My debt has been sold to a collection agency do I still have to pay
Many people think a debt is wiped when it is sold, or assume letters from a collection agency are a scam. This guide explains what it really means when a lender sells a debt, whether you still have to pay, how statute barred debts work, and what to do if you think the collector is wrong or acting unfairly.
Facts in this article are based on guidance from National Debtline, Citizens Advice, the Financial Ombudsman Service, regulated debt advice charities and Financial Conduct Authority rules on consumer credit, debt collection and statute barred debts.
It is increasingly common for people to receive a letter from a company they have never heard of saying that a credit card balance or personal loan has been bought and that payment must now be made to the new firm. Others find that an old debt has suddenly reappeared after years of silence.
This can be alarming and confusing. Many people wonder whether the debt is still real, whether the new firm can take them to court, or whether the timing means the debt is now too old to enforce.
This guide explains what it really means when a debt is sold, when you still have to pay, how limitation periods work, and what you can do if a collector is chasing the wrong person or the wrong amount.
Has the debt actually been sold or is it just being collected?
First, it is important to know whether the debt has truly been sold.
Debt advice sites explain that there are two main arrangements.
- In some cases a lender asks a debt collection agency to collect money on its behalf. The legal owner of the debt is still the original lender.
- In other cases the lender sells or assigns the debt to another company. The buyer becomes the new legal owner and has the right to collect the balance.
In both situations you do not get to choose who you deal with. If the debt has been assigned, you should usually receive:
- a notice from the original lender saying the debt has been sold, and
- a welcome or introduction letter from the purchaser setting out how to pay and how they will communicate with you.
If you are unsure whether a sale has really taken place, you can ask both the old lender and the new company to confirm in writing who now owns the debt and on what basis they are contacting you.
Do you still have to pay after the debt is sold?
In general, selling a debt does not wipe what you owe. The new owner simply steps into the shoes of the original lender. National Debtline and Citizens Advice explain that when a valid debt is assigned, the new firm can normally collect it on the same legal terms as before, including taking court action where appropriate.
However, there are important questions you should ask:
-
Is it definitely your debt?
Citizens Advice stresses the importance of checking liability. If you do not think the debt is yours, or the amount looks wrong, you can ask the firm to prove it, for example by providing copies of the agreement and statements. -
Is the amount correct?
You can ask for a breakdown showing the original balance, interest, charges and any payments already made. If you dispute fees or added interest, set this out in writing. -
Is the debt too old to enforce (statute barred)?
Time limits are explained below. In some cases, even if a debt still exists in theory, the creditor may be out of time to use the courts.
Until you have clear answers to these questions, you should not agree to payments you cannot afford, but you also should not ignore letters. Using a simple written request for information is often the best first step.
How statute barred debts work
In this country there are legal time limits on how long many creditors have to start court action to enforce a debt. These come from the Limitation Act 1980 for England and Wales, and from the Prescription and Limitation Act for Scotland.
For most simple credit agreements such as credit cards, personal loans and overdrafts:
- in England and Wales, the usual time limit is six years
- in Scotland, the usual time limit is five years.
National Debtline explains that a debt will normally be statute barred if, during the relevant five or six year period:
- you have not made any payment, and
- you have not written to the creditor acknowledging that you owe the debt, and
- the creditor has not already obtained a court judgment against you.
If a debt is statute barred:
- in England and Wales, the creditor may still ask you to pay, but you can use the limitation rules as a defence if they start a claim
- in Scotland, guidance explains that many such debts effectively cease to exist and cannot be enforced in court at all.
Crucially, debt being sold does not reset the limitation clock. What matters is when you last paid or acknowledged the debt in writing, and whether court action has already been taken, not how many times the account has changed owner.
If you believe a debt is statute barred, National Debtline provides template letters you can send stating that you will not be paying for that reason. Firms regulated by the Financial Conduct Authority must not continue to press for payment once a customer has clearly stated that a debt is statute barred and this is correct.
What can a debt collector legally do?
