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How Long Can A Debt Be Chased In The UK?

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Did you know that in 2023, there were around 735 UK debt collection agency companies?

When individuals owe money to lenders or creditors, those with monies owed to them could appoint debt collectors to recover funds.

As nerve-wracking as the debt collection process might sound for borrowers with outstanding debts who fear legal action, there are steps in place when it comes to collecting debt.

Your first notice will usually be an invoice for the debt owed, which will be followed by a default notice or a letter of claim if a lender has not been able to get a solution for a debt owed.

The letter of claim will include the responsibilities of both the lender and borrower, legal rights, and the course of action if the debt is not repaid.

Up to this point, it would be lenders who communicate with borrowers who are in debt, although they can choose to use external professionals to act on their behalf.

If no written agreement is reached following the letter of claim, debt collection agencies will usually be called on to take matters further.

Typically, debt collectors will contact persons owing money in writing or via telephone calls.

At this stage, lenders could stop providing services to those who owe them money and notify credit bureaus in some instances.

To simplify an understanding of debt and how long a debt can be chased in the UK, we have put together a valuable guide to take you through everything you need to know about debt collection.

Let’s start with the main debt categories.

What Is The Difference Between Secured Debts And Unsecured Debts?

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There are several debts that an individual can be liable for. These include government debts, bank loans, payday loans, personal loans, business debts, mortgage shortfalls and joint debts.

Secured debts and unsecured debts are the two main debt categories.

Secure debts owed refers to money borrowed for a tangible asset, such as a home or a vehicle. When such money is owed, a lender could take action to repossess these assets.

This is why secured debts have a lot of risk, which can lead to serious consequences for borrowers.

On the other hand, unsecured debts refer to when money was borrowed without any assets as collateral. Examples of these most unsecured debts include personal loans and credit cards.

These debts could come with higher interest rates, and in the case of credit card debt, you could face damage to your credit score if your payments are not made on time.

Understanding Debt Collection In The UK

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The first important thing to understand is that a debt collector will first try to discuss a repayment plan with you before a lender considers any legal action.

Their activities are guided by the Financial Conduct Authority (FCA), and they need to adhere to this authority’s rules.

Remember that debt collectors will likely be very persistent in ensuring you repay your debt as fast as possible, either the full amount or in repayments.

This means that you need to take responsibility for the best way that you can repay your debt.

During the debt collection process, debt collectors can visit you in person, provided they have given prior notice. They cannot insist on entering your property if you do not allow it, and they can only enter if they have your consent.

If a debt collection agency has contacted you, you have the right to get in touch with an impartial debt advice service.

This is an important consideration, as a financial professional can help you draw up a budget and go through your options with you.

You will be better equipped to determine what you can repay and make informed financial decisions.

If you can repay your debt, it is vital that you pay your high-priority debts first – those debts that could have more serious consequences when not paid.

Stay in contact with your creditors, and ensure you keep a record of all communications or receipts.

However, if you can not repay your debt, you must ask the debt collection agency that contacted you to provide some time for you to get proper financial advice.

In this scenario, your lender usually allows 28 days for you to reach out to a debt advice service.

Some options that could be on the table following your consultation sessions include small repayments and, on a larger scale, bankruptcy and debt relief orders. When you visit the debt advice service contact of your choice, these can be explained in detail.

Is There A Time Limitation Period For Debt Collection?

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*Mortgage debt can be included if you no longer own the property in question.

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