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Debt Recovery

Debt Management

Debt recovery in action

Creditors make few concessions on debt recovery, but there are strict rules in place on how a creditor may recover unpaid debts. The Fair Debt Collection Practices Act (FDCPA) sets national standards for debt recovery and debt collectors must abide by its rules.

Knowing you've got overdue debts isn't any reason to try and avoid them. In fact, your first plan of action should be to call your creditors and see if you can negotiate a new repayment plan. Generally, sending in a debt collection agency is a last resort and they'd rather deal with the problem directly than attempt to inflame the situation.


If you've let things slide though and your creditor has sent their debt recovery agents to work on your file or they have employed a debt collection agency to recover the debt, you can expect a visit fairly soon.

The first contact you'll have with a debt collection agency is usually by phone. This is often a recorded message simply asking you to call back. Don't ignore the call, the sooner you deal with it the better chance you'll have of dealing with the problem properly. Phone the number and get as much information as possible. Find out the name of the person you speak to, the name of the agency dealing with your debt, the name of the creditor and correspondence details for the agency.

Get details on how much the agency claim you owe and ask for confirmation of this figure in writing. The debt recovery agent is required to give you written notice within five days of calling you. This should include all the above information as well as details on how to dispute the claim if you disagree with it. If you think you've been the victim of identity fraud contact your bank and creditor directly to find out what has happened.

If you would prefer, you can ask for all future correspondence to be in writing rather than by phone. You can also request that you are not contacted at work. Follow up any of these verbal requests with a written request. Legally the debt recovery agent is only allowed to speak to you, your spouse or your attorney (if you have one) about your debt. You can ask that they only contact you about it.

Keep a written record of all contact with the collection agency. Keep a diary of dates and times of all correspondence, names of people you speak to, details of conversations and copies of all information received from the collection agency or sent to them. You should keep these even after the debt is settled in case there is any dispute about it in the future. Send all correspondence to the debt collection agency by recorded mail and request a return receipt. This way you don't have to verify that the agency received your information.

Get details of any repayment plans in writing, and check all the figures for fees, interest and charges. Call the agency and attempt to negotiate the debt: debt collection agencies have often 'bought' the debt for less than their actual worth and may be willing to agree to a new payment plan - if you're lucky up to 50% less than you actually owe. See our debt settlement page for more information.

Once you've agreed a payment plan, get everything in writing before you put down any cash. If the debt is held by a third-party collection agency make sure to pay the debt collection agency and not the original creditor. Always pay with paper checks to create a paper trail of payments, and once the debt is paid in full get a final written notice to confirm this. You can use this to show to future creditors.

A collection agency cannot file a lawsuit against you for overdue debts unless they have 'bought' your debt from the original creditor. Even if they have done so, phone calls and letters are much cheaper than legal action and they are more likely to employ intimidation tactics. It's worth remembering however, that debt recovery agents cannot legally seize your assets, pay check or bank account unless you have been subject to a lawsuit with a judgment awarded to them.

At all times debt recovery agents must treat you fairly and respect your right to privacy. They cannot harass or mislead you, lie to you or use unfair practices to recover the debt. If you think a debt collection agency has violated the Fair Debt Collection Practices Act then make a complaint. See our page on fair debt collection for more information on your rights in this area.