In this country, debt collectors that chase regulated consumer credit must be authorised by the Financial Conduct Authority and must follow the Consumer Credit sourcebook, known as CONC.
This means they:
- can write to you, call you, and discuss repayment
- can make affordable offers and negotiate payment plans
- can, if the debt is not statute barred and there is no existing judgment, start court action to try to obtain a County Court judgment or equivalent.
But they must not:
- harass you with excessive calls or letters
- pretend to be bailiffs or imply they have powers they do not really have
- mislead you about court action or suggest you will be sent to prison for ordinary consumer debts
- continue to demand payment if a debt is correctly identified as statute barred.
The Financial Ombudsman Service can uphold complaints where firms fail to follow these rules, for example by ignoring evidence, chasing the wrong person or using threatening language.
What to do when you get a letter saying your debt has been sold
Debt charities and Citizens Advice suggest a calm, step by step approach.
1. Do not ignore it
Ignoring letters can lead to court action and extra costs, especially if the debt is fairly recent. Open everything and keep it in a safe place.
2. Check who the company is
Use the Financial Services Register on the regulator website to confirm that the firm is authorised for consumer credit work. This helps you avoid scams and also confirms you can complain to the Ombudsman if needed.
3. Ask for details of the debt if anything is unclear
Write or email to request:
- the name of the original lender
- the type of agreement (for example credit card, loan, overdraft)
- the date of the last payment they say was made
- a copy of the agreement where one is required for enforcement
- a full statement of account.
There are standard wordings for a prove it letter or a formal request for agreement information, which National Debtline and other services provide.
4. Think about whether the debt might be statute barred
Compare the dates in the information you receive with your own records. If there has been no payment and no written acknowledgement for the relevant five or six years and there is no judgment, you can use the limitation rules.
If you conclude that the debt is statute barred, write to the collector stating this clearly and keep a copy. Do not make any payment before you are sure about the limitation position, because even a small payment can restart the limitation period.
5. Work out what you can afford if the debt is still enforceable
If the debt is valid and not statute barred, use a simple income and expenditure budget to see what you can realistically pay. Debt advice charities can help you draw up a budget and can sometimes help negotiate a fair repayment plan or temporary hold on action.
Do not agree to payments that would leave you unable to cover rent, council tax, food or energy. These are priority costs.
6. Get free debt advice if you feel overwhelmed
Citizens Advice, National Debtline and other regulated charities can help you prioritise debts, respond to court papers and understand formal solutions if needed. Their advice is free and independent.
When and how to complain about a debt collector
If a collector is chasing the wrong person, ignoring evidence, breaching the limitation rules or behaving aggressively, you can complain.
The usual process is:
-
Complain directly to the firm in writing
Explain what you think they have done wrong and what you want them to do, such as stop collection, correct records or apologise. -
Give them time to respond
Firms normally have up to eight weeks to issue a final response. -
If you are not satisfied, go to the Financial Ombudsman Service
The Ombudsman is free for consumers and can order the firm to put things right, including cancelling unfair demands and paying compensation.
Complaints can be especially important where collectors have continued to pursue statute barred debts or have misled people about court action or consequences.
Key points to remember
- When a debt is sold, you almost always still owe the money. The new owner takes over the rights of the original lender, including the right to go to court in appropriate cases.
- For many credit debts there is a legal time limit on starting court action, usually six years in England and Wales and five years in Scotland, provided there has been no payment, no written acknowledgement and no previous judgment.
- Selling a debt to a collection agency does not reset the limitation clock. What matters is when you last paid or admitted the debt, and whether court action has already been taken.
- Debt collectors must be authorised and must follow rules that ban harassment and misleading statements. You can challenge unfair behaviour and escalate complaints to the Financial Ombudsman Service.
- If you receive a letter about a sold debt, do not panic. Check who owns it, ask for proof if needed, consider limitation rules, and get free debt advice before agreeing to payments you cannot afford.
Understanding what it really means when a debt changes hands can help you avoid both dangerous silence and rushed decisions, and instead respond in a way that protects your rights and your longer term finances.
