Debt collection has, in one form or another, been around since the dawn of time and although the methods and laws have changed over the years, the crux of it is ultimately to collect money owed to you. Ensuring that debts are paid promptly is crucial running any business (or household) and throughout the United Kingdom, there are a robust set of rules to ensure that creditors have means to collect what is owed to them.
Debt collection is a wide-ranging term and it could include anything from a creditor’s own in-house credit control team chasing late paid invoices, all the way up to a barrister representing a client at a winding-up hearing in the High Court.
Generally, however, debt collection is usually interpreted as when a creditor outsources the matter to an agent or third party to collect it on their behalf. This third party is often referred to as the debt collector – irrespective of whether they attend the debtor’s property to physically collect, or use more modern-day processes like letters, emails, and text campaigns.
Agencies that specialises in debt recovery are usually known as Debt Collection Agencies (or DCAs) and they will often charge a percentage of any recovery as their fee. Once a DCA has exhausted its efforts, they often then refer the matter to a law firm to take legal action. Depending on the DCA you use, they may act as the go-between or refer you directly to the law firm.
DCAs are licensed and regulated by the Final Conduct Authority (FCA) and this sets out guidelines on how they can act and what might constitute an unfair practice. Whilst these guidelines are not laws, it does reflect whether a DCA can hold a credit licence.
Whilst a lot of creditors will use DCAs before solicitors, there is no requirement to do so and it comes down to a creditor’s personal preference.
If you are owed money then contact us today to discuss how Debt-Claims Solicitors can help you not only collect what is owed, but advise how to limit future bad debt instances.