I had perfect finances - until I was stuck with another's debt

The £453 debt related to unpaid ground rent, of which £214 was the debt collector’s charge. I called my solicitor, who said this was nothing to do with me, and instructed me to forward the letter to them to sort out with the vendors’ solicitor.

“He has held back sufficient funds to deal with this,” I was told.

But to be helpful I telephoned the debt collection agency, called Property Debt Collection, and informed it that the individuals it was pursuing no longer lived at the address.

Here, perhaps, I should mention that I was brought up at the tail end of generations imbued with a horror of debt. As a result, I have never had an overdraft, not paid my credit card bill in full at the end of the month, or missed any payment of any kind.

So imagine my shock when a week later the same demand arrived, this time addressed to me and making all kinds of threats, including notifying my mortgage lender. This was laughable as I didn’t have a mortgage, but the threat was menacing.

Obviously, there was a problem so I called again, trying to sort it out. All I wanted to do was get to the bottom of what was going wrong and enter a dialogue to resolve the situation.

But I met a brick wall. The voice at the end of the telephone informed me that their client had instructed them to collect this debt from me, and that was the instruction they had to follow.

Over the coming weeks I came to dread the post, because the demands just kept coming. My various attempts to stop them proved futile, including contacting the Credit Services Association, which represents debt collectors and runs a consumer protection code and complaints procedure. This firm was not a member.

I even considered paying the debt to end the constant distress and to avoid the prospect of mushrooming administration charges. My solicitor strongly advised me not to.

In July I received the final notice before legal action, with the threat that bailiffs would enter my property and seize goods. I knew I had to do something to make this stop.

Fortunately, courtesy of my job as a financial journalist, I know some of the country’s top credit experts, who helped me write a letter of complaint to the debt collectors using a very precise form of words.

Whereas saying “This isn’t my debt” just didn’t cut it, apparently the phrase “I dispute this debt” would. And it did. As if by magic, the matter went into abeyance, subject to further investigation.

On September 1, six months after the nightmare began, I received a statement telling me I didn’t owe any money, which is what I had been trying to tell everyone all along. The matter was finally closed.

James Jones, a spokesman for the credit reference agency Experian, acknowledged that it was not uncommon for people who find themselves pursued by debt collectors to become trapped in a cycle from which they cannot break free.

The position is often exacerbated because books of debts are sold on to other organisations, and then sold on again and again, losing sight of the original authority.

Mr Jones added: “The more organisations involved, the more difficult it is to break the cycle.”

But now the Financial Conduct Authority (FCA), which in April became responsible for regulating the credit industry, including debt collectors, debt management companies, payday lenders and car logbook firms, is promising tougher oversight.

In June the watchdog ordered payday lender Wonga to pay £2.6m in compensation after it sent demands to customers from two fake law firms.

On Wednesday the FCA starts the process of individually authorising credit companies, beginning with debt management firms and moving on to debt collection agencies after Christmas.

A spokesman for the FCA said: “During the authorisation process we will be scrutinising individual firms carefully, particularly with a view to assessing the way they treat consumers.

“It is important for anyone caught up in a dispute about debt to remember that if you do not believe you are liable, the onus is on the firm to prove that you are.”

A spokesman for Property Debt Collection said that if a consumer reported that they were being chased for a debt which was not theirs, the matter should be put on hold. She expressed concern that this did not appear to have happened in my case.

However, she later insisted that the matter would now be treated as a formal complaint, something I had not asked for.

As this would take eight weeks to investigate, she could not comment further, adding: “We are satisfied our processes are compliant with the rules set out by the FCA, and that our dealings with you have been sensitive.”

- money@telegraph.co.uk

How to get them off your back

1. If you receive a letter demanding money you do not believe you owe, write immediately to the firm involved using the words “I dispute this debt”. This will put the action on hold.

2. Do not telephone, but always deal in writing, keeping a copy of all correspondence.

3. Find out whether the firm is a member of the Credit Services Association (CSA), which has a code of conduct and a complaints procedure. Unfortunately, not all firms are members.

4. If the problem escalates, write again to the debt collector asking them to provide evidence that you are responsible for the debt and warning the onus is on the firm to prove this to be the case. Meanwhile, make a complaint to the CSA.

5. Make a complaint to the financial ombudsman, which now has responsibility for debt collection firms.

>> Martin Lewis: 20 things you must know to boost your credit score

>> Have you been wrongly chased by debt collectors? Comment on this story or email us at money@telegraph.co.uk.

>> For money saving tips, tricks and ideas, sign up to our weekly newsletter by entering your email here

more