Meanwhile, business is booming for the debt collectors

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The first contact with a debt collection agency is usually a bright red envelope in the post. The second is a late-night phone call informing the debtor of the agency's involvement. And the third is the dreaded knock on the door.

It is an experience that is becoming more common for the over-stretched consumer. The debt collection industry grew sharply last year as higher borrowing costs and fallout from the credit crunch forced more people closer to the financial brink.

There are now estimated to be 5,200 enforcement agents in England and Wales, including 600 county court bailiffs and more than 1,000 unregistered debt collection companies. Since 2003 the size of the industry has almost trebled, growing from 8.6bn of debt sold on to professional collection agencies to 22.7bn by the end of last year. It is forecast to grow to 24.1bn by the end of this year.

Newly published figures from the Credit Services Association, which represents 95 per cent of the debt collection industry, underline the growing problems of personal debt in Britain, which has been exacerbated by the credit squeeze as troubles in the financial markets spread to the wider economy. More borrowers are being refused credit cards and loans but many are paying the price for over-extending themselves in the past.

There are two kinds of debt collectors those acting on a court order and those instructed by a business or bank to recover money without the need for legal action. Court-appointed agencies must comply with a strict code of conduct which means bailiffs cannot, for example, "levy distress" if the debtor appears to be suffering a severe physical or mental disability, is heavily pregnant or recently bereaved.

Guidance issued by the Office of Fair Trading also protects debtors who are confronted by business-appointed debt collection agencies which rely on fraud or sharp practices to obtain money.