- Tue Sep 09, 2014 8:47 pm
This is Tim replying
Creditors can either sell a debt off or arrange for a Debt Collection Agency to collect on their behalf
Creditors often sell debts 'en mass' to clear them off there bad credit books, that way they don't count as a ongoing loss to the business. By 'en mass' literally means they wil sell 100s at a time, usually to the highest bidder. They will sell these off for a range of prices from 100% to about 5% of the book value.
However, this doesn't mean what you owe goes down, under law if you owe £1000 and they sell yours for 50% you still owe £1000, and that is covered in law.
With regarding to a creditor getting a Debt Collection Company to 'manage' your debt, that is often down to who offers the best service to the Creditor and potentially can achieve the highest return.
Again this still means you owe the full amount.
To help you try and understand the 'management' options for debts, this may explain a bit more
Some companies specialise in debt recovery and can be 'sold' your debt in order to recover it on your behalf. They may charge a fixed fee or take a percentage of the money they recover. When this occurs you will be assigning the debt.
If a debt is assigned, the Debtor must be told of the Assignment and to whom they should now pay the money.
Notice of Assignment
Other than telling the Debtor that the debt has been assigned, there are no other formalities required. This is normally covered in the Good Bye/Hello letters, that often both come form the DCA.
Types of Assignment
Agent - The DCA is acting purely as an agent for the OC and in this case has NO legal powers at all.
Legal (Equitable) Assignment - The DCA is sold the rights to collect the debt, but NOT the duties. In this case they can only take legal action with the OC's full compliance, although they often mislead people as to what this means. This can cause problems, especially with CCA requests, but isn't surmountable. This mechanism is often used for "sale or return" debts.
Absolute Assignment - The entire debt, rights and duties, is sold to the DCA under the Law of Property Act 1925 s136. In this case the DCA now has all the rights, duties and powers of the OC. For this to occur the DCA/OC must inform the debtor that the assignment has taken place in substantiated writing, basically a recorded delivery letter. As the DCA has now replaced the OC they are bound by CCA74 and all that entails.
Agents and Assignment
Well in this case there is no lawful assignment and the DCA is simply collecting the debt on behalf of the OC.
This being the case any requests that are made should be passed directly to the OC for action.
Where under this Act a person is deemed to receive a notice or payment as agent of the creditor or owner under a regulated agreement, he shall be deemed to be under a contractual duty to the creditor or owner to transmit the notice, or remit the payment,
to him forthwith.
Dealing with Equitable Assignment
This is well used by DCA's especially Aktiv Kapital and Thames Credit.
Normally they will start to complain that they aren't the creditor after you have requested your agreement to ensure they do indeed have the legal right the collect the debt.
CCA74 s77 (1)
The creditor under a regulated agreement for fixed sum credit, within the prescribed period after receiving a request in writing to that effect from the debtor and payment of a fee of one pound, shall give the debtor a copy of the executed agreement (if any) and of any other document referred to in it, together with a statement signed by or on behalf of the creditor showing, according to the information to which it is practicable for him to refer,—
(a) the total sum paid under the agreement by the debtor;
(b) the total sum which has become payable under the agreement by the debtor but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due: and
(c) the total sum which is to became payable under the agreement by the debtor, and the various amounts comprised in that total sum, with the date, or mode of determining the date, when each becomes due.
Now s77-79 refer to the "creditor", this term is defined in s189.
“ creditor “ means the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law, and in relation to a prospective consumer credit agreement, includes the prospective creditor;
Same applies to s78 and s79 aswell.
Now if they are saying that they aren't the creditor as defined by the Act the you cannot possibly be the debtor
CCA74 189 (1)
“ debtor “ means the individual receiving credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law, and in relation to a prospective consumer credit agreement includes the prospective debtor;
Therefore there is NO debt to pay.
Simplistic, maybe, but true none the less.
If the rights AND duties haven't passed and they are playing silly games, then this is useful.
Admittedly some DCA's have now realised that this tack isn't useful to them at all, so they are now requesting the agreement from the OC. This isn't a problem, but the normal time scales still apply. They CANNOT continue demanding payment while your request is being dealt with, no matter what they say.
Absolute Assignment and Law of Property 1925
Legal assignments of things in action.- (1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice-
(a) the legal right to such debt or thing in action;
(b) all legal and other remedies for the same; and
(c) the power to give a good discharge for the same without the concurrence of the assignor:
Provided that, if the debtor, trustee or other person liable in respect of such debt or thing in action has notice-
(a) that the assignment is disputed by the assignor or any person claiming under him; or
(b) of any other opposing or conflicting claims to such debt or thing in action;
This gives them full rights and duties to the debt and as such the replace the OC.
LoP does NOT replace the rights granted by CCA74, but merely allows for change of ownership.
Assignment and DCA's
Many DCA's try and hide the type of assignment used to acquire debts, as can be seen equitable ties their hands when it comes to legal action.
A number like to claim assignment under LoP and yet go on to say they have the RIGHTS but not the DUTIES. Well as can be seen this is extremely misleading and also incorrect.
[Adapted from a post by Curlyben from the Legal Beagles Team]