Cabot Debt Letter: Who They Are and What to Do

Who is Cabot?

Encore Capital Group, which hosts the description, calls Cabot Credit Management a debt purchaser and credit management services provider, headquartered in the UK with operations in several other European countries. Its services are described as including collections, outsourcing and litigation.

In practice, that means a letter could come from Cabot as the owner of a debt, from a collections arm acting for another owner, or from solicitors it has instructed. Read the letter closely for words like "we own" or "on behalf of". Our guide to debt sold to a new owner explains the difference.

Three quick checks on the letter

What you can ask for

• Confirmation that the debt was assigned, and the date
• A statement of account and the balance at the date of sale
• A copy of the agreement for regulated credit, using a written request and a £1 fee
• Details of the original account, so you can match it to your own records

A debt that has been sold more than once

Debts can pass through several owners. If Cabot says it owns your account, the original lender may have sold it to one buyer who then sold it on. Ask for the chain of ownership, or at least confirmation of the current owner and the date of assignment, because the person asking for payment must be the one entitled to it. You should also have received notice of each assignment, though older sales can be hard to evidence, which is a good reason to keep your own records.

Your first week

1. Note the date on the letter, because some deadlines run from it
2. Match the original lender and reference to your own records
3. Check Cabot on the FCA register
4. Write asking for confirmation of ownership, a statement and the agreement
5. Prepare a budget before you discuss payment
6. Do not agree to pay until you have the answers and know the debt is not time-barred

Keeping records

Keep every letter and note every call: the date, time, name of the person and what was said. If you use email, save the thread. If a complaint later goes to the Financial Ombudsman ServiceHow to Make an Insurance Claim and What to Do If It Is RejectedStep-by-step guide to making an insurance claim in the UK, what evidence to gather, what insurers must do, and how to complain to the Financial Ombudsman.Read more →, a clear record of what happened is the best evidence you have. Send documents by a method that gives proof of posting, and keep copies of anything you send.

If solicitors or litigation are mentioned

Because debt purchasers may use litigation, a letter from a firm of solicitors may follow if the first approach fails. That is not the same as a court claim, but it is a signal to act. Look at our guides on a letter before action and debt letters from solicitors. Under the Pre-Action Protocol you should normally get 30 days to reply before a claim is started, so use that time.

Check the age of the debt

If your last payment or written acknowledgement was more than six years ago in England, Wales or Northern Ireland, the debt may be statute-barredStatute-Barred Debt: The Six-Year Rule and UK Time LimitsIs your debt too old to be enforced? Learn the UK time limits, what restarts the clock, how it differs from your credit file and what to do before replying.Read more →, so a court is unlikely to enforce it. In Scotland the usual period is five years. Be careful, because a payment, or in England and Wales a written acknowledgement, can restart the clock. Our guide to statute-barred debt covers the rules and what to do next.

When the debt is not yours

Letters sometimes reach the wrong person, for example a previous occupant or someone with a similar name. If the debt is not yours, write promptly, give your name and address and say you do not know the account. Do not ring a number from an unsolicited message, and do not give out personal details. Our guide to letters for someone else explains what to say, and the firm should update its records once you have told it.

Credit file effects

A defaulted account usually stays on your credit fileHow Credit Scores Work in the UKHow UK credit scores work: what the credit reference agencies record, what affects your score, why scores differ between agencies and what lenders actually see.Read more → for six years from the defaultDefaultA default is a record on your credit file showing that you have seriously fallen behind on an agreement, usually after several months of missed payments.Read more → date, whether or not it has been sold. Paying or settling a debt does not remove the default, but it shows the account as settled. Check your file for free with the main UK credit reference agenciesCredit reference agencyA credit reference agency is a company that collects information about people's borrowing and sells it to lenders. The main UK agencies are Experian, Equifax and TransUnion.Read more →, and ask for errors to be corrected.

Agreeing a payment plan

If the debt is yours and you want to repay it, offer an amount based on a realistic budget. Ask for the terms in writing, including whether interest and charges will stop and what happens if you miss a payment. Do not agree to a direct debitDirect debitA Direct Debit is an instruction to your bank to let a company collect varying amounts from your account on agreed dates.Read more → you cannot afford, and avoid giving a debt purchaser control of your bank account without understanding the commitment. A free adviser, such as Citizens Advice or MoneyHelper, can set this up for you.

Complaining

Start with a written complaint to Cabot. If you are unhappy with the reply, or you have waited 8 weeks, the Financial Ombudsman Service can review it for free. Keep a record of every letter and call, and note dates. If contact is excessive, see what to do when a collector will not stop calling.