Is there any difference between an assignment of debt from the original creditor to a Debt Collection Agecy (DCA) and the debt being sold to another company and that new company seeking payment of the original debt (whilst the account is in dispute)?

If the account is in dispute then neither should have taken place is my understanding.

Have you received a Notice of Assignment then ?

If the account is in dispute then neither should have taken place is my understanding.

This is not correct. There is nothing to stop a contract being assigned unless it is specifically prohibited within the terms of the contract

Is there any difference between an assignment of debt from the original creditor to a Debt Collection Agecy (DCA) and the debt being sold to another company and that new company seeking payment of the original debt (whilst the account is in dispute)?

Sometimes creditors use dcas to collect debts on their behalf on other occasions they actually sell the debt to the dca.

The sale of a debt is done by way of an assignment.

There a re 2 types of assignment, equitable and absolute. Equitable means the DCA is collecting on behalf of the OC and absolute means the DCA has purchased the account.

How would we know which is which?

Ask the DCA. With an equitable assignment the OC would have to be a co-claimant in court.

I am not sure how I would identify a 'Notice of assignment' but I received a letter from the OC informing me they were going to write the debt off but would then pursue a listed number of actions including selling the debt to a third party. I wrote back and said they could not whilst the account was in dispute, their complaints department acknowledged my letter said they would reply in December 08 and never did, I was then served with a default notice and finally (so far) received a letter from another company saying they are now the owner of the account having 'acquired the debt' and are seeking full payment! From the replies on this thread it sounds like an absolute assignment. In case it is of relevance the OC had failed to provide a CCA.

I note there are differing views on whether a contract can be assigned whilst the account is in dispute but if the contract is the same thing as the credit agreement and it doesn't appear to exist how can they assign it?

They're breaching OFT guidlines and the CPUTR by trying to collect on an account in dispute and forwarding it to another company. Report them to TS and the OFT.

Does the last post mean that if the original OC still held the debt they should not be trying to collect either directly or via a DCA? If that is the case then events have moved on as it seems like the Original Creditor (OC) is not holding the debt or trying to collect it. They seem to have sold it outright (I think from answers in this thread this is referred to as an absolute assignment).

It begs the question can they sell/absolutely assign the debt when the account is in dispute? If I am interpreting the replies correctly there are 2 differing viewpoints so far. Any further views would be appreciated so I can weigh it all up and decide what to do.

my view is there is nothing to prevent the sale or assignement of your debt, institutions frequently sell whole tranches of old debt for a small % of the value.

but this does not affect the validity of your dispute, it just means you have someone new to explain the dispute to - they will then eventually give up and go away since when they understand your dispute has substance they will not wish to waste good money on chasing it further.

The offending parties will be breaching OFT guidlines and the CPUTR so should all be reported to TS and the OFT.

my view is there is nothing to prevent the sale or assignement of your debt, institutions frequently sell whole tranches of old debt for a small % of the value. Correct

but this does not affect the validity of your dispute, it just means you have someone new to explain the dispute to BUT WRONG TEAGRAM...- they will then eventually give up and go away since when they understand your dispute has substance they will not wish to waste good money on chasing it further.

If a debt is in dispute it mustn't be sold, read the OFT Guidelines on Debt Collection, read the CCA ..DCA's who buy debt, whole tranches of debt, have laws, rules and regs to abide by and must inform debtors if the debt has been assigned in the correct manner with hallo and goodbye letters sent accordingly.

You cannot just pass a disputed debt onto someone else, not a consumer debt anyway. We have spent the last 3 years educating the industry of precisely that, be they statute barred debt which they purchase or 3 month old debt - the rules and regs have to be applied rigorously otherwise these degenerates feel they have a free hand to continue what they have done for the last 40 years without recourse. Not anymore they don't.

Sad thing is they do not give up, even when they are told they are wrong - most of these DCA staff haven't a clue about the OFT they think OFT is slang for Off For Tea...so complain as babybear so correctly says and stop them in their tracks.

S

Thanks for your support on this. I cannot believe what these companies are doing. It is a shock because when you don't expect to have debt problems you don't look below the surface of what the Finance industry is doing to people. It has been a shock. I will see if there are any template letters I can find for the Oft complaints. I guess the complaint is against the Original Creditor (OC) and a letter advising the company who 'aquired the debt' that the debt was in dispute and has to be returned to the OC. Does that make sense?

