Debt Sold to a Collection Agency UK — Your Rights (2026)

A letter arrives from a company you’ve never heard of. They say you owe money — but the original lender is someone else entirely. Your debt has been sold.

This is one of the most confusing moments in personal debt. Most people don’t know what’s actually happened, whether they legally owe this new company anything, or what rights they still have. Here’s everything you need to know.

What actually happens when a debt is sold in the UK

Lenders sell unpaid debts when they’ve decided the cost of chasing them internally outweighs the return. They package debts into portfolios and sell them to specialist debt purchase companies — often for 10 to 30 pence in the pound depending on the age and type of debt.

When a debt is sold to a debt collection agency, the agency becomes the new legal owner of the debt and has the same rights to collect it as the original creditor. This legal transfer is called an assignment. Under the Law of Property Act 1925 (section 136), a valid legal assignment must be in writing and notice of the assignment must be given to the debtor.

That notice is the letter you received. The new company contacting you is — if the assignment is valid — the legal owner of your debt.

What changes when your debt is sold

The name of who you owe changes. The company chasing you changes. That’s essentially it.

• The new owner has the right to collect the debt
• Any court action would be brought in their name, not the original lender’s
• You should direct all payments and correspondence to them, not the original creditor
• They may report the debt differently on your credit file — sometimes adding their own entry alongside the original default

What does not change

This is what most people don’t know — and it matters.

• The amount you owe. The amount of the debt does not change on assignment — the collector cannot charge interest beyond what the original agreement permitted, cannot add new fees, and cannot demand more than was owed to the original creditor.
• Your rights. Every FCA protection you had with the original lender follows the debt to the new owner. The FCA’s Consumer Credit sourcebook (CONC) applies in full.
• Any defences. An assignee cannot acquire greater rights than the original creditor held. If the original debt was flawed, disputed, or unenforceable, those issues transfer with it. If the original agreement was improperly executed, the new owner inherits that problem.
• The statute bar clock. The 6-year limitation period runs from your last payment or written acknowledgement to the original creditor — not from the date the debt was sold.

Your rights when a debt collection agency contacts you

Right 1 — The right to verify the debt. You do not have to pay anything until you’re satisfied the debt is genuinely yours and the amount is correct. Send a “prove the debt” letter asking them to provide a copy of the credit agreement and a statement of the account. Under Section 77 or 78 of the Consumer Credit Act 1974, regulated lenders must provide a copy of the agreement within 12 working days. If they cannot, the debt is unenforceable in court until they do.

Right 2 — The right to see the notice of assignment. Ask for written proof that the debt was legally transferred to them — the deed of assignment. They should be able to provide this. If they can’t prove they legally own the debt, you have grounds to dispute any court action they bring.

Right 3 — The right to dispute. Under FCA regulations, a collection agency that receives a formal dispute must pause collection activity, investigate the dispute, and respond in writing. Continuing to pursue a disputed debt without resolution is a breach of CONC rules.

Right 4 — The right to written communication only. You can request that the agency communicates with you only in writing. They must comply. This removes the pressure of unexpected calls and creates a paper trail for every interaction.

Right 5 — The right to protection from harassment. The FCA’s CONC rules, the Consumer Credit Act 1974, the Protection from Harassment Act 1997, and the Administration of Justice Act 1970 section 40 — which makes harassment by creditors a criminal offence — all apply.

Right 6 — The right to complain. If the agency breaches FCA rules, complain to them first (they have 8 weeks to respond), then escalate to the Financial Ombudsman Service (FOS) for free. The FOS has the power to order agencies to stop pursuing debts that have been improperly handled.

What collection agencies cannot do

Under FCA CONC rules 2026, debt collection agencies are prohibited from:

• False or misleading representations — including impersonating court officers or bailiffs
• Harassment — excessive contact, threatening language, calling at unreasonable hours
• Claiming powers they don’t have
• Adding charges or interest beyond what the original agreement allowed
• Continuing to pursue a debt they know is statute barred once you’ve stated you won’t pay
• Discussing your debt with third parties — family, employers, neighbours
• Sending documents designed to look like official court papers when they are not

What to do if the debt isn’t yours

Write to the agency immediately stating clearly that you do not recognise this debt and do not acknowledge it as yours. Do not say anything that could be interpreted as acknowledgement. Request full documentation including the original agreement, the account history, and the notice of assignment.

If after investigation they confirm the debt is genuinely not yours, they must stop pursuing you and correct any entries on your credit file. If they continue pursuing you after you’ve raised a clear dispute with evidence, escalate to the Financial Ombudsman.

If you’ve received letters specifically from Lowell Financial, read our dedicated guide: Debt Sold to Lowell? What to Do UK — covering the prove-it letter, statute bar check, and every option available to you.

For all UK debt relief options in one place, visit the UK Debt Help hub.