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."

PROMOTED VIDEO
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Finacial products from our partners
Property search
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

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

    Helpdesk Analyst

    £23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

    Day In a Page

    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
    Ed Sheeran hits back after being labelled too boring to headline festivals

    'You need me, I don’t need you'

    Ed Sheeran hits back after being labelled too boring to headline festivals
    How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

    How to Get Away with Murder

    Shonda Rhimes reinvents the legal drama
    A cup of tea is every worker's right

    Hard to swallow

    Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
    Which animals are nearly extinct?

    Which animals are nearly extinct?

    Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
    12 best children's shoes

    Perfect for leaf-kicking: 12 best children's shoes

    Find footwear perfect to keep kids' feet protected this autumn
    Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

    Arsenal’s ray of light ready to shine again

    Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
    Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

    Moyes’ show of sensitivity thrown back in his face... by Ferguson

    Manchester United legend tramples on successor who resisted criticising his inheritance
    Two super-sized ships have cruised into British waters, but how big can these behemoths get?

    Super-sized ships: How big can they get?

    Two of the largest vessels in the world cruised into UK waters last week
    British doctors on brink of 'cure' for paralysis with spinal cord treatment

    British doctors on brink of cure for paralysis

    Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
    Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

    Lonely Planet’s Best in Travel 2015

    UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London