Debt Collection Agencies (DCAs)

When you first default on your account, your bank, credit card or finance company will contact you in the first instance, however, most creditors will only chase the debtor for a few months, after that they will pass it on to a specialist debt collection business, known as a DCA. Later on the account may be sold on to a debt purchaser.
Debt collection

Debt collectors

Debt

Debt collection agencies (DCAs) are hired by their clients to collect a debt that’s still owned by the lender or creditor. They are contracted for a period of time and if they fail to collect the amount or get a repayment arrangement set up, they will return the account to the creditor. Debt collection businesses must be authorised by the Financial Conduct Authority (FCA).

Banks and other finance companies start by trying to collect the outstanding amounts themselves. Once the account is officially defaulted (after a Default Notice has been issued), the usually pass it on to their own collections department. Most banks have their own in-house collections departments, often named in such a way as to suggest they are separate entities; some may use than one name. A Google search for the name on your correspondence will shed some light on the subject and tell you whether you are dealing with an in-house collections department or an external agency.

Many companies start by using their own in-house collectors, once they’ve exhausted this avenue, they will pass on the account to an external DCA to collect the balance. This has the effect of putting some distance between the bank and the collection process.

Businesses such as utility companies and telecoms operators tend not to have their own collections department and they will use a debt collector agent for their delinquent accounts. The government (DWP and HMRC) often use the services of debt collectors rather than attempting to collect themselves.

Debt collectors are not bailiffs and have no powers to enter your home or seize goods. Some threaten home visits, however, those visits are infrequent. If you are visited by a debt collector, you are under no obligation to speak to them or let them into your home.
Debt collectors acting on behalf of the creditor who do not own the account have no powers to start legal action by themselves. However, once the debt has been assigned (sold) to a debt purchaser, they become the creditor and can start legal action in their own right.

DCAs are well known for bullying, threats and abuse, some are worse than others. Section 7.3 of the FCA Consumer Credit Sourcebook sets out the procedures to be followed by DCAs.

A firm must treat customers in default or in arrears difficulties with forbearance and due consideration.

DCAs use different methods to collect debts, some of them may be against the rules. DCAs rely on debtors being not being aware of their rights. Common collection methods include:

  • Threatening letters using language intended to scare the debtor, such heading them FINAL DEMAND, printing on red ink, etc.
  • Letters demanding that the debtor rings a number within 7 days or before a certain date to discuss the account URGENTLY.
  • Frequent phone calls and texts, including calls at work, early in the evening or late at night.
  • Threats of home visits by field agents which debtors often mistake for bailiffs.
  • Threats of legal action including bankruptcy, charging orders, attachments of earnings, bailiffs, etc. which they can’t obtain without going to court and winning first!
  • Demands for bank statements, payslips or information about the debtor’s assets.

See harassment for more information.

Debt purchasers

Debt purchasers

calculationsCreditors often sell their defaulted accounts to specialist companies called debt purchasers. Debts are sold for a fraction of their value and the rest is written off as a loss for tax purposes. Unlike debt collectors, debt purchasers own the accounts and once the accounts are sold, all rights and duties are transferred to the debt purchaser who becomes the creditor.

Debts are sold in bulk, debt purchasers don’t get much detail about the accounts they buy or any paperwork. It’s up to the debtor to inform them of any ongoing dispute regarding the account. The debt purchaser will often have to go back to the original creditor to obtain information, this usually results in a lengthy process, however, the debt purchaser should put the account on hold while they contact the original creditor.

Debts can be sold on an unlimited number of times regardless of whether they are disputed, unenforceable or even statue barred. It is a common misconception that disputed debts cannot/should not be sold.

When a debt has been sold, you should receive a Notice of Assignment (NoA) stating that all rights and duties have been assigned to the new owner.
Do not ignore letters from debt purchasers. Failure to respond often results in a claim being issued. These days the vast majority of claims for consumer credit debts are issued by debt purchasers.
It is advisable to inform creditors of you new address if you move to avoid having court papers served to an old address. If they have an old address and you have no collection or redirection facilities, they could issue a claim and obtain default judgment when you fail to respond.
Companies

Companies involved in debt purchase and collection

A full list of companies involved in debt purchase and collection is available on the CSA website.

The site details the activities each company is involved in. Some companies are both debt collectors and debt purchasers. A few such as Rossendales, also offer enforcement services (bailiffs). This can lead to confusion with people assuming they are being threatened with bailiff action when they are just acting as debt collectors.

Well known debt purchasers include:

  • 1st Credit
  • Arrow Global
  • Compello Group
  • Hoist Portfolio
  • Intrum Justitia
  • Lowell Portfolio

Well known debt collectors include:

  • Advantis
  • Akinika
  • Allied International (AIC)
  • Apex
  • Clarity
  • Credit Security
  • Fredrickson International
  • Motormile Finance
  • Regal Credit
  • Robinson Way
  • Ruthbridge

Companies who do both purchasing and collection include:

  • Arc Europe
  • Cabot
  • Capquest
  • Experto Credite
  • Go Debt
  • Hillesden Securities (DLC)
  • Idem Servicing
  • Link Financial
  • Moorcroft Group
  • Opos
  • PRA Group (formerly Aktiv Kapital)
  • Wescot

Firms of solicitors involved in debt purchase and collection include:

  • BW Legal
  • Drydensfairfax
  • Mortimer Clarke
  • Optima
  • Restons
  • Shoosmiths
Need help? Join the forum
 Avoid dealing with creditors over the phone, you are under no obligation to talk to them. Write to them and get them to put everything in writing. Avoid responding to texts.
Keep all communication in writing and keep copies of all correspondence sent and received.