Debt collection letter: what to do first

Open the envelope, write today's date on the letter, and do not ring up and agree to pay anything until you know who is asking and whether the debt is really yours. That is the honest short answer to "debt collection letter, what to do" — everything below is how to do each part without letting a bad week turn into a bad year.

Winter bills and post-summer card statements push a lot of these letters through a lot of doors. Most of them are earlier in the process than they look.

Open it, date it, and do these three things first

1. Write the date you received it on the letter and keep the envelope. Almost every deadline in debt collection runs from a date — the Pre-Action Protocol for Debt Claims, for example, gives you 30 days to reply to a letter of claim.
2. Do not phone the number and agree to a payment on the spot. You can't work out what you can afford while your heart is thumping, and in England, Wales and Northern Ireland putting an acknowledgement in writing can restart the limitation clock on an old debt.
3. Put every letter in one box or folder, unopened ones included. When you speak to a free adviser, the pile is the thing they need.

One more rule: do not pay whoever shouts loudest. The letter with the red ink is often for a credit card, while the quiet one from the council is the debt that can actually cost you something.

Work out who is actually asking, and whether the debt is yours

Three different organisations can write to you about the same debt:

• The original creditor — the bank, catalogue, energy supplier or council you dealt with.
• A collection agency working for them. The debt still belongs to the original creditor.
• A debt purchaser that has bought the debt outright. They should have sent you a notice of assignment telling you the debt has changed hands.

If you don't recognise the debt, or the amount looks wrong, ask for it in writing before you pay a penny. National Debtline publishes free template letters for asking a creditor to prove a debt, including asking for a copy of a regulated credit agreement under the Consumer Credit Act 1974. If the creditor can't produce it, the debt may not be enforceable in court.

Statute barred debt: when a debt is too old to chase

Under the Limitation Act 1980, most consumer debts in England and Wales become "statute barred" after six years with no payment and no written acknowledgement from you — the creditor can still write to you, but a court should not let them enforce it. Northern Ireland uses a similar six-year period.

Scotland is different and better for you: under the law of prescription most consumer debts are extinguished after five years, so they stop existing rather than just becoming unenforceable.

The trap is that paying anything, or writing anything that admits the debt is yours, can restart the clock in England, Wales and Northern Ireland. Citizens Advice and National Debtline both have step-by-step pages on statute barred debt — read one before you reply to an old letter.

Common letters explained: default notice, letter before action, enforcement

Default notice

A default notice is required by section 87 of the Consumer Credit Act 1974 before a lender can end your agreement, demand the whole balance early or enforce security. Since the Consumer Credit Act 2006, it must give you at least 14 days to put things right. It is a warning shot, not a court order, but it will sit on your credit file.

Letter before action (letter of claim)

This is the last stop before court. Under the Pre-Action Protocol for Debt Claims, in force since 1 October 2017 in England and Wales, a business chasing an individual must send a letter of claim with an information sheet, a reply form, a financial statement and a list of free debt advice organisations.

You get 30 days from the date of the letter to send the reply form back. If you tick the box saying you are getting debt advice, the creditor should not start court action for at least 30 days from receiving your reply — and if you need longer, say why, who is advising you and when you expect the advice.

Notice of enforcement

This is the bailiff stage, and it only happens after a court order or a council tax liability order. In England and Wales the rules changed on 1 May 2026: the Taking Control of Goods (Miscellaneous Amendments) Regulations 2026 increased the minimum notice of enforcement from 7 clear days to 14 clear days, and for non-business debts a debt advice provider can ask for that to be extended to up to 28 clear days. Any older advice you read saying "seven days" is out of date.

Priority debts first: rent, mortgage, council tax, energy

A priority debt isn't the biggest one. It's the one where not paying costs you your home, your heating or your liberty.

• Rent and mortgage — arrears can end in possession action. Speak to the landlord or lender early; lenders have their own pre-action rules before they can seek possession.
• Council tax — miss instalments and you can lose the right to pay monthly, after which the council can get a liability order and use enforcement agents. Northern Ireland has rates rather than council tax.
• Energy — Ofgem is clear that you should tell your supplier if you can't pay, and that suppliers must help you if you ask, which can mean a repayment plan or emergency credit. Ofgem's price cap rose 4% from 1 October 2026, taking a typical dual-fuel direct debit household to £1,723 a year, though the cap limits unit rates and standing charges, not your total bill.
• Water — household supplies cannot be disconnected for non-payment in England and Wales, but the debt doesn't vanish, so still ask about a social tariff.

