usually be enough to satisfy persistent callers.
How can an IVA help if I am being contacted by a debt collection agency?
It is likely that a debt will have been put in the hands of debt collector because you are having problems managing repayments to multiple creditors. If this is the case and your unsecured debts total £15,000 or more, you may qualify for an IVA. Once an IVA proposal is accepted, debt collection agencies and other creditors are not permitted to make further contact with demands for payment.
An IVA will replace your various repayments to creditors with a single, affordable payment which will allow you to get back on top of your finances. An IVA is a formal, legal arrangement and protects you from legal action by your creditors, as well as barring them from passing your debt on to debt recovery companies.
An IVA typically lasts for five years and at the end of the IVA period, any outstanding debt is legally written off.
How can a DMP help if I am being contacted by a debt recovery company?
A debt being passed to a debt recovery company is a wake-up call that your debt has become unmanageable. If your total unsecured debt is less than £15,000, a DMP may be the most suitable option for you. A debt recovery company is still a creditor any debts in the hands of a debt recovery company can be included in a DMP.
A DMP is a less formal arrangement whereby we negotiate lower monthly repayments to your creditors. As with an IVA, your various repayments are replaced with a single, affordable monthly payment into the DMP. The DMP is designed to reduce your monthly outgoings to give you the room to recover control of your finances. Once you are in a better financial position, your normal monthly repayments resume until the debt is repaid.
Can I file for Bankruptcy or a Debt Relief Order if a Debt Collections Agency is chasing me?
If your situation is such that you cannot afford repayments and you do not own your own home (or are happy to accept the idea of selling it) then bankruptcy may be a viable option. Bankruptcy is a formal, legal arrangement and as such, all creditors including a debt recovery company would have to respect it. Filing for bankruptcy would usually mean that after a twelve month period, you are discharged from any bankruptcy restrictions and your debts will be written off. It is a chance to give your finances a fresh start, but it is not a quick and easy fix. There can be long-lasting consequences and restrictions to being made bankrupt, such as problems getting credit and bank accounts, and possibly having to declare your discharged bankrupt status to future employers, depending on your profession.
A Debt Relief Order is similar to bankruptcy in it’s restrictions and consequences. If you do not own your home or any valuable assets, and are left with very little disposable income each month, a Debt Relief Order could write off your debt completely, including those debts in the hands of debt collection agencies.
In both a bankruptcy or a DRO, debt collection agencies would be barred from contacting you with demands for payment.