Thanks for your support on this. I cannot believe what these companies are doing. It is a shock because when you don't expect to have debt problems you don't look below the surface of what the Finance industry is doing to people. It has been a shock. I will see if there are any template letters I can find for the Oft complaints. I guess the complaint is against the Original Creditor (OC) and a letter advising the company who 'aquired the debt' that the debt was in dispute and has to be returned to the OC. Does that make sense?

You can find a complaint form on the OFT website....Write to the DCA telling them there is a dispute with the OC and to refrain from activities, they'll know the score and will understand if it's spelt out to them. You can always add the words "Having received information from the "Consumer Action Group website" they'll know then you have one or two people behind you on this..

Trust no-one in the finance industry, a few days reading over this forum will show you exactly what they get up to in the industry - respectibility is a thing of the past. Businesses earn respect, they don't demand it in terms and conditions...as they are finding to their cost.

If a debt is in dispute it mustn't be sold, read the OFT Guidelines on Debt Collection, read the CCA ..DCA's who buy debt, whole tranches of debt, have laws, rules and regs to abide by and must inform debtors if the debt has been assigned in the correct manner with hallo and goodbye letters sent accordingly.

 

You cannot just pass a disputed debt onto someone else, not a consumer debt anyway. We have spent the last 3 years educating the industry of precisely that, be they statute barred debt which they purchase or 3 month old debt - the rules and regs have to be applied rigorously otherwise these degenerates feel they have a free hand to continue what they have done for the last 40 years without recourse. Not anymore they don't.

 

Sad thing is they do not give up, even when they are told they are wrong - most of these DCA staff haven't a clue about the OFT they think OFT is slang for Off For Tea...so complain as babybear so correctly says and stop them in their tracks.

 

S

Whilst that may be true in terms of OFT guidelines - as a matter of law the company can sell the debt (subject to any restrictions in the original contract) and of course the mechanism through which legal ownership is transferred is assignment and the assignee (the new owner of the debt) can bring proceedings. The fact that the assignment was in breach of OFT guidance does NOT make the assignment unlawful.

As pointed out previously by another poster any defences to the original agrement are still there AND the fact of the assignment also gives rise to a range of possible other defences ranging from whether proper notice of assignment was given to whether the actual assignment itself is valid

In terms of the breach of OFT guidance - you need to complain to the OFT

Thanks for further very helpful responses on this thread. The thread started out as my trying to understand if there was a difference between a debt being assigned and a debt being sold/bought and if the account being in dispute at the time had any bearing in either scenario. I am concluding from the various posts received that whilst the account is in dispute the sale/purchase of the debt is against OFT guidelines but may not be unlawful depending on the conditions of the original contract. With this particular creditor they have not even produced an agreement so it is impossible to check the original conditions for any restrictions on assignment. If they didn't have it at the time of assignment, the new account holder is going to have some difficulties collecting.

The debt being sold or assigned means the same ( I believe), the difference is in the type of assignment. Equitable means they bought the benefit (debt), but none of the duties ie being able to sue in their own name, send statements, add interest & charges and arguably not able to report to credit ref agencies. Absolute/legal means they bought everything, they benefits and duties, BUT for this to be legal it should have been Novated. This means you agreed in writing and signed to say so the new creditor taking over the debt, it is a new contract and as such you are a party to it with the same rights as in the first contract (but you wont agree unless you are a retard of course).

many DCA`s seem to be confused over the difference, including qualified solicitors they have working for them. I have an ongoing tussle with solicitors who have now clearly stated the assignment was Absolute, ohh dear that messes up their ideas to take me to court.

The argument as to whether they can sell it on comes down to what the agreement states they can do, oh there isnt one! “nemo dat quod non habet”, you cannot give what you do not own. No contract = no proof of ownership.

I am concluding from the various posts received that whilst the account is in dispute the sale/purchase of the debt is against OFT guidelines but may not be unlawful depending on the conditions of the original contract.

It is not unlawful to sell the debt while in dispute. There are 2 potential 'unlawful' things:-

1) The dispute must be settled by the old owner. If they refuse to respond they are breaching CPUT Regulations 2008, plus,

2) The new owner must be made fully aware of the dispute and not enter into any requests for payment etc, as again they are breaching CPUT Regulations.

Consumer Protection from Unfair Trading does clearly state a new trader (owner) must be given all the information relevant to avoid the consumer having to repeat their case.

