Understanding Debt Purchasing
When you fall behind on payments to a bank, credit card company, or utility provider, your debt may be sold on to another company. This process is known as debt purchasing. Debt purchasing companies, often called debt buyers, purchase unpaid debts from original lenders – usually for less than the full amount owed. Once a debt buyer owns your debt, they have the legal right to collect the outstanding balance from you.
If your debt is sold, you should be notified in writing by both your original lender and the new debt owner. The terms of your agreement, such as the total amount owed and your rights as a debtor, do not change simply because the debt has a new owner. Debt buyers must follow UK laws and regulations, including those set out by the Financial Conduct Authority (FCA), which oversees how financial firms treat consumers. You can learn more about their role on the Financial Conduct Authority (FCA) website.
You have important rights when dealing with debt buyers, such as the right to be treated fairly, to dispute the debt if you believe it is incorrect, and to expect your personal data to be handled lawfully under the Data Protection Act 2018 and UK GDPR. If you feel you are being treated unfairly or harassed, it’s important to know that there are rules in place to protect you. To better understand what counts as unfair treatment, visit our page on unfair debt practices.
Your Data Protection Rights When Dealing with Debt Buyers
When a debt buyer takes over your debt, they also gain access to your personal information, such as your name, address, contact details, and the specifics of your debt. Under the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018, debt buyers must handle your data lawfully and fairly. This means they can only collect and use information that is necessary for managing your debt, and they are required to keep your data secure and confidential.
You have important rights when it comes to your personal data. For example, you can ask a debt buyer what information they hold about you and request corrections if anything is inaccurate. If you believe your data has been misused or mishandled, you have the right to raise a complaint.
To explore your full rights, the responsibilities of debt buyers, and practical steps for protecting your information, see our detailed guide on data protection and debt.
For a broader overview of how your personal data is protected under UK debt collection laws, including what creditors and debt buyers can and cannot do, you may also find this legal guide helpful.
Debtor Data Protection Rights and GDPR
When a debt is sold to a new company, your personal data is transferred along with it. Under the UK General Data Protection Regulation (GDPR), you have important rights over how debt buyers handle your information. These include the right to access the data held about you, request corrections to inaccurate details, and, in certain circumstances, ask for your information to be erased. Debt buyers must process your data fairly, lawfully, and transparently at all times. If you believe your data rights have been breached, you can take action to protect yourself.
For a detailed explanation of your rights, how GDPR applies specifically to debt collection, and what steps you can take if you think your data is being misused, see our dedicated guide on Debtor data protection rights and GDPR.
Verifying a New Debt Owner
Before making any payments to a new debt owner, it’s essential to confirm they are the legitimate holder of your debt. Under UK law, including the Data Protection Act 2018 and regulations set by the Financial Conduct Authority (FCA), debt buyers must be authorised and transparent about their ownership. Verifying a new debt owner helps protect you from scams and ensures your personal data is handled lawfully.
Always ask the debt buyer for official documents – such as a notice of assignment or a letter from the original creditor – proving they now own your debt. Be cautious of fake debt collectors, who may try to deceive you into making payments to them.
To help you take the right steps, see our detailed guide on how to verify a new debt owner, which explains the process, what evidence to request, and how to stay safe from fraudulent activity.
What to Do If You Experience Unfair Practices from Debt Buyers
If you believe a debt buyer is treating you unfairly, it’s important to know your rights and the steps you can take to protect yourself. Unfair or aggressive practices might include repeated calls, threats, or attempts to collect debts you don’t owe. These actions could amount to harassment by creditors, which is unlawful under UK law.
Debt buyers must follow rules set out by the Financial Conduct Authority (FCA), which requires them to treat you fairly and communicate in a clear and respectful manner. Harassment and intimidation are also prohibited under the Protection from Harassment Act 1997. If a debt buyer’s behaviour crosses the line, it may also fall under illegal debt collection – see our page on Illegal Debt Collection for more info.
If you think you are experiencing unfair treatment, you have the right to complain about unfair debt practices. Start by contacting the debt buyer directly, outlining your concerns in writing. If the problem continues, you can escalate your complaint to the FCA or seek legal advice.
Remember, support is available if you feel overwhelmed or unsure about your next steps. Understanding the difference between firm collection and unlawful behaviour can help you respond confidently. For more on your rights and what to do if you’re being harassed or treated unfairly, explore our sections on harassment by creditors and illegal debt collection.
Related Issues When Dealing with Debt Purchasing
When dealing with debt purchasing, it’s important to be aware of related issues that can affect your rights and financial situation. Debt purchasing often overlaps with other unfair debt practices, such as mis-selling of credit products. If you were sold a loan or credit agreement that wasn’t suitable for your needs or circumstances, this problem can continue even after your debt is sold to a new company.
Another concern is unauthorized or excessive debt charges. Some debt buyers may try to add fees or charges that weren’t part of your original agreement. It’s important to check what you actually owe and challenge any charges that seem unfair or are not properly explained.
The terms of your original contract also matter. When a debt is sold, the new owner must still follow the rules about unfair contract terms and fees. UK law protects you from contract terms that are unfair or hidden, so you have the right to question any new conditions or charges imposed by a debt purchaser.
If you fall behind on payments, debt buyers may use legal methods to recover the money, including attachment of earnings orders. This means money can be taken directly from your wages to pay off the debt. These orders are governed by the Attachment of Earnings Act 1971, which sets out the rules for how and when your earnings can be accessed.
Managing multiple debts or dealing with aggressive debt buyers can be stressful, but there are practical steps you can take. Our guide to managing debt offers tips on prioritising payments, negotiating with creditors, and seeking professional advice.
Debt purchasing can also affect people with mortgage arrears, as some lenders may sell unpaid mortgage debts to third parties. If you’re on Universal Credit and struggling with rent or other arrears, you may be able to get help with debt and rent arrears on Universal Credit.
Understanding these connected issues can help you protect your rights and make informed decisions when dealing with debt buyers.
