Letter from Bluestone Credit Management? Read this before you reply

A letter from Bluestone Credit Management is different from a typical debt-collector letter. Bluestone is a UK servicer, not a primary collector — they administer securitised mortgage and consumer-credit portfolios on behalf of investors and noteholders. If you have a Bluestone letter, the underlying debt is usually one of three things: an active mortgage, a post-repossession shortfall, or unsecured consumer credit that has been sold into a securitisation Bluestone services.

The IVA distinction matters: secured mortgage debt sits outside an IVA, but unsecured shortfall debt (after a voluntary surrender or repossession) is treated like any other unsecured debt and can be included.

This guide covers who Bluestone are, what they can legally do, and the realistic options — including how an IVA can deal with the unsecured side of a Bluestone debt.

Who Bluestone Credit Management are

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Bluestone Credit Management is a UK servicer regulated by the Financial Conduct Authority. Their core business is administering portfolios that have been securitised or sold to institutional investors — they handle customer service, payment collection, arrears management, repossession proceedings (where instructed), and post-repossession recovery on behalf of the investor.

Practical implications:

• The underlying creditor on your account is the investor or noteholder who owns the portfolio, not Bluestone itself
• Bluestone operates within the FCA’s MCOB rules for regulated mortgages and CONC for consumer credit
• Securitised mortgages are subject to the same legal protections as any other regulated mortgage — the FCA’s pre-action protocol, court oversight on possession, and so on
• Servicer changes are common in this market — a portfolio you originally took out with one lender may have moved through multiple servicers before reaching Bluestone

What Bluestone can and cannot legally do

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Bluestone’s powers depend on the type of debt:

Secured mortgage debt:

• Process payments and arrears administration
• Issue MCOB-compliant arrears letters and forbearance discussions
• Apply to court for a possession order if arrears persist (court-supervised process)
• After possession, sell the property and pursue any shortfall as unsecured debt

Unsecured consumer-credit debt:

• Write to you and call you on numbers held by the underlying creditor
• Apply for a CCJ if the debt is enforceable
• After a CCJ, apply for attachment of earnings, charging order, or High Court enforcement
• Pass the file on to a debt purchaser if the investor instructs

For unsecured debt they cannot force entry, take goods, threaten arrest, continue contacting after a written stop request, or invent fees outside the original agreement.

The two checks worth running first

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1. Section 77/78 CCA request (consumer credit) or mortgage statement and assignment proof (mortgage). For consumer credit the documents must be produced before the debt is enforceable; for a securitised mortgage you have the right to a clear statement of account and confirmation of the lender of record.
2. Limitation check — six years in England and Wales (five in Scotland) for unsecured debt; 12 years for mortgage capital, 6 for interest under sections 5 and 20 of the Limitation Act 1980 for shortfall debt. The Council of Mortgage Lenders / UK Finance voluntary code limits most lenders to 6 years on shortfall in practice.

Don’t make a token “goodwill” payment — it can reset the limitation clock on shortfall debt.

How Bluestone tend to operate

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Bluestone’s operating model is shaped by the investor mandates they hold:

• Active mortgages — standard servicing, with FCA-required forbearance options for arrears
• Defaulted mortgages — escalation through the FCA pre-action protocol, then possession proceedings
• Post-repossession shortfall — pursued as unsecured debt for up to the limitation period
• Securitised consumer-credit portfolios — standard collections cycle with letters, calls and selective litigation

A switch in correspondence from servicing letters to formal litigation correspondence (or to a solicitors firm) signals the matter is escalating.

What happens if you ignore Bluestone

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Ignoring Bluestone is high-risk for both mortgage and unsecured debt:

Mortgage:

1. Arrears letters and forbearance offers under FCA MCOB rules
2. Pre-action protocol notice
3. Possession claim issued — N5 claim form
4. Possession hearing at the county court
5. Possession order, then warrant for possession executed by court bailiffs
6. Sale of property, shortfall pursued as unsecured debt

Unsecured / shortfall:

1. Letters and calls
2. Letter Before Claim from a solicitors firm
3. County-court claim issued through Northampton or Salford bulk centre
4. Default judgment if no acknowledgement of service by day 14
5. Enforcement on the CCJ

If any claim form arrives, respond before the deadline printed on it — court-supervised possession proceedings in particular reward early engagement and forbearance applications.

Routes out

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For active mortgage arrears:

• Forbearance — arrears repayment plan, term extension, payment holiday, or capitalisation, all under FCA MCOB rules
• Voluntary surrender if the property is unaffordable — but understand the shortfall consequence
• Sale of the property by you, on the open market, with consent

For unsecured consumer credit or shortfall:

• Settle in full with a written discount where possible
• Affordable repayment plan, confirmed in writing
• IVA for total unsecured debt of £5,000+. The IVA legally stops Bluestone pursuing any included unsecured balance. The secured mortgage continues outside the IVA and is repaid normally.
• Debt Relief Order for total unsecured debt under £50,000 with very low spare income (homeowners normally cannot use a DRO).
• Bankruptcy for severe situations — with the property at risk if there is equity.

Pitfalls when dealing with Bluestone

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• Don’t conflate secured and unsecured debt. An IVA doesn’t include the secured mortgage on a property you still own.
• Don’t ignore mortgage arrears letters — possession proceedings move fast once the pre-action protocol is exhausted.
• Don’t make a token “goodwill” payment on a shortfall debt before checking limitation.
• Don’t accept a verbal “settlement” without written confirmation with full-and-final wording.
• Watch for changes of servicer — Bluestone may transfer the file, and the new servicer must honour any agreement reached.

Frequently asked questions

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Is Bluestone a debt collector? Bluestone is a servicer — they administer mortgage and consumer-credit portfolios on behalf of investors. The underlying creditor is the investor, not Bluestone.

Can an IVA include my Bluestone mortgage? No — secured mortgage debt sits outside an IVA. Unsecured shortfall debt and unsecured consumer-credit debt managed by Bluestone can be included.

What is a mortgage shortfall debt? The unpaid balance after a repossession sale falls short of the outstanding mortgage and costs. The shortfall is unsecured.

Will an IVA stop Bluestone contacting me about a shortfall? Yes — once approved, Bluestone must stop pursuing any included unsecured shortfall and write off the balance at the end of the IVA.

Related guides

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• Lowell Financial — major debt purchaser
• Cabot Financial — major debt purchaser
• How long can I be chased for a debt?
• Can debt be written off?
• How do I apply for an IVA?