What is the Difference Between Bailiffs and Debt Collectors?

February 23, 2024 / FAQs

Receiving any kind of debt collection notice can be both disastrous for a company, and worrying for its directors. It demonstrates a shift in the attitude of a company’s creditors, poses a threat to a company’s assets and cashflow, and could even escalate into a legal dispute. To avoid such an unpleasant development, it is best to swiftly deal with an enforcement notice upon receiving one.

Although any contact from debt collection agents is usually a bad sign, not every notice or letter is the same. There is a considerable difference between contact from bailiffs and contact from debt collectors, which will impact the responses available to you. But what exactly are the differences between bailiffs and debt collectors, and what do they mean for you and your company?

In this article, Clarke Bell breaks down the differences between bailiffs and debt collectors, how they might approach your company, and the ways in which you can respond to them.

What is a bailiff?

Bailiffs, often referred to as enforcement agents, are individuals who work to collect important debts. Bailiffs can work for a private company or the council, and most often enjoy the backing of the courts. This allows bailiffs to be more forceful in their debt collection, especially if they have a warrant for entry or asset seizure.

When are bailiffs used?

Bailiffs can be used to collect a wide range of debts, though they are mostly used after a dispute in court. For example, bailiffs could be used to collect criminal fines, County Court Judgments, tax arrears, or large awards ordered by a civil court.

Before visiting your company, bailiffs will send an enforcement notice detailing the specifics of your case. Bailiffs will visit your company after seven days, excluding holidays and Sundays, have passed since the serving of the notice.

What is a debt collector?

Debt collectors are individuals who work for a debt collection agency to collect various debts. Rather than working on behalf of the courts, debt collectors are hired by creditors to collect an outstanding debt without necessarily getting the courts involved. As the courts do not directly appoint debt collectors, they have much less power when it comes to collecting a debt.

When are debt collectors used?

Debt collectors are used by creditors to collect an outstanding debt. These debts typically include small loans, such as personal loans or credit cards, unpaid fees, or unpaid costs for goods and services. Debt collectors may also purchase a debt, entitling them to collect despite not being the original creditor. If you receive an unexpected call from a debt collection agency, you may want to contact your original creditor to find out if they sold the debt.

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What is the difference between bailiffs and debt collectors?

Despite working in the same industry for the same goal, there is a world of difference between bailiffs and debt collectors. These differences mostly stem from bailiffs working directly on behalf of the courts, thereby enjoying a level of authority debt collectors simply don’t possess.

What debts can be collected?

Bailiffs generally collect debts of at least some legal importance. This includes criminal fines, tax arrears, dues owed to a local council or HMRC, child maintenance payments and County Court Judgments (CCJs). As these debts are of a legal nature, they are typically only collected after a court hearing.

Debt collectors tend to specialise in collecting small debts of a commercial nature, rather than any outcome of a legal dispute. This means debt collectors have a wider range of debts to collect, ranging from unpaid personal loans to company equipment rental arrears. However, although debt collectors have a wider range of applications, they have much less authority to lean on should a debtor refuse to cooperate.

Read Our Complete Guide To Debt Collection

Legal powers of bailiffs and debt collectors

The main difference between bailiffs and debt collectors resides in the legal authority held by both agents. This difference in powers greatly impacts how you can respond, and how forceful your debt enforcement agent can be.

What can bailiffs do?

Bailiffs have varying levels of authority depending on the involvement of the courts and the severity of a debt. For example, bailiffs who are directly appointed by the courts may be able to force entry into a home or company premises in certain cases. Force may be used when collecting debts on behalf of HMRC, or important debts such as a criminal fine. However, force can be more readily applied when collecting debts from companies, as bailiffs have a wider array of powers when collecting from companies and the self-employed. When collecting from a dwelling, bailiffs usually cannot rely on force. Instead, they must make it clear who they are and ask for permission to enter. Any attempts of force can be grounds for a legal case.

Once bailiffs have gained entry, they will first make a list of any assets suitable for seizure. They will generally prefer high-value assets, such as vehicles or equipment, though they will include low-value assets if necessary. Any items listed can be taken away at a later date, giving you the chance to make repayments and settle the debt in question.

What can debt collectors do?

Debt collectors are much more limited in how they can collect a debt. Their powers start and end at the ability to ask for repayments. They can’t use any force, can’t gain entry to your property, and must leave immediately once you tell them to. However, this doesn’t mean you should ignore debt collectors, as your creditor may escalate the issue if you refuse to make repayments.

Handling bailiffs and debt collectors

Handling bailiffs and debt collectors can be a daunting task, especially if your company is insolvent and cannot afford to repay the debt in question. In such cases, the usual methods of dealing with enforcement agents, such as repayment or negotiation, are not applicable. Instead, directors may wish to consider liquidating their company.

Creditors’ Voluntary Liquidation (CVL) can prove to be a reliable method of solving debt-related problems faced by an insolvent company. It allows directors to appoint an insolvency practitioner of their choosing to the role of liquidator. This liquidator will dispose of company assets for the highest possible value, distribute the proceeds amongst creditors, and wind up the company once all distributions have been made. The CVL procedure also affords directors certain legal protections, ensuring creditors cannot launch legal action during the procedure, and that directors are protected from accusations of misconduct.

For more information regarding Creditors’ Voluntary Liquidations, read our complete guide to the procedure.

Clarke Bell can help

Receiving a notice from the bailiffs or debt collectors is never a good part of your day. An impending visit from any debt enforcement agent is a serious problem, one that requires fast action to remedy. Clarke Bell can help you find the best action to take.

We have more than 29 years of experience in helping struggling companies find the best solutions to their financial problems.

Our team can help you find the most suitable approach for your company, whether it be a business rescue plan or Creditors’ Voluntary Liquidation.

Don’t hesitate to contact us today for a free, no-obligation consultation and find out exactly what we can do for you.