If you find yourself in a situation where a debt’s passed to a collection agency, it can cause stress and worry especially if you can’t afford to pay what they are demanding. However, it is important that even if you know the debt is yours, you don’t claim the debt until you have taken advice from a specialist in the field.
Some debts that you think have completion and passed off as a bad debt can still come back and haunt you years later. Companies will sell these bad debts to a collection agency and they use their expertise in trying to claim some money back from the person who originally created the debt.
Take the information to a specialist who can look at it and help you decide what to do. Charities like the Citizens Advice Bureau have trained staff that can offer you advice in this situation as to the best step to take.
Collection Agency Legal Requirements
As with any financial company, the collection agency has to follow the rules and guidelines set out in the FCA, Financial Code Authority. If a collection agency doesn’t follow these guidelines, there are consequences for the company in question and you would need to report them.
However, if they are taking a firm approach it could be they are not a regulated company and they are in effect a loan shark, there are places and people you can turn for help and advice if you find yourself in this situation; the Citizens Advice Bureau is a great place to start.
A collection agency cannot take your goods away from you, the power for that comes from a Bailiff and they are a court appointed business. It would mean that the company claiming money or goods from you have already taken you to court and won.
What obligations must a collection agency do:
- If you ask them to stop calling you they must
- If you get distressed or unable to make an informed decision they must leave
- They are not allowed to discriminate against you
- They must not pretend that they have some sort of legal power that is above the status they hold
- They are not allowed to threaten you with physical violence
How To Prevent a Collection Agency Contacting You
The best way to prevent this is not to have any form of debt; whilst this might sound far-fetched in the modern world, it is possible to live a life debt free, except from a mortgage.
If you owe no one any money and you save up for the items you do want,then you will not have any problems with debt collectors knocking on your door.
How you can do this is to understand what it means to live within a budget and not spend more money than you have coming into your home. This is difficult for many people, it is not a concept that is typical with the modern way of life, if you want something then putting it on credit seems the obvious choice.
But for me this is not something I have done for many years, I made a promise to my husband and him to me that we would save for any purchases that we needed and to never look for credit for an item. It has meant that over the years we have to save for the things we want, and sometimes a project can take longer to complete but we never have to pay another company any interest for the items or services we buy.
Creating and sticking to a budget is important, it allows a greater understanding of the money that you have and a greater respect for the items that you buy.
Therefore, it is important that if you get contacted by a collection agency, you seek advice before acting. This will give you the information you need to ensure that you handle the situation in the best manner. In future moving forward creating a budget could help to see where your money is going and to help understand the relationship between the money coming into your home and the money going out.