Debt collection laws in the UK

Debt collection laws in the UK

Debt collection is a very specific, delicate in some instances, and specialised practice and not everyone is cut out for the job. 

It requires a high degree of experience, professionalism, and training. And it’s vital that debt collection agencies and debt collectors use the right tools to support both the creditors and the debtors in the collection process – (you can learn more about Direct Route’s collection process online.) 

What’s more, there are laws, specific legislation, and guidance surrounding debt collection that must be adhered to, and in this post, we look at the most important and influential areas. 

Recent Changes in Debt Law UK

On the 4th of May 2021, in England and Wales, a new debt moratorium regime was brought into effect, supporting individuals struggling to pay off their debt. 

The Debt Respite Scheme states that debtors can now ask for a 60-day break from any loan repayments. For a debt recovery agency, this means that by applying this break, no collection activity can take place, and protections surrounding the debt should be adhered to.

Debt Collection Law UK

In the UK, companies must legally register as a debt collection agency, where they can then  

act on another company or individual’s behalf to collect any outstanding debts. 

The Financial Conduct Authority, the Financial Ombudsman, and the Competition and Markets Authority are responsible for ensuring all debt collection agencies abide by the stated law and the legal debt recovery scheme. 

When chasing outstanding invoices and monies owed, legally, you can: 

  • Send reminders in the form of letters, emails, and text messages.
  • Make phone calls and follow-up calls.
  • Set up payment plans.
  • Outsource to a professional debt recovery agency.
  • Take court action.

What you can’t do:

  • Provide vague, non-descriptive information.
  • Assign unrealistic payment deadlines.
  • Add charges that aren’t apparent in contracts or terms and conditions.
  • Contact debtors via their social media profiles.
  • Contact a debtor’s family and friends without their permission.

Debt Collection Laws 

Debt recovery law is complex and, in some places, a minefield. To stay compliant at all times, as debt recovery agents: 

  • You can’t discuss a person or company’s debt with other people or third parties. 
  • You can’t pressure debtors into a decision. 
  • You must explain any confusing jargon, i.e., you can’t use technical jargon to confuse debtors. 
  • You can’t have your communication practices seen as harassment, and you must abide by a debtor’s contact preferences. 
  • You must be 100% sure and accurate that the debtor you are chasing owes the debt. 

Note: If debts are older than six years, the debt becomes statute barred. 

Ways to recover an outstanding debt 

Statutory demand – sent before a bankruptcy petition and is for debts over £5,000 with no disputes attached to them. 

Third-party debt order – if a debtor’s loan is about to be repaid, you can apply to the court for the money to be repaid directly to you. 

Attachment to earnings – payments are regularly deducted from the individual’s salary. 

Charging order – placed against the debtor’s property. 

Enforcement agents – used for debts up to £5,000, a bailiff (assigned) can enter a debtor’s  

property and remove belongings up to the value of the debt outstanding. Note: A High Court  

Enforcement Officer will handle debts over £600.

Debt collection steps you can take 

Before heading straight to court, which can be costly and time-consuming, look to implement a robust process where you can streamline your collection activity effectively while also remaining compliant. 



  • Performing credit checks on debtors 
  • Carrying out judgement and insolvency searches 
  • Identifying and clearly stating in T`s & C`s late payment and interest charges 
  • Sending letters in demand detailing all relevant information, including the exact amount owed, instructions on how the debt can be paid, payment due dates, etc. 

If your internal processes are still not gaining any results, you can move to County Court Proceedings. 

For this you will need to complete a County Court claim form and file this with the court. The court will issue this form to the debtor, who will have 14 days to respond. If the debtor responds positively, no further action is required, and the debt will be paid. However, if the debtor does not respond, you can take additional action and apply for a judgement against them. 

If there is still no payment made or settlement agreed resulting from the judgement, look to instruct a professional debt collection agency who can help recover the amount owed.  

Professional debt collectors will offer a range of debt collection services, providing you with a tailored service to meet your individual needs. 

Debt collection is not an easy field or sector. That’s why, at Direct Route, we ensure that our debt recovery agents are professionally trained to the highest standards. 

We’re also proud members of the CSA, the trade association for the debt collection agency, showing our commitment to maintaining high-quality collections and practices within the sector. 

To find out more, or to see how we can help you further today, call 0330 229 1991 or email