Beware the Ides of March - Beginning of the end for the DMP??

[dannyboy660]

"Beware the Ides of March" he screams in his best Charles Hawtrey (Carry on Cleo) voice. Silly old sage.

Bear with me.

OFT guidelines on harassment state that a DCA should not bypass an appointed third party acting on behalf of a debtor, i.e CAB.
This also means that if you are paying off your debts through a DMP, you have a certain degree of protection from harassment as you are making regular, affordable repayments.

So, the answer to this from a DCA or Purchasers point of view is :-

Arrow Financial | Consumer Credit Counseling Services (CCCS)

Now, this has probably been going on for some time, but it seems the new tactic is to tempt lenders into charging off the debt, claiming their bits and pieces from the taxman and underwriters, and making a little bit extra by selling it to the DCA.

So what we have is DCA's apparently giving up on the 'won't pays' and targeting the 'can't pays', because you can be sure they won't accept peoples agreed level of payment. It will affect the DCA profit for a start.

These are private companies, targeting vulnerable people and making huge profits along the way. The example given in the link are an American company, and the majority of DCA's are foreign backed/owned.

I'd like to question

a) why it is possible for the banks/lenders to be allowed to ditch debts so quickly and easily, at expense to the taxpayer??

b) why do they sell the debts for a tiny fraction of 'face value', allowing outside companies to intimidate people into paying the full amount...and more??

c) DMP's were designed to protect the vulnerable, allowing people to pay their debts at an affordable rate to the people they lawfully owe the money to - why should DCA's be allowed to undermine this, and profit from it??

d) how on earth do they get away with it?? where is the regulation??

and perhaps most importantly :-

e) what can be done to stop this practise of stealing from the poor to give to the rich (overseas)?? Would more flexibility from the banks and the removal of incentives to ditch bad debt ultimately stop the vultures that purchase these debts??

I'm probably just going over old ground again, but I do feel the Consumer is once more being conned when they are at their most vulnerable, and in a particularly nasty and disgusting manner.

OK rant over. Lunchtime.

[dannyboy660]

Well, that's 7 months, and nobody has caught up yet........or have they???

[tomterm8]

Originally Posted by dannyboy660

"Beware the Ides of March" he screams in his best Charles Hawtrey (Carry on Cleo) voice. Silly old sage.

Bear with me.

OFT guidelines on harassment debt collection state that a DCA should not bypass an appointed third party acting on behalf of a debtor, i.e CAB.
This also means that if you are paying off your debts through a DMP, you have a certain degree of protection from harassment as you are making regular, affordable repayments.

So, the answer to this from a DCA or Purchasers point of view is :-

Arrow Financial | Consumer Credit Counseling Services (CCCS)

Now, this has probably been going on for some time, but it seems the new tactic is to tempt lenders into charging off the debt, claiming their bits and pieces from the taxman and underwriters, and making a little bit extra by selling it to the DCA.

This is not a new thing, it has been going on for many years.

So what we have is DCA's apparently giving up on the 'won't pays' and targeting the 'can't pays', because you can be sure they won't accept peoples agreed level of payment. It will affect the DCA profit for a start.

There is a maximum amount they can force out of someone who can't pay. what many people experience, however, is the fact that there can be a fear factor. DCA's are worried that a particular debtor is unlikely to pay them, and institute a program that is on the grey side of harassment.

This is often the case with debtors who are nearest to bankruptcy, etc.

These are private companies, targeting vulnerable people and making huge profits along the way. The example given in the link are an American company, and the majority of DCA's are foreign backed/owned.

I think that is fair to say.

I'd like to question

a) why it is possible for the banks/lenders to be allowed to ditch debts so quickly and easily, at expense to the taxpayer??

The public policy reason is that by encouraging lending, the government is on net helping the economy.

b) why do they sell the debts for a tiny fraction of 'face value', allowing outside companies to intimidate people into paying the full amount...and more??

They sell debts for a tiny fraction of the face value because this reflects (a) the true cost of lending (which is often around 7-12% of the face value of a loan) and (b) an estimate of the amount of money they will recover in the next year or two years.

the amount debt is selled for can be anywhere between 2-40%, although I believe most debt is sold for around 15% of the face value, which would represent on average a true profit for the banks.

On top of this, they treasury allows them to write off the face value from profit.

the reason that banks do not allow debtors to buy their debt for the same price is an economics theory called "moral hazard", which says if you make a mistake, you pay for it.

c) DMP's were designed to protect the vulnerable, allowing people to pay their debts at an affordable rate to the people they lawfully owe the money to - why should DCA's be allowed to undermine this, and profit from it??

Many DCA's accept DMP's, but there has never been any requirement to do so.

d) how on earth do they get away with it?? where is the regulation??