The question over legality rests with the courts. However, the OFT are the body who decide whether an action is worthy of prosecution. On past performance, OFT need a lot of complaints before they do anything so do not be despondent if they do nothing on just your complaints. The old points make prizes line, can be interpretted as number of complaints make OFT listen.

The debt being sold or assigned means the same ( I believe), the difference is in the type of assignment. Equitable means they bought the benefit (debt), but none of the duties ie being able to sue in their own name, send statements, add interest & charges and arguably not able to report to credit ref agencies. Absolute/legal means they bought everything, they benefits and duties, BUT for this to be legal it should have been Novated. This means you agreed in writing and signed to say so the new creditor taking over the debt, it is a new contract and as such you are a party to it with the same rights as in the first contract (but you wont agree unless you are a retard of course).

I don't quite agree with this. For novation, yes the debtor does have to agree for both rights & duties are to be assigned.

Under contract law, duties cannot be assigned. However they can be transferred (delegated).

The duties are irrelevant as to whether an assignment is equitable or absolute.

Consumer Credit Act agreements require both rights and duties to be assigned for the creditor name to change. The draftsman of the CCA admits on his own site, duties cannot be assigned and suggests the courts would actually read it as rights or duties (instead of rights and duties).

The 12 + 30 days still stands for default whichever assignment takes place. It doesn't matter whether the DCA deem themselves as creditor or not, either way from the contract extracts I have seen, the DCA is duty bound by the CCA irrespective of whether the request for say a CCA could have been made before they bought it.

Most of what the DCA's say is a play on words with the CCA, trying to exploit the obvious weakness over duties. CPUT closes that door to some extent as it refers to DCA's and creditors alike as 'Traders'. Instead of having the non-court tested debate over the rights and duties in the CCA itself, this Act appears to accept the information in letters may be factually correct, however is does not allow that correctness to dictate what the consumer is entitled to.

On the interest/charges front. An absolute assignment seems to have to be for a fixed amount therefore a DCA cannot add anything else. Whereas on an Equitable assignment it could be either a yes or no, depending what is actually assigned.

The debt being sold or assigned means the same ( I believe), the difference is in the type of assignment. Equitable means they bought the benefit (debt), but none of the duties ie being able to sue in their own name, send statements, add interest & charges and arguably not able to report to credit ref agencies. Absolute/legal means they bought everything, they benefits and duties, BUT for this to be legal it should have been Novated. This means you agreed in writing and signed to say so the new creditor taking over the debt, it is a new contract and as such you are a party to it with the same rights as in the first contract (but you wont agree unless you are a retard of course).

 

many DCA`s seem to be confused over the difference, including qualified solicitors they have working for them. I have an ongoing tussle with solicitors who have now clearly stated the assignment was Absolute, ohh dear that messes up their ideas to take me to court.

 

The argument as to whether they can sell it on comes down to what the agreement states they can do, oh there isnt one! “nemo dat quod non habet”, you cannot give what you do not own. No contract = no proof of ownership.

I'm sorry but I don't agree with much of what you say.

1. Equitable assignment - my understanding is that if the assignee wishes to bring proceedings they can do so but those proceedings must be brought jointly with the assignor

2. Absolute assignments - Do NOT require novation - what they require is a contract/deed between assignor and assignee and that notice of that contract/deed is given to the debtor of the assignment. You have a common law right to inspect the actual assignment

As to whether they can assign at all - there is a general common law right however I would agree that this is sometimes modified by the original terms and conditions - in any event most t & c's give a general right to assign

Equitable assignments - you can get them for one or more of three reasons:-

1. Written notice hasn't been given to the debtor

2. The assignment itself may not be in writing

3. The assignment may not be absolute

There are some limits on assignability which revolve around Predjudice to the debtor and include personal contracts and around public policy issues. However in the case of a straight debt the only restriction would be if an express term in the agreement prohibited or modified the right.

1. "none of the duties ie being able to sue in their own name", isnt that the same as your take on it?

2. Correct, I missed a chunk out. But I still argue that what was written is correct. I refer to this thread first post from TLD: http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/191791-knocked-back-dca-sec.html

Also:

Had the contract not been performed it would have been required to be 'novated'. This is because the burden of a contract cannot be assigned (only the benefit of a contract may be). A novation agreement is a tri-partite agreement between the customer, the original supplier and the new supplier. It effectively replaces the first contract with a new contract so that the contractual relationship is between the customer and the second supplier. A novation agreement would at least have provided the Avraamides with a remedy against the existing service provider.

