Should I pay a debt collection agency?
Getting a letter or phone call from a debt collection agency can be unsettling. You may not even recognise the name of the company contacting you, which can make the situation even more confusing. A common question people have is simply ‘Do I need to pay a debt collection agency?’
The short answer is that it depends. Your response should be guided by the type of debt, whether it’s valid, and what you can realistically afford. This article will explain how debt collection agencies work, your rights, and the steps you should take before deciding whether to ignore or pay a debt agency.
What is a debt collection agency?
A debt collection agency is a company that collects money on behalf of a creditor, such as a bank, utility provider, or credit card company. In some cases, the debt has been sold to them outright, meaning they now own it.
Agencies make money by recovering debts. They may contact you by letter, phone, email, or even visit your home. But it’s important to remember they are not bailiffs. They cannot force entry, take your possessions, or act outside the rules set by the Financial Conduct Authority (FCA).
Should you pay a debt collection agency?
Whether or not you should pay depends on a few key questions:
- Is the debt genuinely yours?
- Has the agency provided proof?
- Can you afford the payment being requested?
- Is there a more manageable way to deal with the debt?
Paying a collection agency can be the right step if the debt is valid, affordable, and you want to clear it. But paying immediately without checking details may leave you vulnerable, especially if the debt is old, disputed, or not enforceable.
Do I have to pay a debt collection agency if I don’t recognise the debt?
If you’re unsure whether a debt belongs to you, ask the agency to provide written proof. You can request a copy of the credit agreement or account details that show you’re responsible. Until they provide evidence, you’re not obliged to pay.
This is sometimes called sending a ‘prove the debt’ request. It’s a good way to protect yourself from paying something you don’t owe.
What happens if you ignore a debt collection agency?
Some people wonder whether it’s better to ignore or pay a debt agency. While it may feel easier to avoid contact, ignoring them is rarely a good idea.
If you ignore letters or calls, the agency may escalate the situation by:
- Adding charges or interest (if allowed under the original credit agreement)
- Passing the case back to the original creditor
- Starting court action, which could result in a County Court Judgment (CCJ).
A CCJ can damage your credit file for six years and may lead to enforcement action if payments aren’t made. By engaging early, you often have more options available.
Your rights when dealing with a debt collection agency
Debt collectors must treat you fairly under FCA rules. They cannot:
- Harass you with excessive calls or visits
- Threaten action they cannot legally take
- Mislead you about your rights
- Discuss your debt with family, friends, or your employer without permission.
If you feel an agency is acting unfairly, you can make a complaint – first to the company, then to the Financial Ombudsman if needed.
Options if you can’t afford to pay
If the debt is valid but you can’t afford the full payment being demanded, you still have options:
1. Request a repayment plan
Many agencies will accept smaller, regular payments based on your budget.
2. Check for priority debts
Some debts, like rent or council tax, carry more serious consequences. It’s important to deal with these first.
3. Explore debt solutions
If you have multiple debts or your payments are no longer manageable, a debt solution might be more suitable. At MoneyPlus, we can explain options such as a Debt Management Plan or an Individual Voluntary Arrangement (IVA).
4. Understand the type of debt
Not all debts are equal. Some, like utility arrears or credit cards, can be negotiated more easily. Our guide to different types of debt may help you understand where yours fits in.
Can debt collectors take you to court?
Yes, but only if the debt is enforceable and valid. If a collection agency believes you owe money and you refuse to pay, they may apply for a CCJ. If granted, the court sets out how the debt should be repaid.
This doesn’t happen overnight – there will always be opportunities to respond before a case reaches this stage. Engaging early can prevent it from going that far.
What if the debt is very old?
In England, most unsecured debts become statute barred after six years if:
- You haven’t made a payment during that time
- You haven’t admitted the debt in writing
- No CCJ has been issued.
Once statute barred, the debt is no longer enforceable through the courts. However, a collection agency may still contact you to request payment – it’s your choice whether to agree.
If you’re unsure whether a debt falls into this category, get advice before making a payment. Paying even a small amount could reset the time limit.
Steps to take before paying a debt collection agency
Before you decide whether to pay:
- Confirm the debt is yours – ask for proof if necessary.
- Check the balance – ensure charges or interest are accurate.
- Review your finances – work out what you can realistically afford.
- Get advice – if you’re unsure, speak with a professional.
At MoneyPlus, we’ve helped thousands of people in similar situations. We’ll go through your circumstances and explain whether paying directly, negotiating, or setting up a formal debt solution is the best step forward.
When to seek professional help
If debt collectors are contacting you about multiple accounts, or you’re struggling to cope with the pressure, professional support can make all the difference. You can get free debt advice from MoneyHelper.
Alternatively, our advisers can help you understand how to respond and, if needed, guide you towards solutions that fit your situation. Get in touch with MoneyPlus and we’ll help you decide the best way forward.
