A debt recovery agent is a company or legal firm who are licensed under the consumer credit act to recover consumer debts on behalf of a third party such as a bank or any financial institution.

To do this they must hold a current consumer credit licence and all agencies including legal firms are regulated by the OFT.

The OFT and therefore the government have laid out very strict guidelines to which all agencies must adhere to when recovering debts on behalf of their clients, failure to do so can result in an agency losing its licence and therefore its ability to trade. It’s important to remember that a debt recovery firm is not a bailiff; they cannot come into your home to seize goods without first obtaining a court order    

If you find yourself dealing with a DCA it is important that you do not ignore their advice or their attempts to communicate with you, as all agencies are licensed you are very well protected from abuse or inappropriate action, in fact the vast majority of DCA’s now offer very useful advice when it comes to clearing debts and can be very helpful.

To help you with dealing with a DCA I am going to outline what they can and cannot do when dealing with your debts, if you are dealing with an agency and you feel that they are not working within the parameters I outline it is important that you seek advice from a third party such as citizens advice or the OFT. The advice bellow is taken directly from the OFT:

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As you can now see DCA’s have some very strict rules that they must work within when dealing with you and your debts.

Before we take a look at what you must do, we will take a look at what a DCA can do when working to recover debts on behalf of their clients.

A DCA can do the following as long as it stays within the guidelines we have looked at as laid out by the OFT:

• They can write to you and make a demand for payment on behalf of their client, in most cases they will write an initial letter advising that they are now dealing with your debt and request that you contact them asap.

• They can continue to write to you if you choose to ignore their first attempt, they may even advise you of possible legal action or advise you that your credit rating may be affected. They can only threaten legal action if they have the intention of carrying out their threat.

• They can employ someone to visit your home address to establish contact with you, again this will usually only be done if you choose to ignore their letters or calls. They cannot seize goods though without a court order and then only with a court appointed bailiff.

• They can call you on the phone at home and or your place of work to discuss your situation, they must adhere to strict guidelines when doing so and must not harass you when doing so. If you request that they only contact you in writing they must respect that request, however if you choose not to respond in kind they may call you again. You can request that calls are not made to your place of work.

• They can if they feel they have no other option take legal action against you, this is only usually done in cases where no attempt has been made to resolve the debt through discussion and consultation with the DCA, if they do take legal action they may obtain a judgment against you which could result in the seizure of goods from your property, in extreme cases they may also obtain a charge against your property.

• If you have changed address without informing your creditors they may trace you using one of several methods available, they may then use this information to contact you regarding your debt.

• They can and will help you put a plan together to repay your debt, they will and should listen to you and consider all the facts when doing so. They have an obligation to make sure you are treated fairly at all times.

• They must if asked to do so surrender all notations taken in relation to dealing with you and your debt, whilst also providing information relating to the debt such who you owe the money too and details of any interest charged.

Now it is just as important for you to understand what you must do when dealing with your creditors and or a DCA, as long as you play fair with them they will do the same with you

When dealing with debts it’s far better to be honest with your intentions rather than look for hoop holes which may give you time rather than a solution.

So here you are this is what you must do: You must respond to any letters you receive, either in writing or by phone, it is always better to have a traceable record of any contact so by letter is always good, if calling by phone keep a record of the call, a debt diary in which you can log all calls is a good idea.

Open all of your post, do not hide away from your problems, they will always come and find you one day.

Things are much easier if faced head on. Be honest with all of the information you provide, do not be tempted to work the numbers so you can keep cash back from your debts, be strict with yourself, it will pay off in the long run and it will get you into some good habits too.

If someone calls you on the phone talk to them or if it’s inconvenient make an arrangement to call them back at a time that suites you. Make sure you stick to any agreement you have made, if you find that it’s difficult call or write to your creditor and or DCA and tell them, don’t just default.