My Late Father's Debt Was Sold to a Collection Agency

A letter arrives from a company you have never heard of. It says your dad's debt has been sold to it, gives a reference number that matches nothing you have seen, and asks you to call. He died months ago. You already told the original lender. Nobody mentioned that a debt could be sold on to a debt collection company after he died, and the first instinct is either to pay it to make it stop or to bin it.

Do neither yet. Selling a debt is ordinary commercial practice and it is usually legitimate: banks and card issuers sell portfolios of accounts, and a deceased customer's balance can be included in one. But the sale moves the debt, not the rules. The buyer steps into the original lender's shoes and gets exactly the rights the lender had — no more. It is still a claim against your father's estate, not against you, and it is still governed by the credit agreement he signed years ago.

What follows is what should have happened, what a purchaser can and cannot add, and the specific things to ask for in writing before a penny of anyone's money moves.

The short answer: the debt moved, the rules did not

When a lender sells a debt, what changes is who is owed the money. What does not change is the amount, the terms of the original agreement, the interest provisions in it, or who is liable. A purchaser cannot rewrite the contract it bought.

So the first question is not "who are these people?" but "was this debt in his sole name?" If it was, it is a claim against his estate. The estate pays what it can from what he left, and if there is not enough, the balance is written off. A son, a daughter or a widow does not become liable by being related to him, by living in his house, or by being the person who happens to open the post.

The exceptions are the same ones that always apply, and they have nothing to do with the sale. A joint account, a joint loan, a guarantee you signed, a card where you were the main account holder — those were your debts too from the day you signed, and they still are. That is a different situation from being pursued as a relative, which is covered in what to do when a credit card firm chases you for a parent's balance. It is also worth checking old joint agreements you may have forgotten, particularly after a separation, as a joint loan with an ex-partner can outlive both the relationship and the borrower.

Notice of assignment: what should have arrived

The document that makes a sale effective against you is the notice of assignment. In England, Wales and Northern Ireland, a legal assignment of a debt requires express notice in writing to the debtor; in Scotland the equivalent step is intimation of the assignation. In practice you should receive either one letter from the buyer and one from the seller, or a single letter jointly branded, telling you the account has been transferred, on what date, and where payments now go.

This matters for a practical reason. Until proper notice is given, a payment made in good faith to the original creditor still counts. If you have been paying the original lender out of the estate, that money is not lost because a purchaser has since written to you.

If no notice of assignment ever arrived, ask for a copy. A firm that cannot evidence its own title to the debt is asking you to pay a stranger on trust, and no executor should do that. Ask them plainly, in writing, whether they own the debt or are collecting it on behalf of someone else — a debt purchaser and a collection agency acting under instruction are different things, and the answer tells you who you are actually dealing with.

Check the firm too. Debt purchasing and debt collecting are regulated activities, and firms doing them need permission from the Financial Conduct Authority. You can look up any firm on the Financial Services Register at fca.org.uk. This is also the moment to be blunt about fraud: demands referencing a recent death are a known approach for scammers, who find the details in obituaries and public records. Never give card or bank details over the phone to someone who rang you, never pay into account details supplied only by phone or text, and verify the firm independently before responding.

Can they add interest and charges after a death?

Only where the original credit agreement allowed it. That is the whole test. A purchaser has no power to invent a charge, and "collection costs", "administration fees" or "assignment fees" that appear from nowhere should be challenged in writing and not paid until they are justified by reference to a clause.

Interest is more nuanced. On most consumer credit agreements interest is contractual, so it does not automatically stop because the borrower has died. In practice many lenders and purchasers do freeze interest and charges once a death is confirmed and a death certificate has been supplied, as a matter of policy rather than law. It is a reasonable thing to ask for explicitly, and to ask for in writing, because a verbal assurance on a recorded call is harder to rely on months later.

There is also a statutory limit on what a creditor can do purely because the borrower has died. Under section 86 of the Consumer Credit Act 1974, where a regulated agreement is fully secured, a creditor cannot use the death itself as the reason to demand early repayment, terminate the agreement or repossess. Where the agreement is unsecured or only partly secured, it can take those steps only with a court order. You can read the section on legislation.gov.uk.

The practical request is simple. Ask for a statement of account showing the balance at the date of death and every single entry added since, itemised. Then compare it against the agreement. Anything that cannot be tied to a clause is a candidate for removal, and firms do remove them when challenged properly.

Making them prove it

You are entitled to be sceptical, and you should be. Portfolios are sold in bulk, data gets transcribed badly, and a purchaser sometimes knows very little about the account beyond a name, an address and a figure.

Ask, in writing, for three things:

• A copy of the original credit agreement. Sections 77 to 79 of the Consumer Credit Act 1974 give a borrower the right to request a copy of a regulated agreement for a small prescribed fee, and a creditor that fails to comply cannot enforce the agreement while it remains in default of that request. As the person dealing with the estate, you can make that request on the estate's behalf.
• A full statement of account from the opening of the account, or as far back as the firm can go, showing the balance built up, all payments made, and everything added since the date of death.
• The notice of assignment, and the date the debt was sold.

Then say clearly that the debt is disputed pending that evidence. Under the FCA's consumer credit rules a firm must not continue to pursue a debt that is disputed on valid grounds while it investigates, and it must be able to provide details of what it says is owed. In practice, a well-worded dispute letter buys the estate breathing space and often surfaces the fact that a chunk of the balance is fees nobody can explain.

