While all companies need a way to collect outstanding debts, there are rules and guidelines that should be observed by debt collection companies.

Unfortunately they don't always keep to these and have been known to use under-hand, dishonest and sometimes borderline illegal tactics when it comes to debt collection - this means you really need to be on your guard if you're approached.

Here's how to deal with debt collectors if they come calling:

Find out what you owe and to whom

The first step when dealing with a debt collector is to find out exactly what they want, where the debt they are collecting has come from and how much they believe you owe.

You should write to the debt collection agency in question asking for a copy of your original credit agreement (they must legally provide this) and telling them that you wish only to be contacted be post - this should prevent telephone calls and home visits which are difficult to keep track of.

It is important to do this before you acknowledge that you owe them any money.

It if transpires that you have no knowledge of the debt in question then you should inform the debt collection agency in writing that this is not your debt, and that you will contact the Trading Standards if they contact you again about it.

What to do if you owe money and can pay?

If the debt is question is legitimate and you can afford to clear some or all of it, the easiest solution is just to pay up.

Delaying unnecessarily is likely to lead to further hassle from the debt collection company and could lead to court action and the appointment of bailiffs in the long run.

Don't just hand over cash to the debt collection company or bailif - instead you should ask for a final bill to be sent to your home (in writing) and pay by cheque or debit/credit card.

If you must make payment in cash then it's vital you get a reciept and written acknowledgement that the debt has been paid in full.

Once you have settled you should also make sure the company updates your credit file to show that the debt is now satisfied.

What to do if you owe money and can't pay?

If you can't afford to pay the debt you may be able to agree a repayment plan with the debt collection agency, even if this is a nominal amount each month.

However, before you contact them to negotiate a plan you should seek advice from an independent charity such as the Citizens Advice Bureau, StepChange or the National Debt Line.

Once you have contacted a money charity you should be given a grace period of up to 30 days by the debt collection agency to all to allow you to sort your finances and establish how much you can afford to pay.

Can debt collectors enter your home?

OFT guidelines stated that a debt collection company should "only come into your home if you have invited them to". This means they cannot force their way in, either by breaking in or by pushing past you when you open the door.

They must also "leave your property if you ask them to". Consequently, if they come knocking and you don't answer the door, or answer but don't let them in, there is little that they can do about it.

If you don't want them to call on you at home you should write to them and ask they communicate with you by phone (if you'd prefer to receive calls) or in writing.

Can bailiffs enter your home?

In most cases a bailiff cannot enter your property without your permission.

However, they can enter your home without your consent if they can do so without breaking in or causing damage. This is called "gaining peaceful entry" and means that if you leave a door unlocked or a window open that they can come into your home.

In some rare cases, bailiffs working for a magistrate's court can legally break into your home, but only if:

  • You have unpaid criminal fines

  • You have unpaid Income Tax

  • You have unpaid VAT

However, even in these limited cases they should only break into your home as a last resort and after other reasonable measures have been pursed.

Providing you don't owe money for unpaid fines or tax you should simply make sure that your property is securely locked (windows and doors) both when you're in it and when you go out.

Can debt collectors take your possessions?

Different rules apply to bailiffs and debt collection companies when it comes to seizing possessions so it is important to know which you are dealing with.

Bailiffs

There are set rules on what bailiffs can and can't take from your property. They cannot take the following:

  • Things you need for day to day life - clothes, cooker, furniture or tools for work

  • Items that don't belong to you - your partner's or flatmate's possessions

However, they can take luxury items and anything from outside your home, including your car and garden equipment.

Debt collection companies

Unlike registered bailiffs, debt collection companies cannot take your possessions.

They do not have the same legal powers as a bailiff and can only visit your home to discuss repayment of your debts.

Can debt collectors take your wages?

A debt collector or creditor needs court approval before they can take your pay direct from your employer. They will only be able to get this if you've had a CCJ in place for a certain amount of time.

If they get permission, the court decides how much money they can take and for how long. The courts will then be responsible for making arrangements with your employer and for passing the agreed amount to the company you owe money to.

Importantly, if you are unemployed, self employed, in the armed forces or the merchant navy your creditor, or the debt collection company operating on their behalf, cannot apply for an attachment of earnings order.

For more information on how a company can take money directly from your pay, visit the Citizen's Advice Bureau website.