What to do if you're chased for debt that's not yours

By Michael Lloyd

It may not surprise you to hear that lenders and debt collection agencies are far from immune from making the odd mistake or two. However, receiving a phone call asking for a payment you've already made is one thing; being incessantly chased for debt that you don't owe is another. In addition to being very distressing, it could have a negative impact on your credit worthiness if you don't take steps to put things right.

If you find yourself in this situation, your first instinct might be to ignore requests for payment and hope the debt collectors go away. After all, nothing's going to happen to you if the debt genuinely isn't yours, right? not-your-debt

Unfortunately, if you do stick your head in the sand, the collector could send adverse information about you to the credit reference agencies. This could affect your chances of successfully applying for financial products such as credit cards, loans and mortgages. You might also find that debt collectors show up on your doorstep making demands.

First step: contact the company chasing you
Debt might be wrongly assigned to you for a number of reasons, including the following:

  • A fraudster may have stolen your identity and taken out a financial product in your name;

  • Trace agents, which collections departments use to locate runaway debtors, may have wrongly linked your name to an account;

  • A debt belonging to a previous occupant at your address might have been assigned to you;

  • A lender or collections agency may have made an internal administrative error.

Nine times out of 10, you'll be able to sort things out by talking to the company that's wrongly demanding money from you. "If you find yourself in this situation, speak to the business that is pursuing the debt and explain why it does not belong to you," says Samantha Hargreaves, media manager at the Financial Ombudsman Service (FOS). "You might have to send in some sort of proof -- like a written confirmation that you're the only resident at your address, for example -- but this can help you get the problem sorted quicker."

Get the FOS involved if the lender won't see reason
In some cases, however, collections agencies won't listen. They seem to assume that all debtors they contact are trying to pull a fast one.

A company has eight weeks to address your complaints of wrongful accusation. If you receive any phone calls or letters demanding payment after you've submitted your complaint, explain that you're waiting for a response and request that no further contact is made until this has been forthcoming. If the company continues to call or sends you more notices after you've made a complaint, collect evidence of its further attempts to contact you, as such behaviour could be classed as harassment.

Assuming you've submitted evidence to support your claim -- such as proof of address or a police crime reference number -- it will be time to make a compliant to the FOS. "If the business refuses to listen or still contacts you about the debt, give the ombudsman a call," says Hargreaves. "We'll talk you through your options and help you get started."

Once the eight-week period is up, you have six months to make a submission to the FOS. If you feel that the firm chasing you has failed to acknowledge your claim, collect evidence of its further attempts to contact you. The FOS has seen cases where collectors ask for an interim payment during investigation.

"Request that the account in question is frozen until the complaint is resolved," says Hargreaves. "If the company you're dealing with refuses to freeze the account, it might add charges if you do not make payments while your complaint is being investigated." 

If your complaint is ultimately rejected, you may have to pay those charges. Otherwise, they should be removed once the FOS resolves the issue.

If the FOS upholds your complaint, it will attempt to negotiate a mutually agreeable resolution between you and the company chasing you. This might involve the company paying you compensation and agreeing to make sure that any adverse information relating to the debt is removed from your credit file.

If the FOS rejects your submission, you will receive the reasoning behind its decision. If you disagree, the next step will be court action. Remember that you may be fully responsible for any joint credit agreements you enter into or any financial arrangements you guarantee. Any lender or debt collection agency will be within its rights to pursue you for a full settlement in the event that the person you've entered into a joint agreement with stops making payments on an account.

How long it takes the FOS to reach a decision will depend on how complicated your case is and the strength of your evidence, but you should receive progress reports throughout the investigation so you are not in the dark.

Check your credit
Regardless of whether you get things straightened out directly with the collector or involve the ombudsman, you'll need to check your credit file to make sure the debt didn't lead to adverse information on your record - even if a collector has agreed to make sure anything nasty gets removed.

You can access your credit file by contacting the three main UK credit reference agencies: Callcredit, Equifax and Experian. Alternatively, you can access information held on you by all three firms through checkmyfile.

If you find adverse information in your file, work with the firm that had been wrongly chasing you for money to make sure the information is removed as soon as possible. If the company is non-cooperative, get back in touch with the ombudsman.

See related: Stop debt collectors digging up dirt on social media, How to deal with debt collectors

Updated: 13 April 2017