How to deal with a debt collection agency
Being contacted by a debt collection agency can feel unsettling. But knowing your rights, understanding the process, and responding in the right way can help you stay in control. Step by step, this guide explains everything you need to know about dealing with a debt collector, from the first letter or call to setting up a repayment plan that works for you.
What is a debt collection agency?
A debt collection agency is a company that either collects debts on behalf of the original creditor (such as a credit card provider or utility company) or has purchased the debt outright. If the debt is still with your original creditor, they’ve simply hired a third party to chase repayment. If it’s been sold, the agency now legally owns the debt and will collect payments directly.
Either way, you still have rights. And the agency must follow strict rules under UK law.
Step 1: Don’t ignore debt collectors
It might feel easier to put the letter in a drawer or ignore the phone call, but doing nothing usually makes things worse. The longer a debt goes unacknowledged, the fewer options you’ll have and the more likely you are to face added fees, legal action or a default being added to your credit file.
That said, if you’re unsure whether the debt is yours or you don’t recognise the company, don’t panic. You have the right to clarity. And importantly, you can ask them to prove it.
Step 2: Ask them to prove the debt
If you’re unsure whether a debt is genuine, or you’ve never received a bill or notice before, ask for proof in writing. This is called a ‘prove the debt’ letter. It’s your legal right to see a breakdown of the debt before you make any payment.
Here’s what to include in your letter:
- Your name and address
- A request for written confirmation of the debt – who it’s owed to, the amount, and how it was incurred.
You don’t need to provide any personal financial information at this stage. Always keep a copy of the letter, and if possible, send it via recorded delivery for peace of mind. Until they respond with evidence, you’re not legally required to pay.
Step 3: Know your rights
Under Financial Conduct Authority (FCA) rules, debt collectors must:
- Treat you fairly and not pressure you into payments you can’t afford
- Provide clear information about the debt
- Only contact you at reasonable times
- Stop contacting you if you request communication in writing only.
They are not allowed to:
- Harass or intimidate you
- Pretend to have legal powers they don’t
- Visit your home without notice or force their way in.
If they break these rules, you can complain – first to the agency, then to the Financial Ombudsman Service if needed.
Step 4: Decide how to respond
Once the debt is confirmed and you know it’s yours, you have a few options depending on your situation:
- If you can pay in full:
Ask for a final settlement figure. In some cases, debt collectors may accept a reduced amount as a one-off payment. Make sure any agreement is confirmed in writing before you pay.
- If you can pay in instalments:
Prepare a budget first. Offer an affordable monthly amount and don’t agree to payments that will leave you short on essentials..
- If you can’t afford to pay anything:
This might be a sign you need professional debt support and to explore formal debt solutions.
Before agreeing to anything, get the offer in writing and make sure the repayment plan is affordable and sustainable.
Step 5: Set up a repayment plan
If the debt is genuine and you’re ready to repay, it’s time to create a plan.
Start by reviewing your budget. Make sure you can cover essential costs like rent, energy, food and council tax first. Any remaining money, known as disposable income, can then go towards repaying debts. You can work out your disposable income using our calculator.
You can:
- Propose a monthly payment amount based on your budget
- Ask the agency to freeze interest and charges
- Set a review date to check progress.
It helps to keep written records of all correspondence and payments made.
How to stop debt collection letters and calls
If you’re receiving constant calls or letters, it’s perfectly reasonable to ask for all future contact to be in writing. This can give you breathing space and helps create a clear paper trail.
You can write to the agency with the following request:
‘I request that all future contact from your company is made in writing only. Please remove my phone number from your records.’
They must respect this under FCA rules. If contact becomes excessive or aggressive, you can raise a complaint.
What if you’re dealing with multiple debts?
It’s not unusual to be contacted by more than one debt collection agency, especially if you’ve fallen behind on payments to a few different creditors. Credit card companies, loan providers, utility suppliers, and even landlords may all use different agencies to recover what’s owed.
Trying to juggle multiple debts can quickly become overwhelming. You might find it difficult to keep track of who you owe, how much you owe, and when payments are due. And with each agency contacting you separately, it can feel like there’s no room to breathe.
That’s where having a more structured approach can really help.
Getting additional help
If you’re unsure what to do next, you’re not alone.You can also visit MoneyHelper for free, impartial guidance that can help you understand your rights and explore the best way forward.
Alternatively, you can speak to an adviser at MoneyPlus to talk through your options in confidence. Dealing with debt collectors in the UK doesn’t have to be overwhelming. With the right support, you can take back control of your finances, one step at a time.
