Your rights: being chased for debt or money you don’t owe

If you’ve ever had a company chasing you for a bill you can’t pay, you’ll know what an ordeal this can be – dreading the post, feeling nauseated when the phone rings or the door knocks.

But what happens if you don’t owe the money in the first place and the alleged creditor still insists you pay up?

Worse still, what if the company is threatening you with court action?

Here’s our guide to your consumer rights.

Worryingly, there are a number of reasons a company may wrongly chase you for a debt.

The confusion could be the result of a simple admin error or something more sinister – for example, you may be the victim of identity theft and the fraudster has used your information to obtain credit.

Your situation could also be caused by a “mistrace”, in which a debt collector incorrectly links another person’s debt to your identity.

A mistrace typically occurs when a debtor has a similar name to yours, shares your date of birth or has previously lived at your address.

Although it may be tempting to ignore any requests to pay a debt you don’t owe, you risk serious damage to your credit score or even court action by doing so.

“Debt collectors often intensify their efforts if they’re being ignored,” says Andrew Shaw, debt advice policy co-ordinator at StepChange Debt Charity.

“They may increase the volume of phone calls and letters, and the warnings may become more drastic.

“Eventually, they can take you to court and get a judgment against – if you don’t defend the court proceedings, judgment will be entered in your absence.”

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It may sound obvious, but it’s a good idea to check the debt is, in fact, not your responsibility.

Even if you don’t recognise the details of a debt, you could be liable if:

• One of your creditors has sold on an existing debt to a collection agency;
• A person for whom you acted as guarantor has failed to make payments;
• A former partner to whom you were financially linked has defaulted on a credit agreement.

Under sections 77, 78 and 79 of the Consumer Credit Act, a lender must produce a “true copy” of your original loan agreement if you request one.

This document should include the full terms and conditions of your loan, details of any changes to the agreement and your full name and address when you took out the loan.

If the company fails to do so within 12 working days, it cannot legally pursue you for the debt until it provides you with this information.

If you are still convinced you don’t owe the money, the next step is to dispute the debt with the lender.

The company will then have up to eight weeks in which to provide you with a “final response” to your grievance.

You can also request your account is frozen while the investigation is carried out – this should prevent further interest or penalty charges being added.

If you’re not satisfied with the creditor’s response, you’ll have up to six months to raise your grievance with the Financial Ombudsman Service (FOS).

The FOS will ask the company to provide credible evidence that you are the person who incurred the debt.

If the FOS rules in your favour, it can force your would-be creditor to compensate you for any stress you have endured, or expenses you have incurred while disputing the debt.

Bear in mind, there is no set amount of compensation and not all successful claims will automatically result in compensation.

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Unfortunately, some lenders resort to extreme measures to recover money they believe you owe – even if you’re querying its claim.

According to StepChange’s Shaw: “Aggressive pursuit of debts via threatening phone calls, bailiffs and other strategies can cause untold anxiety and stress and often pressures people into making unaffordable repayments.”

When has a creditor overstepped the line? A lender may be harassing you by:

• Ignoring you if you claim you don’t owe the money;
• Contacting you repeatedly during one day;
• Approaching you for payment via social media;
• Failing to inform you your debt has been sold to a collection agency;
• Attempting to embarrass you in public.

Visit the Citizens Advice website for a full definition of harassment.

If you believe you’re being harassed, try to gather as much evidence as possible of any inappropriate behaviour before making a complaint to relevant regulator.

Relevant evidence could include the time and dates of calls or visits you receive in relation to the debt, as well as correspondence from the lender.

In extreme cases, a lender may refer your case to a bailiff (or enforcement agent) if it doesn’t receive the money it believes you owe.

A potential creditor should not pass your details to a bailiff while the debt is in dispute.

If you receive visits or letters from bailiffs while your complaint is being investigated, you should inform the bailiff you’re challenging the debt.

You can do this by sending a copy of your original grievance to the enforcement agent.

If you would like to complain about a bailiff, there a number of organisations you can contact, such as the Civil Enforcement Association or the High Court Enforcement Officers Association.

If you’re concerned about a debt (whether you owe the money or not), a number of organisations can provide support:

• Citizens Advice
• National Debtline
• StepChange Debt charity
• Debt Support Trust