Borrowing: You don't owe a penny but they're after you

Sue Hayward reports on why innocent people are targeted over loans gone bad, and shows how to stand up to the debt collectors

You open the post and there among the bills and the junk mail is a letter from a debt-recovery firm claiming you owe them money. After the initial panic, you realise it's not you they want – but your problems may not be over. With collection agencies currently chasing £21bn of debt, being contacted about someone else's borrowing is becoming more common.

Lenders often don't have the time or resources to chase people, so they sell bad debt on to third-party firms at a knock- down price. These agencies then go after the debtor, knowing that every penny they recover above what they paid the lender to buy in the debt is profit. This pursuit regularly involves letters being sent to ex-partners of debtors, or simply those who have a similar name.

Godfrey Lancashire of the Credit Services Association, which oversees the debt-recovery industry, says the problem is sorting out the "can't pays" from the "won't pays". He admits that when the debtor is elusive, the agencies may contact someone with the same or a similar name. "Often, a 'soft letter' is sent to one or two people who they feel could be the person with the debt."

He adds, though, that this has to happen because in the UK it is hard to trace people who go into the red and then change address. "There's no legal obligation for debtors to tell their creditors when they move. We're one of only three countries in Europe [as well as France and Greece] where this is the case."

So if you get one of these letters, what can you do?

"Debt-recovery agencies are paid to pursue you. So if you genuinely don't owe the money, you've got to be very strong and forthright," says Alex MacDermott from Citizens Advice. But simply telling the agency you aren't the debtor may not be enough: "Say you've called or written to them in response to their letter. In that way, they have established contact, and they're unlikely to give up easily."

Instead, Mr MacDermott's advice is: "Always ask for proof that you owe the money. It's up to the person claiming the debt to show you owe it." The easiest way, he suggests, is to ask to see the signed credit agreement that went with the original loan or credit card application, to verify the signature is yours.

It's worth checking your credit record, too, in case arrears or debts show up. This can be done through the main credit reference agencies, Equifax or Experian.

And what happens if you receive notice that the debt enforcers are coming round to seize your possessions? "In order to send in the bailiffs, a county court judgment is needed," says Mr MacDermott.

But while you shouldn't be threatened with the bailiffs unless this is the case, Mr Lancashire admits: "Although we represent 95 per cent of outsourced debt collection and have a strict code of practice, there are some cowboys who operate outside our remit."

If you're having problems with a debt-collection firm or feel that they're harassing you, check first that the company is a member of the Credit Services Association, as you can report it for bad practice. You can contact the Office of Fair Trading too, since anyone collecting debts must have a credit licence issued by the OFT, which also has the power to revoke it.

As for being pursued for debts from the dim and distant past, the rules surrounding this are complex. For example, while unsecured debt, such as credit cards and personal loans, expires after six years, that timetable starts "from the last communication, not when the debt first occurred", points out Frances Walker of the Consumer Credit Counselling Service.

At the end of the six years, unpaid debts do "drop off" your credit record, says Experian. But while you can't be taken to court for unpaid debts after this period, the collection agencies can keep asking you for the money.

'I thought paying up was the only way to get them off my case'

John Smith, 32, from Luton, was contacted last year by a collection agency over a £450 debt that he knew nothing about.

"The letter didn't even say who I owed the money to; it just came out of the blue claiming I owed it. I was horrified and rang them immediately to find out what was going on."

He admits to having had a few debts in the past, but adds: "Once I'd got back on my feet, I had paid everything off over eight years previously."

The debt-collection firm couldn't provide any proof that John owed the money but claimed it had taken over an "old debt" owed on a store card. "I don't even recall ever having a card for the shop, though there's a possibility it could have been a card connected with my ex-partner," says John. "But I've had a clear credit record for years. I got my files to check I was clear after settling my debts in 2000."

Regular letters began arriving from the collection agency after he had rung the firm to query the original letter, and soon he was being threatened with the bailiffs.

"I was really worried," he recalls, "and thought paying it off was the only way to get them off my case."

So John settled the bill and has since heard nothing from the firm. Nevertheless, he feels aggrieved.

"It's frightening to think you can be contacted out of the blue by companies claiming you owe them money. I always keep my bank statements and paperwork but not going back beyond six years. I can't believe they can get away with this."

News
Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
News
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
news
Life and Style
Former helicopter pilot Major Tim Peake will become the first UK astronaut in space for over 20 years
food + drinkNothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
Life and Style
Buyers of secondhand cars are searching out shades last seen in cop show ‘The Sweeney’
motoringFlares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own