[1] Avraamides and another v Colwill and another [2006] EWCA Civ 1533

And:

Walker Morris UK solicitors, corporate and commercial law firm

As to your last para I refer to my last para.

The problem is that you are talking about two different things - Novation and Assignments - an assignment does not involve novation. Here we are talking about an assignment. The question posed by the OP was about whether the sale of a debt involved an assignment or not.

In your original post you said that an assignment required novation. Which is wrong in Law - an assignment is a transfer of a right without the consent of the debtor, hence the statutory procedure under s136 Law of Property Act - some commentators refer to these as "Statutory Assignments" (See Treitel - The Law of Contract, 2004, P273, Oxford, OUP).

In terms of who can bring proceedings - the requirement that an assignee had to to bring proceedings in the name of the assignor was abolished - see Weddell v J A Pearce & Major [1988] Ch 26. In any event a statutory absolute assignment gives the right to the assignee to bring proceedings in their own name.

The essence of a novation is that it is a tri-partite agreement - in debt cases - that does not happen - because what is assigned is the benefit - that is the right to recover the debt.

Indeed even the quote you give from Walker Morris confirms that an Assignment is different from Novation.

To be honest I'm not totally sure what point you are trying to make. Could you clarify - whilst I read the case that you refer to?

Well I've read the All England Law Report and also the Times Law Report.

I don't think that I actually entirely agree with the Walker Morris interpretation of the case - to suggest that a former customer should in some way, upon a disposal of the business enterprise, be joined into the contract is somewhat unrealistic.

The point was based on the construction of S 1(3) of the Contract (Rights of third parties) Act 1999 and essentially said a third party must be expressly identified in the contract to enforce it. There was nothing in the judgment which referred to novation

The facts were that a construction firm A had done work for Mr and Mrs B. After the work had been concluded firm A disposed of its' busines to firm X. Subsequently defects appeared in the work done for Mr and Mrs B.

Mr and Mrs B sued firm X claiming that under the Contracts Rights of third parties Act that they could bring proceedings

The Court held that there was no cause of action BECAUSE for the Contract Rights Act to apply Mr and Mrs B should have been named or be part of a class of persons referred to in the contract between Company A and Company X

At no time did the court mention Novation

In fact the case is actually authority for the propopsition that a contract can be assigned with a burden for the benefit of a third party - providing that the third party is named in the assignment - the third party does not need to be a signatory to the assignment and there is no requirement for novation

1. "none of the duties ie being able to sue in their own name", isnt that the same as your take on it?

2. Correct, I missed a chunk out. But I still argue that what was written is correct. I refer to this thread first post from TLD: http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/191791-knocked-back-dca-sec.html

 

Also:

Had the contract not been performed it would have been required to be 'novated'. This is because the burden of a contract cannot be assigned (only the benefit of a contract may be). A novation agreement is a tri-partite agreement between the customer, the original supplier and the new supplier. It effectively replaces the first contract with a new contract so that the contractual relationship is between the customer and the second supplier. A novation agreement would at least have provided the Avraamides with a remedy against the existing service provider.

[1] Avraamides and another v Colwill and another [2006] EWCA Civ 1533

And:

Walker Morris UK solicitors, corporate and commercial law firm

 

As to your last para I refer to my last para.

 

You are merging a few unrelated issues into one here.

The change in companies did not give the avraamides the right to sue the second company for burdens held by the first. Likewise, annoying as it is burdens performed by DCA's only allow the consumer to sue the actual lender.

The rights of a contract in CCA terms is the monetary return, while the burdens are what the consumer is entitled to request. To complicate that further with each burden there is a right, with each right there is burden.

TLD is focusing on a DCA's 'right' to report to CRA. If they are reporting under the name of the orginal lender there is no issue. However we all know DCA's report in their own names. S136 does allow the right to the benefit of a contract, however as CRA reporting is not purely for the benefit of the body reporting it, it is hard to see how that could be construed as a right of the contract capable of assignment. If the contract between lender and DCA does not assign the CRA reporting by transferring it instead, then the reports should IMO only show the original lenders name. You can also argue S136 has not been amended to add CRA, therefore the meaning is exactly as what rights the dca would have had in 1925.

Where there is no CCA, there is still frequently evidence of a contract by other means, eg repayments. The problem with CCA agreements for the mainstream credit cards/loans is the fact they are not unique, eg there are thousands who sign the same terms/conditions. Novating a contract is not in a consumers interests, much better to have a pre 2006 CCA lost as that stops a dca having a right to sue.