What Powers Do Commercial Debt Collectors Have?

Debt collection is one them things. Most people have an opinion on it. Arguably one of the reasons for that is that either they have been affected by financial troubles in the past, or know somebody that has. The figures on debt in the UK support that too with one person every 5 minutes and 12 seconds going bankrupt or insolvent between December 2020 and February 20201 (

What that that public influence has led to over the years is a serious increase in the amount of regulation of the financial sector over the years – which only began in 1979 with the arrival of the EC directive no 77/780 (, leading up to now the Financial Conduct Authority and their regulation of most consumer financial activities. Despite this, it wouldn’t be too difficult for anybody to do a google search and find a ‘horror story’ regarding debt collectors.

However, JSP Credit Management operates in a different domain to that, in the commercial credit management arena. The commercial credit management arena is less regulated than the consumer debt and financial industry but for some reason, there tends to be less publicity about the kinds of antics that happen in the commercial debt collection industry. JSP Credit Management suspects it has something to do with a view if it is a company rather than a person being harmed, then it is not as bad.

When it comes to commercial debt problems the data is just as revealing. The data on company insolvencies is collected by companies and published monthly and in the last month alone in Birmingham, there were 170 companies that went into liquidation or administration. Also, some of those numbers will be attributable to companies that have been wound up by company owners who have retired admittedly however a large portion of them will have happened because of cash-flow problems.

What this lack of publicity has led to is something of a void in the knowledge of business owners about what rights they have and what rights commercial debt collection companies have when they are assigned the task of recovering a non-performing debt either by way of acting as a third party agent or as the new owner of the debt having purchased it from the original vendor.

Therefore the purpose of this blog is to bridge that gap and to clarify for people and organisations, who may be being chased by a commercial debt collection agency, exactly what their rights are and what they are not. In the process perhaps(?) it might even challenge some pre-existing notions one or two readers had about the topic at hand. If so, that’s just a bonus.

A commercial debt is a debt that has arisen out of a contract between two commercial entities which usually involves one party supplying the other one with a product or a service. There can be other ways for a commercial debt to arise of course but this is by far and away the most common. Immediately then it can be noted that if a contract is in place then there a legal aspect to the transaction on which the debt is being pursued.

The worst-case scenario when it comes to outstanding commercial debts is that the legal leverage that is assumed by the presence of a contract can result in legal proceedings being taken to recover the debt and that will result in a court order being given that makes official the legal right of the creditor to the money which is owed to them and usually includes a time span by which the debt must be repaid even in full or by installments.

After that, a claimant (the person awarded the judgment in their favour) can apply to have the order enforced which can result in bailiffs or a winding-up petition being issued to the company. More information about what a bailiff can do can be found here ( However a winding-up petition can result in a company being dissolved by companies house if not challenged by the person who owes the debt, so at this stage, things are about as serious as they can possibly get.

However, if a debt collection agency has been assigned to recover a debt from you then you will hear from them long before it gets to that stage. Initial contact would usually start by either receiving a letter, email, or telephone call from them to introduce themselves and explain the nature of their involvement (the recovery of the debt owed). Our advice is to engage with them at the earliest possible stage because in our experience no collection agency actually wants to get to the stage of issuing legal proceedings. The truth is, it is a lot of work and most appreciate the severity of such a course of action so they would rather avoid it if possible.

If you believe the debt is not payable then it is vitally important that this is communicated to the debt collection agency when they make contact with you. It is far from unheard of that an agency will have been assigned a case that is not legitimately recoverable and legally enforceable for a myriad of reasons, ranging from the wrong debtor being chased to a contract not being in place or to the service or product in question not being provided as agreed.

However, if you have received a good piece of work from a company and the money you owe them has become overdue and you accept it is payable you will usually find most companies more than willing to reason with you in relation to its repayment if you open up a dialogue with them about the circumstances surrounding its non-payment and your intention to pay it back.

At JSP Credit Management we are absolutely no different. Especially during times like these when there is more pressure on companies finances than there has been for a long time we quite understand if the reason for non-payment is your own cash-flow problems but unless we know about it we cannot do anything about it. If you are being chased by us and want to discuss your case then feel free to get in touch with us at or call us on 01827 929209 and we would be more than happy to talk to you.

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