Use this guide when you receive a letter from a creditor, debt collection agency or debt purchaser asking you to pay. Have the letter, any older paperwork about the debt, your bank statements and your budget or a list of your income and outgoings ready.
Step by step
Do not ignore it
Open the letter and read it carefully, noting who sent it, the amount claimed and any deadline. Ignoring debt letters can lead to extra charges or court action. Acting early gives you the most options.
Check the letter is genuine
Look up the company independently and check it is authorised by the Financial Conduct Authority on the FCA register. Do not use phone numbers or links in the letter until you have verified them. Be alert for fake letters that ask for payment to a personal account.
Check the debt is yours and correct
Compare the amount with your own records and ask yourself whether you recognise the original creditor. If you are unsure, write to the collector asking for proof, such as a copy of the credit agreement and a statement of account. Some older debts may no longer be enforceable, so ask a debt adviser before acknowledging or paying a very old debt.
Work out what you can afford
Use your budget to see what, if anything, you can pay after priority bills like rent, council tax and energy. Do not agree to a payment you cannot keep up just to end the call. A realistic offer is better than a broken promise.
Get free advice
Contact Citizens Advice, StepChange, National Debtline or MoneyHelper for free, confidential help. They can check whether the debt is valid, help you prepare a financial statement and suggest options such as a payment plan or breathing space. Avoid paid debt management firms offering quick fixes.
Reply in writing and keep records
Write to the collector with your reference number, either disputing the debt or making an affordable offer, and ask them to confirm in writing. Keep copies of everything and log any phone calls with dates and names. If a court claim form arrives, respond by the deadline shown on it and get advice immediately.
Ready-to-use checklist
- Letter read and deadline noted
- Company checked on the FCA register
- Debt amount compared with own records
- Proof of debt requested if unsure
- Budget completed
- Free debt adviser contacted
- Written reply sent with copy kept
- Call log started
Practical tips
- Ask collectors to contact you in writing only if phone calls cause you stress.
- Pay by a method that gives you a record, never cash, and keep every receipt.
- If you are struggling with your mental health because of debt, tell your adviser and creditors, as it can affect how they must treat you.
Common problems
I do not recognise the company chasing me.
Debts are often sold to other companies, so the name may be new even if the debt is old. Write asking who the original creditor was and for a copy of the agreement. Do not pay until you are satisfied the debt is yours.
The collector is threatening bailiffs straight away.
Collectors cannot send enforcement agents for most consumer debts without a court judgment first. Ask them to explain in writing what stage the debt is at. Get free advice promptly if you receive any court papers.
I made a payment plan but can no longer afford it.
Contact the collector before you miss a payment and explain that your circumstances have changed. Send an updated financial statement showing what you can afford. A debt adviser can negotiate for you if needed.