Keep everything. Every letter you send, dated, and every reply. Deal in writing wherever you can and follow up phone calls with a short email confirming what was said. If this ever becomes a complaint, the file you have built is what decides it.

What to write, and the sentence that costs you money

Head your letters with the fact that you are writing as the executor or as the person dealing with the estate of the late Mr So-and-so, that you are dealing with the estate's affairs, and that you do not accept personal liability for the debt. That sentence is not rudeness or a legal trick. It is the line that stops a firm treating your correspondence as though you had taken the account over.

The mistakes that cause real damage are quiet ones:

• Paying from your own bank account because it is quicker than waiting for probate or confirmation. It muddies who is paying whom, and it can be read as you assuming the debt.
• Agreeing a repayment arrangement in your own name to make the calls stop. An estate does not need a repayment plan. It pays what it can once, and then it is finished.
• Saying "I will sort it out" in writing. Say instead that the estate will meet valid claims in the correct order once its assets are established.
• Paying the loudest creditor first. If the estate turns out to be insolvent, an executor who paid creditors out of order can be pursued for the difference, as we set out in when an executor can be made to pay estate debts personally.

Alongside this, keep building the picture of what the estate actually holds. Balances sit in places families do not think to look, from app-only banks — see closing a Monzo, Starling or Revolut account after a death — to money other people owed him, which is an asset of the estate and can be called in. That cuts both ways on evidence: if you are chasing a family loan owed to the deceased, you will be asked for the same kind of proof you are demanding here.

Old debts, and the payment that brings one back to life

Purchasers often buy old accounts cheaply, which is why a demand can appear years after the last payment. Age matters legally.

In England and Wales, most consumer debts become statute-barred six years after the cause of action arose, under the Limitation Act 1980, which usually means six years from the last payment or written acknowledgment. The creditor can still ask for the money, but it cannot enforce it through the courts. Northern Ireland has its own limitation legislation with a comparable six-year period for most consumer debts.

Scotland is both shorter and stronger. Under the Prescription and Limitation (Scotland) Act 1973 most consumer debts prescribe after five years, and prescription extinguishes the obligation rather than merely barring the remedy. In Scotland the debt genuinely ceases to exist.

Source: Limitation Act 1980 and the Prescription and Limitation (Scotland) Act 1973, published on legislation.gov.uk.

Two things follow, and the second is the trap. First, the death does not restart the clock: time runs from the last payment or acknowledgment, not from the funeral. Second, in England, Wales and Northern Ireland a part payment or a written acknowledgment can restart it — so a relative who sends a small sum to be helpful, or an executor who writes "I accept this is owed", can revive a debt that was otherwise unenforceable. Before paying anything on an old account, work out when the last payment was actually made.

The FCA's rules also restrict pursuing statute-barred debts where there has been no contact with the customer during the limitation period. If a firm is chasing something clearly ancient, say so in writing and ask them to justify it.

When the estate cannot pay everyone, and where to complain

Sometimes the honest answer is that there is not enough money. If the debts exceed the assets, the estate is insolvent, the payment order stops being a matter of choice, and the executor's own exposure changes. We have set that out in full in dying owing more than the estate is worth. If the person was already bankrupt when they died, a trustee is in charge and the position is different again, which we cover in dying part-way through a bankruptcy.

If a firm behaves badly — pursuing you personally after being told you are not liable, refusing to evidence the debt, adding charges it cannot explain, or continuing to chase while a genuine dispute is open — complain to the firm in writing first. If you do not get a satisfactory final response within eight weeks, you can take it to the Financial Ombudsman Service, which is free, and which will consider a complaint brought by the person representing the estate. Free debt advice is available from Citizens Advice, MoneyHelper and StepChange, none of whom will sell you anything.

There is one last thing worth saying, because people arrive at this page in a particular frame of mind. Sorting out a parent's debts is the moment most of us first look properly at our own, and at what would land on the people we live with. That thought hits hardest when the ages line up, which is why we wrote about reaching the age a parent died at. The practical point is narrow: money paid to a family through a life policy written in trust goes to the named beneficiaries rather than into the estate, so it is not available to creditors and does not wait for probate or confirmation. Whether cover can be arranged, and on what terms, depends on age, health and the answers given at application. If it is on your mind, you can get life insurance quotes through an FCA-authorised broker.

The rest of this subject — cards, car finance, guarantees and business borrowing after a death — is collected in our guide to debt, credit and finance after a death.

Frequently asked questions

Can a debt be sold after the person has died?

Yes. Creditors sell portfolios of accounts routinely, and a deceased customer's balance can be included in one. The buyer takes on the same rights the original lender had and no more, and it should send a notice of assignment telling you the account has transferred. It remains a claim against the estate rather than against relatives, and the terms of the original credit agreement still govern it.

Can the new owner add interest or collection fees?

Only where the original credit agreement allowed it. A purchaser cannot invent charges, and many stop adding interest once a death has been confirmed and a death certificate supplied, though that is usually policy rather than a legal requirement. Ask for a statement showing the balance at the date of death and every entry added since, then challenge in writing anything that cannot be tied to a clause in the agreement.

How do I make them prove the debt?

Write and ask for a copy of the original credit agreement, a full statement of account, and the notice of assignment showing they now own it. Say clearly that you are dealing with the estate and are not accepting personal liability, and that the debt is disputed until the evidence is produced. Keep a dated copy of every letter you send and every reply you receive.