What Debt Collection Agency Can Do

Learn what debt collection agency can do, including contacting debtors, arranging payments, handling disputes, and taking legal action.

A debt collection agency can do more than send letters asking for payment, but it cannot simply do whatever it wants.

That is an important difference.

What debt collection agency can do depends on the type of debt, who owns it, and the rules that apply to the agency.

In some cases, an agency may contact you, ask for payment, agree to a repayment plan, or pass the matter back to the creditor.

In other cases, the creditor may decide to take court action.

If you have been contacted by debt recovery, knowing what it can and cannot do can make the situation less confusing.

The Financial Conduct Authority (FCA) regulates many firms involved in consumer credit and debt collection, and its rules set standards for how firms should deal with people who are behind on payments.

So, what powers does a debt collection agency have?

Table of Contents

What Does a Debt Collection Agency Do?

A debt collection agency is a business that collects money owed to another company or, in some cases, collects a debt it has purchased.

For example, a credit provider may have an unpaid account.

Instead of handling the collection itself, it may use a collection agency to contact the customer.

The agency may:

Contact you about the debt
Send letters or statements
Make phone calls
Ask you to make a payment
Discuss repayment options
Agree to an affordable payment arrangement
Provide information about the debt
Report information to credit reference agencies where permitted
Take certain legal steps where it has the right to do so

The FCA Handbook contains rules for firms involved in debt collecting and sets out requirements for dealing with customers who are in or approaching arrears or default.

However, not every debt collection agency is regulated by the FCA.

The rules that apply can depend on the type of debt and the activities the business carries out.

Can a Debt Collection Agency Contact You?

Contacting someone about an unpaid debt is one of the main things a collection agency can do.

It may contact you by:

Letter
Telephone
Email
Text message
Other reasonable communication methods

The purpose is normally to ask about the unpaid amount and try to arrange payment.

But there are rules around how regulated firms should communicate with customers.

The FCA says firms dealing with customers who are in or approaching arrears or default should provide timely information that takes account of the customer’s circumstances and helps the customer understand their financial position and options.

That means a collection process should not simply be about repeatedly demanding money without considering the person’s situation.

Can a Debt Collection Agency Send Bailiffs?

A debt collection agency cannot simply send bailiffs to your home whenever it wants.

Enforcement agents operate under specific legal powers and procedures.

In England and Wales, court enforcement can involve methods such as warrants or writs of control, depending on the type of judgment and circumstances.

The GOV.UK guidance on enforcing a judgment explains the different enforcement methods available after a court judgment.

So, if a letter says that enforcement action may follow, look carefully at what has actually happened.

A warning from a collection agency is not automatically the same thing as a court order or enforcement warrant.

What If You Dispute the Debt?

image What Debt Collection Agency Can Do

This is an important area.

If you genuinely believe that you do not owe the money, or that the amount is wrong, tell the collection agency.

You may dispute a debt because:

You already paid it
The amount is incorrect
The debt belongs to someone else
You do not recognize the account
The account was opened fraudulently
The debt has already been dealt with through another process

The FCA has specific guidance for firms about disputed debts.

Its authorization guidance says firms should have processes for handling disputed debts and should not continue pursuing someone inappropriately when a debt is genuinely disputed.

Keep evidence that supports your position.

That could include bank statements, receipts, emails, contracts, letters, or previous payment records.

Can a Debt Collection Agency Report You to a Credit Reference Agency?

It may be possible for information about a debt to appear on your credit file, depending on the circumstances and the rules that apply.

However, a collection agency cannot simply put false information on your credit file because you have not paid a demand.

Credit reporting must be accurate.

The FCA’s rules also require firms dealing with customers in arrears or default to provide information that helps customers understand their financial position, including how the debt may be reported to their credit file.

If you believe information on your credit report is wrong, check the entry and raise the dispute with the relevant company and credit reference agency.