The credit industry is almost as heavily regulated as the nuclear industry. However, the government have been introducing a series of new laws and regulations, including the "unfair relationship" clauses in the consumer credit act, and are consulting on a civil procedure rule for debt actions.

and perhaps most importantly :-

e) what can be done to stop this practise of stealing from the poor to give to the rich (overseas)?? Would more flexibility from the banks and the removal of incentives to ditch bad debt ultimately stop the vultures that purchase these debts??

I'm probably just going over old ground again, but I do feel the Consumer is once more being conned when they are at their most vulnerable, and in a particularly nasty and disgusting manner.

OK rant over. Lunchtime.

..

[tomterm8]

The thing i find most worrying is the tendency to go after unsecured debtors homes that exists at the moment, for example via charging order, but especially bankruptcy.

there is a tendancy for DCA's to see this as an "easy option" for collecting money.

People are not warned, when they get a credit card / unsecured loan that their house may be at risk if they can't keep up with the repayments.

[Bookworm]

TT, would you care to write a little post to that effect, explaining in succinct points how it can happen? (eg charging order, bankrupcy, anything else?) I think it could come in handy for future reference.

[tomterm8]

Originally Posted by Bookworm

TT, would you care to write a little post to that effect, explaining in succinct points how it can happen? (eg charging order, bankrupcy, anything else?) I think it could come in handy for future reference.

Hi, Bookie:


There are three methods of which I am aware of, however one is entirely theoretical... I have not heared of it done in the last 100 years.

Charging Order

A charging order can be granted on any money judgement where you have failed to abide by the terms of the order. In practice, this means failing to pay a forthwith order, OR failing to pay the installments on a installment order.

Once a charging order has been granted, the judgement creditor can apply for a sale on the debt; theoretically, even if further installments were paid on time. In practice, the court would be likely to grant this order if the creditor could show that with payments made, the debtor would be unlikely to ever to be able to repay the money OR had consistantly failed to keep to any agreed plan.

Here's what the national debt line say about it:

Originally Posted by nationaldebtline

The court can order a sale where:

• the debt is in your sole name and you are the sole owner; or
• the debt is in both names of the joint owners of the house;
• if the debt is in your sole name and the house is in joint names, the creditor gets an 'interest' in the house once the charging order is made final. This means the creditor can apply to the court for an order for sale to realise their 'interest' in your house. All joint owners (or a married person who is not a joint owner but has an 'interest' in the property) should be part of the court proceedings so they can explain their case to the court as well. They should be sent notice of the hearing and be allowed to attend.

At the hearing the court must look at the following points.

• Is there enough equity in the house to cover any mortgages and the charging order debt?
• When you bought the house what did you buy it for? Is it intended as a long-term family home? Is it imagined that an elderly person will live there for their lifetime?
• Welfare of any children should especially be taken into account. Are there special factors such as age, disability or illness? There may be a need for stability at school. The effect on the children of moving house should be considered.
• If the debt is in your sole name, argue that it is not fair for the whole family to lose their home because of a debt belonging to one person.

The court should look at whether the interests of the creditors should outweigh the interests of the family. Argue that, under the Trusts of Land & Appointment of Trustees Act 1996, the court has discretion to say the family's interests outweigh the creditor's interests.

it should be noted that it is very rare for a charging order to lead to reposession.


Bankruptcy

A bankruptcy petition can be filed where a statutory demand has been served on a debtor; the debt (in England) is greater than £750; The debt is unsecured and the debt is either due, or the creditor can show it is highly unlikely the debtor will be able to pay the debt when it falls due.

The available defence in a bankruptcy petition (if a stat demand has been properly sercved) is quite limited;
either:

(a) you can show that you do not owe the money or there is a substantial dispute as to how much you owe or

(b) there is a reasonable offer to secure or compound for a debt in respect of which the petition is presented to the extent that it becomes less than £750. or

(c) (where it is a future debt) you can show you will be able to pay it on time.

Obviously, if the debt is secured, then the house is at risk if you cannot keep to the agreed repayments; you must get professional advice on the matter. People have lost their homes because of a duff agreement.

if the bankruptcy petition goes through, then your assets become the property of the bankruptcy estate. It is the OR’s job to realise these assets. Any equity in the home will be subject to the normal rules of bankruptcy – that is, the OR will recover your share of the beneficial interest.

It is sometimes possible for a member of the family to buy the beneficial interest from you. Where this does not happen, the OR is highly likely to arrange a sale of the property. This might not happen if you have negative equity (so no money to realise), and might be delayed because e.g. you have young children, or for reasons of special hardship.

Inherent powers of the court

Within equity, there is at least an inherent power to order (that is, to issue an injunction) mandating the sale of a property where he court considers it fair to do so. I am not aware of the court ever exercising these powers in the last hundred years. I would expect it would only ever do so in extreme circumstances probably related to fraud.