Tackling your debts

How to dispute a debt – and when you can win

Posted 31 October 2016

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When is a debt not yours to pay – and when do you have to cover it?

If you’ve ever had a letter telling you that you owe money, you’ve probably wished you didn’t have to pay it. But in most cases if you’ve borrowed the money, you will have to either pay it back or seek further help. 

But what about if you want to dispute a debt because you don’t think you owe it? How do you go about this? Let’s take a look at when you can and can’t dispute a debt and how to go about doing this. 

When you can dispute a debt

When you borrow any money, you’ll always sign a credit agreement. This gives you and the creditor some rules to stick to. It will include how you’re expected to pay the money back and what you’ll need to do if you want to pay it back early. 

If you’re not sticking to the terms of this credit agreement and you miss a few payments, you might get a default from the creditor. But if you don’t think the terms of the credit agreement were fair, you might dispute the debt.

Reasons why you can dispute a debt include if you didn’t sign a credit agreement for the debt, you didn’t understand that you were signing a credit agreement, or if you were under 18 when you signed it. You should always speak to a debt advisor if you think you have grounds to dispute a debt. They’ll be able to tell you if they think you can dispute a debt and, if they don’t think you can, why this is. 

How to do this

If you want to dispute a debt for any reason, you should first contact the creditor. You can complain to them in writing by explaining clearly why you don’t think you have to pay the debt. If you have any evidence for this – for example, a copy of your passport if you were under 18 at the time you borrowed the money – you should send this with your letter.

The creditor might not agree with you and they might say you still have to pay the money. But if you still think you don’t have to pay the debt and you want to take your complaint further, you can get in touch with the Financial Ombudsman Service (FOS).

If you’re looking to set up a debt solution to deal with your debts, you need to be aware that including any debt on a solution means that you are acknowledging that you owe it. So if you wanted to dispute the debt, this would need to be done before your solution started. 

When you can’t dispute

Just because you don’t recognise a debt, it doesn’t mean you don’t have to pay it. Your creditor might have sold your debt on to another company. In this situation, you now owe the money to the new company who bought it.

If you get a call or a letter from a company you’ve never heard of and they say you owe them money, it’s possible that this is what’s happened. But don’t just take their word for it – ask to see details of this including how much you owe and who they bought the debt from. If they’re not clear on the details or they can’t tell you any more about it, they might be a scammer.

If there isn’t a reason for you to raise a dispute, you will need to deal with the debt. It’s not a good idea to simply leave it – if you just stop making payments, you could end up with extra charges to pay or even a CCJ. That’s why it’s really important that you keep in touch with your creditor and let them know if you’re not going to be able to make your repayments. 

If you can’t afford to pay what you owe, you can speak to your creditor and see if you can set up a new affordable payment plan. You could also speak to a debt advisor like the ones at Debt Advisory Centre about the different debt solutions available. They will be able to take a look at your circumstances – including how much you earn, how much debt you have and who you owe it to – and they’ll recommend the best way for you to get debt free.

This might not necessarily be a debt solution – for example, if you’ve only just started to struggle with what you owe, you could get back in control of your finances by budgeting more smartly and making some cutbacks. But whatever your situation is, there will be a way to deal with your debt problems.

by Emily Bancroft

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.