Britain's personal debt now stands at a staggering £1.3 trillion, so it's no surprise that some mistakes are made in the process of collecting the payments. But what do you do if you are being chased for a debt that is not yours?

Often a debt could belong to the previous owner or tenant of the property you live in, or a previous partner, and the first you learn of it is when the letters drop on to the doormat.

Since April the Financial Ombudsman Service (FOS) has received more than 200 complaints relating to debt, about 120 of which concern unrecognised debts. The FOS now regulates any company with a consumer-credit licence - an organisation that can take money through a payment scheme. This covers about 80,000 set-ups, ranging from marquee hire to karate clubs and veterinary practices. This means that you now have an ombudsman to complain to if you are not getting anywhere with the company yourself.

David Cresswell, of the FOS, says: “Any activity where you are borrowing money from an organisation is now covered by the FOS.”

The first signs that you are being chased for a debt that is not yours could be insignificant. But if you start receiving letters from financial companies that you do not recognise, you need to be careful. It is a criminal offence to open post that is not yours, but that can make it difficult to nip such problems in the bud. The only thing that you can do legally is cross out your address on the front and in write “return to sender - not known at this address”. With most correspondence relating to financial matters, including debt, the sender's address will be on the back of the envelope.

Hopefully this will resolve any difficulties. Neil Munroe, external affairs director of the credit reference agency Equifax, says: “If post is coming to your address, then hopefully, after you have sent it back, the company will recheck its records. In a lot of cases it will find that its processes have slipped up and inadvertently sent mail to a person no longer in that property. However, it is good to try to have a conversation with the company that is trying to recover the debt, if you can.”

If you continue to receive letters, Mark Ward, head of consumer services at Call Credit, another credit reference agency, says that you should use the address on the back of the envelope to find a phone number and get in touch with the company concerned to find out who it thinks that it is chasing. He says: “We often get people worrying about their address being blacklisted, but debt relates to the individual, not the property. Find out which company is sending the correspondence and explain the situation. They are normally happy that you are giving them some information rather than nothing at all.”

If matters are not sorted out, you could face the frightening prospect of having a debt-collection agency knocking on your door to recover money that you do not owe. Many lenders sell debt to such agencies and the latter will only make money by recovering cash from debtors. This can make them extremely zealous in their pursuit of you. Mr Munroe adds: “There is a lot of pressure on the debt-collection agencies because they make their money by recovering what is owed. But to be fair, they are working hard to find the right individuals to collect the correct debt from.”

Part of the problem is that people can be confused about who they are borrowing from. For example, if you take credit with, say, an electrical store, you may be borrowing from a third party rather than the store itself. If you do not keep up the repayments, it is the third party that would chase the debt, and you may not recognise the name of the company. In some instances, former partners who used to live with you may have taken out credit unbeknown to you, which can result in chasing letters coming to you.

Be aware, though, that if you have taken out credit jointly, you could be liable to pay it off even if your partner has headed off into the sunset without any thought of being fair about splitting debts as well as assets.

Mr Cresswell adds: “Many of the complaints we deal with involve an individual saying ‘this is not my debt, it was taken out by a former partner, I paid it off' or ‘this belongs to the previous tenant'. It is these sorts of issues that bring disputes. We have established contacts with trade bodies that cover debt collection and they do, broadly, seem to be very responsible. They know that if there are complaints of them bullying or using intimidation, they will be in breach of their own code.”

Bailiffs would end up on your doorstep only as a last resort. But if they do, don't panic. Most are highly trained and have to follow a code of conduct. Mr Ward says: “If this does happen, show the bailiffs some sort of identification of who you are, stating that you are not the person they are looking for and that that person no longer lives at your address. It is a very rare situation, but it is basically about proving that you are not the person they are really after. However, it can be a bit of a pain.”

New laws came into force in July, which mean that, ultimately, bailiffs will be able to force entry to recover goods to pay off a credit-card debt. However, this would be possible only after a court has given authorisation, and will not happen until all private bailiffs are regulated.

Prevention is always better than cure, so it is important that you protect yourself. For example, when a relationship does break down, the last thing that you may want to address is the need to split your finances, but it is essential. Companies such as Callcredit, Equifax and Experian can help you to disassociate yourself from debt belonging to a previous partner.

When a relationship does end, it is always a good idea to check your credit report, which can cost as little as £2. If you and your former partner have credit accounts that are linked together, apply for a notice of correction once you can prove that you no longer have any financial connections with that person. It is also a good idea to change your personal identification numbers for any debit or credit cards and monitor your bank statements. Pay off all joint debt fully and inform the lender that you have split. Mr Munroe says: “Make sure that you settle everything to safeguard your future credit health.”

Of course, you should also remember to have your post forwarded when you move house and give your new address to any financial companies that you deal with. This should also help to prevent the possibility of a new occupant of your former address being able to clone your identity - a common reason why people are chased for debts of others.

CASE STUDY: On guard against fraud

Michael Downing, of Selly Oak, Birmingham, has been the victim of two frauds in recent years.

The most recent was when he noticed that £3,600 had been transferred from his bank account when he logged on to HSBC's internet banking website. Since it was 9.30pm, he had to wait until the morning before getting in touch with his bank to sort it out.

Mr Downing, 61, says: “When I first saw it I was horrified, and with it being so late in the evening, I didn't really know what to do.”

When he contacted HSBC the following morning it was able to detect what had happened and immediately took steps to prevent any further fraudulent activity on Mr Downing's account.

He had previously been a victim of fraud when someone had taken out two mobile phones in his name. In this case, Experian, the credit reference agency, had helped him to clear his credit record. It has a Victims of Fraud service that offers expert advice to limit the damage caused by fraudsters. It also helps fraud victims by allowing them free access to its credit-report monitoring service CreditExpert.

Mr Downing, a self-employed fire adviser, was reasonably careful with his financial details before these frauds were committed, but he now takes extra care to guard against giving a fraudster a way in.

“I have done as much as I can,” he says. “For example, anyone trying to obtain credit in my name would now have to give extra passwords that I have put in place. And since the last fraud, I shred everything with my name and address on it.

“Anyone can get your name from the electoral roll, but there are two lists, the full register and the edited version. The latter is available for sale to anyone, so tick the box on the voter registration form to opt out of being included on this.”

Prevention is better than cure

Check your credit file regularly for any unusual entries. It costs from £2 for a single snapshot, to £15 for full credit-monitoring.

Keep personal documents, plastic cards and chequebooks in a safe place. Such items make it easier for a fraudster to impersonate you.

Do not share your personal information unless you are confident that you know who you are dealing with. Do not give any personal details over the phone - your bank, for instance, will never ask for your whole password, only certain characters from it.

Dispose of financial statements, card receipts and other personal documents with care. Rip them up or, preferably, shred them.

When you change address, make sure that you inform your bank, utility providers and anyone else who might send you a bill, as an easy way for a fraudster to assume your identity is by intercepting your mail.

Check your bank and credit card statements carefully to ensure that all the transactions and purchases were made by you.


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