Credit cards, overdrafts, catalogues, buy-now-pay-later and payday loans are non-priority. They feel urgent. They aren't.

Different letters, very different stages — knowing which one you have changes what you do.

What a debt collector can and cannot do, under FCA rules

Most collectors are regulated by the Financial Conduct Authority, whose consumer credit rules require firms to treat customers in arrears with forbearance and due consideration.

They can write to you, ring you, report the debt to credit reference agencies, and ultimately take you to court.

They cannot claim to be bailiffs or court officers, imply legal powers they don't have, force their way into your home, threaten action they cannot lawfully take, or ignore you when you tell them to deal with your adviser instead. If they do, complain to the firm in writing and then, if you're not happy, to the Financial Ombudsman Service, which is free.

Asking for time: breathing space and affordable offers

In England and Wales the Debt Respite Scheme — usually called breathing space — gives 60 days with interest, charges, most enforcement and creditor contact frozen. You can't apply yourself: the House of Commons Library confirms it has to be started by a debt advice provider authorised by the FCA, or by a local authority. There's also a mental health crisis breathing space that lasts as long as the crisis treatment plus 30 days.

For an offer of payment, creditors are expected to work from the Standard Financial Statement, the common income and expenditure form with agreed spending guidelines. Under the debt claims protocol a creditor must give written reasons if they refuse your repayment offer. A token £1 a month is a legitimate offer if that is genuinely all there is.

Free help from Citizens Advice, StepChange and National Debtline

Before you agree to any payment plan, get free debt advice from Citizens Advice, StepChange or National Debtline. All three are free, confidential and won't judge you; they can also start a breathing space for you. Never pay a company a fee for something these charities do for nothing.

In Northern Ireland, Advice NI does the same job.

Scotland has different enforcement rules and its own scheme

Breathing space doesn't apply in Scotland, because debt is devolved. Instead there is the Debt Arrangement Scheme, which lets you repay debts over time with interest and charges frozen, and a statutory moratorium that pauses enforcement — called diligence — while you get advice.

Scottish enforcement looks different too: a charge for payment, then steps like earnings arrestment or bank arrestment, rather than English-style bailiffs. Citizens Advice Scotland and the Accountant in Bankruptcy have the current detail.

Questions people ask

Should I ring the number on the letter?

Not until you've checked the debt is yours and worked out what you can genuinely afford. Write instead, keep a copy, and let a free adviser make the call if you'd rather not.

Can they take money from my wages or bank account without going to court?

A commercial lender needs a court judgment first, then a separate order. Councils and HMRC have some powers that don't need a county court judgment, which is another reason council tax and tax arrears go to the top of the pile.

Will a collection letter damage my credit file?

The letter itself doesn't; the missed payments and any default recorded by the lender do. A default usually drops off your file six years after it was registered, whether or not the debt is paid.

Can I go to prison for not paying?

Not for ordinary consumer debts like cards, loans or catalogues. Council tax non-payment in England and Wales can, very rarely, lead to committal proceedings after a means inquiry, which is exactly why you get advice rather than ignoring the letters.

What to do next

Put the letters in one place, write the dates on them, then work out which are priority debts. Our debt letter help page explains your rights letter by letter and points you to the free charities.

While you're at it, check you're not leaving money on the table: try the benefits finder, the energy bill check and the council tax band check. More plain-English guides are in Helpful Tips.

Where this comes from

• Pre-Action Protocol for Debt Claims — Ministry of Justice / Civil Procedure Rules
• Consumer Credit Act 1974, section 88 (default notices)
• Debt Respite Scheme (Breathing Space) — House of Commons Library briefing
• Energy price cap will rise 4% from October 2026 — Ofgem
• Changes to the energy price cap between 1 October and 31 December 2026 — Ofgem
• Statute barred debts — National Debtline
• Check if you have to pay a debt — Citizens Advice
• CONC 7: Arrears, default and recovery (including repossessions) — FCA Handbook