It’s recognised that banks and the like can sell on debts owed to them by individuals or organisations.

However, what seems unclear is on what basis this is legally obligating so far as the borrower is concerned.

When a debtor defaults on a loan the lender will serve a default notice in prescribed form and duly terminate the contract on account of non-compliance with the terms on the part of the borrower.

It’s that original contract between borrower and original lender that would typically include a clause requiring acceptance by the borrower of the sale of the debt and consequent transfer of liability.

Therefore if that original contract is terminated then although the loan liability will remain it seems that the agreement between borrower and lender to allow loan ownership transfer will no longer apply, pending a new contract.

As I understand it,

the common law principle of privity holds that any contract between two parties (here the original lender and a subsequent buyer of the debt) cannot impose obligations on a third party (here the borrower) not a party to the (sale) contract itself.

It follows that the purchaser of a debt can only assert repayment or other authority over the lender by persuading that lender to agree that authority, that is to establish a new contract with that purchaser.

This is why, it seems, such companies claim that the debt has been sold to them and encourage borrowers to agree with the transfer of terms, offering inducements such as there being no change to the terms.

However, unless and until that is done it seems that the borrower is entitled to continue whatever agreement was reached after default with the original lender, perhaps continuing to pay the original lender rather than the purchaser on such terms as then agreed.

Note that this isn’t about the original lender appointing a third party as an agent nor about the validity of serving a notice of debt assignment but specifically on the question of whether in these circumstances outlined the consent of the borrower is needed in order to transfer the original creditor's rights and responsibilities in respect of the debt insofar as that affects the borrower directly.

Views? TIA for comments.

It will be buried deep in the T and c somewhere that they can.

One point on this..

However, unless and until that is done it seems that the borrower is entitled to continue whatever agreement was reached after default with the original lender, perhaps continuing to pay the original lender rather than the purchaser on such terms as then agreed

Nope, your in breech of the contract if your in default.

ALmost all contracts state that they can transfer all rights and obligations to a new party. Under the 1925 law, they are perfectly within their rights to do it. The new owner though should maintain the current payment plan.

You also are standing dangerously on the FOTL argument line. Dont. They are wholly and completely incorrect.

When they sell a debt, they assign the rights – but they can't assign the duties.

This means that if you have paid unlawful charges or PPI then you can still proceed against the original creditor.

It also means that statutory duties such as the duty to treat you fairly or to communicate with you fairly also remain with the original creditor. This means that if the assignee – the new debt owner treats you in some way which is unfair then your action is against the original creditor.

They don't like it – but hey, who cares?

 

You also are standing dangerously on the FOTL argument line. Dont. They are wholly and completely incorrect.

Awwww, dont tell them that!!!

I've not had a good FMoTL twaddle and nonsense argument in ages!!!

I've moved part of this thread to a new thread - https://www.consumeractiongroup.co.uk/forum/showthread.php?483334-Complicated-discussion-about-assignment-of-debt because as site team member DX pointed out, it was becoming unintelligible and unhelpful to the OP here

I've moved part of this thread to a new thread - https://www.consumeractiongroup.co.uk/forum/showthread.php?483334-Complicated-discussion-about-assignment-of-debt because as site team member DX pointed out, it was becoming unintelligible and unhelpful to the OP here

my input was a copy of the applicable law ??

Yes, but that and the exchanges which developed started really to become very obfuscated. It might be more helpful to people who are looking for assistance to receive a plain English explanation and then a link to the applicable law.

I wasn't aware of any further comments.

However the OP demonstrated the wish to understand the law, or so it seemed to me.

It is no secret.

In answer to DXs question, I think it was necessary to explain this for as many times as someone asks.

Interesting. Thanks.

Forget my comment about the 1925 act. I realise from Dodgeball's post what it is and I'm looking through it now.

When they sell a debt, they assign the rights – but they can't assign the duties.

 

This means that if you have paid unlawful charges or PPI then you can still proceed against the original creditor.

 

It also means that statutory duties such as the duty to treat you fairly or to communicate with you fairly also remain with the original creditor. This means that if the assignee – the new debt owner treats you in some way which is unfair then your action is against the original creditor.

 

They don't like it – but hey, who cares?

A CJEU ruling last month stated that when a debt is assigned, then all relevant consumer law applies to the company that has been assigned the debt in addition to the original creditor so when they chasing the debt they have to conform with all relevant consumer law as well.

Yes, but that and the exchanges which developed started really to become very obfuscated. It might be more helpful to people who are looking for assistance to receive a plain English explanation and then a link to the applicable law.

what 'exchanges'. my single post was to the OP re their 'specific question' (quoted in my post) from their first technical post about new contracts and debtors consent being required.

anyway, do delete all my posts in this thread and that other arbitary thread.