What Happens When Your Account Is Handed Over to Debt Collectors?
When your account is handed to debt collectors, it means the credit provider has engaged a third party to recover the outstanding amount. You may receive calls and letters demanding payment. Verify the debt, keep records, and consider a financial assessment if the debt is unaffordable. Do not ignore the matter, as unresolved arrears can lead to legal action.
Key Points
- Hand-over means a third party is collecting the debt.
- Verify the debt before making payments.
- Keep records of all communication.
- Unresolved arrears can lead to legal action.
This article provides general consumer information and is not legal advice. Individual circumstances differ. If legal proceedings have already started, obtain advice relevant to your specific circumstances.
What hand-over means
Hand-over usually means the credit provider has referred the account to a debt collection agency or attorneys to recover the arrears. The debt still exists and you remain liable for it; the collector is acting on behalf of the creditor.
You may receive letters, calls and demands for payment. The original credit agreement and its terms generally still apply.
How to respond
Request written confirmation of the debt, including the original creditor, the outstanding balance and any added fees. Verify that the amount is correct before making payments. If you dispute the debt, say so in writing.
If you are under debt review, refer the collector to your debt counsellor. If you are not, and the debt is unaffordable, consider a financial assessment.
What happens if you ignore it?
Ignoring collection demands does not make the debt disappear. If the matter remains unresolved, the creditor may institute legal proceedings, which can result in a judgment and further enforcement steps such as a garnishee order on your salary.
Acting early — by verifying the debt and seeking help — generally gives you more options.
Frequently Asked Questions
Worried That Your Debt Has Become Unaffordable?
Debt Guidance can assess your income, essential expenses and debt commitments to determine whether debt review may be appropriate.
Reviewed by Carolina Guevara Harris
Registered Debt Counsellor · NCRDC3152
Last updated: 17 September 2025
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