Debt Collection

 

Understanding Debt Collection Agencies (DCAs)

Debt Collection Agencies often appear aggressive, authoritative, and relentless. But in reality, they operate within strict legal limits. Understanding who they are and what they can and cannot do is essential before you begin challenging any debt.

This section explains:

  • How DCAs obtain debts
  • The difference between agents and debt purchasers
  • When a DCA has legal standing
  • When they do not
  • How assignment works
  • Why documentation matters
  • Why most threats never materialise

Once you understand the role of DCAs in the credit ecosystem, you will see that the system relies heavily on consumer ignorance. This chapter removes that advantage.

 

 What DCAs Actually Are

DCAs fall into two categories:

 

1. Agents acting for the original creditor

These DCAs do not own the debt.

They simply collect “on behalf of” banks, lenders, or card companies.

Examples:

  • Wescot
  • Moorcroft
  • Sigma Red
  • Arvato

Key facts:

  • They cannot sue in their own name
  • They can only sue in the name of the creditor if authorised
  • They rely on the creditor’s documentation
  • They have no rights under the Law of Property Act 1925
  • They are paid commissions (often 10–20%)

Their letters often look intimidating, but in legal terms, they’re just call centres with letterheads.

 

2. Debt purchasers (portfolio buyers)

These companies buy debt in bulk, often for pennies in the pound, and then attempt to collect the full balance.

Examples:

  • Lowell Portfolio Ltd
  • Cabot Financial (UK) Ltd
  • PRA Group (UK) Ltd
  • Hoist Finance
  • Arrow Global

Key facts:

  • They only have legal standing if:
    ✔ they purchased legal title, AND
    ✔ they can prove assignment under s136 Law of Property Act 1925
  • Many purchases are equitable only, meaning they cannot sue in their own name
  • They rely on “deeds of assignment” and “notices of assignment” - often defective
  • They rarely hold the original agreement
  • Their business model depends on volume, not accuracy

 

 The Myth of DCA Enforcement Power

DCAs routinely imply:

  • “We will take you to court.”
  • “Your goods will be seized.”
  • “A CCJ is inevitable.”
  • “Bailiffs are on the way.”

In reality, they cannot:

  • Enter your home
  • Seize goods
  • Send bailiffs without a court order
  • Obtain a County Court Judgment without issuing a claim
  • Instruct enforcement unless they win the case
  • Enforce without a valid, compliant agreement

This chapter teaches you the truth:
DCAs do not have enforcement powers. The court does.

 

When a DCA Can Issue a Claim

This is an area where many consumer-rights guides get it wrong, and our guide will always place legally correct emphasis.

A DCA can issue a court claim only if:

✔ They own the debt (legal assignment, not just equitable)

AND

✔ They can prove the assignment

AND

✔ They can prove the agreement was properly executed

AND

✔ They can show a compliant Default Notice (if required)

AND

✔ They can show accurate account records

If any of these are missing or defective, their legal case may collapse.

 

When a DCA Cannot Issue a Claim

A DCA cannot sue if:

  • They only holdequitable assignment
  • The deed of assignment fails Section 44 Companies Act 2006
  • The Default Notice was issued correctly
  • The agreement is missing the prescribed terms
  • CCA Section 77/78/79 compliance is outstanding
  • No chain of assignment exists
  • The NOA is defective
  • They cannot show that they have authority

These defects are extremely common, especially in older credit card and catalogue debts

Bailiffs (Enforcement Agents) – Different Rules Apply

A bailiff is only involved after a creditor obtains a County Court Judgment (CCJ) and applies for enforcement.
Even then, bailiffs have strict rules:

  • They must give at least seven days’ notice before visiting

  • They can only enter through an unlocked door or with your consent (for most debts)

  • They cannot take essential household goods or items belonging to others

  • They must act professionally and proportionately under the Taking Control of Goods Regulations 2013

If a bailiff appears without proper paperwork or you have never received a CCJ, do not allow entry.
Request identification and copies of the warrant — and seek advice immediately.

 

How to Deal With Them

  1. Stay Calm and Keep Records – Log calls, letters, and visits.

  2. Communicate in Writing – This creates an evidence trail and prevents misrepresentation.

  3. Request Proof – Ask for the notice of assignment or warrant before discussing payment.

  4. Know Your Priority Payments – Protect essentials such as rent, mortgage, council tax, and utilities first.

  5. Do Not Be Bullied – Threats or misleading statements can breach FCA and Ministry of Justice conduct rules.

Why Knowledge Is Power

The majority of DCA and bailiff threats rely on fear and misunderstanding.
Once you know your rights, the pressure tactics lose their impact.
You can then negotiate, challenge, or escalate from a position of strength — not panic.

 

Get the Debt Collection Challenge Pack

Freedom Financial has created a Debt Collection Challenge Pack designed to help you respond confidently and lawfully to creditors, DCAs, and enforcement threats.

It includes:

  • Template letters to challenge DCAs and bailiffs

  • Response wording under FCA, GDPR, and CCA rules

  • Step-by-step escalation guides and complaint templates

  • Behaviour checklist and rights summary