Cabot's methods of buying debts?

[Seahorse]

Cabot Cheese, eh? I wonder if the .co.uk domain name is still free??????

[ODC]

Cabot Cheese, eh? I wonder if the .co.uk domain name is still free??????

It is free but strangely enough kenmaynard.co.uk is not

[pmhcfc]

Found an article for you, written by Glen Crawford, I've highlighted something in Blue that seems interesting to me.

 

Back in 1998, when Cabot Financial executed the first sale of non-performing credit card accounts with one of the UK's mainstream banks, we developed a form of contract that has since been adopted as the UK industry standard.

 

In essence, that contract is a set of master terms and conditions governing any offers of receivables which the seller may make to the buyer. Acceptance of such an offer by the buyer is achieved through "course of conduct", that is, by the act of paying the purchase monies to the seller. In this way, no stampable assignment document is created, thereby avoiding the need for the buyer to pay Stamp Duty, typically at the top rate of 4 per cent of the purchase price.

Avoiding Stamp Duty in this way gave the buyer "equitable" but not "legal" title - meaning that the buyer, or the seller, could not rely on the terms of the sale agreement in court without first paying the relevant duty. In practice, this would only ever be an issue in the event of a breakdown in relations between buyer and seller such that one was actually litigating against the other - and in such event paying the duty would "perfect" the title anyway.

 

Most buyers, including ourselves, combined the "offer and acceptance" mechanism with offshore signing and retention of documents so that if, for any reason, the offer and acceptance mechanism was deemed not to be effective, penalties for non-payment of the duty would only run from the time, if ever, that the original documentation was brought back onshore

So then, that's the history lesson. From 1 December 2003, Stamp Duty on non-marketable securities (that is, debts and other securities that are not traded on a stock exchange) executed on or after that date, is abolished by the Finance Act 2003. However, documents executed prior to 1 December will still be governed by the "old" rules.

 

What are the implications of this change in the rules for the UK debt sale and purchase industry?

 

First, the existing form of contract in common use, with the offer and acceptance mechanism, still works as it always did and indeed continues to facilitate "forward flow" arrangements where receivables are sold, typically on a monthly basis, by a seller with the buyer not being bound to accept the monthly tranche of debts until verification of the underlying data and eligibility criteria has been completed. No change in practice is therefore required.

 

However, it seems sensible, particularly for one-off transactions, to simplify the form of contract by removing the offer and acceptance mechanism and replacing it with simple assignment language. There is no requirement, though, for sellers and buyers to depart from the existing contract they are familiar with.

 

Second, there is now no longer any benefit in executing and retaining documentation offshore - though sellers should take care to ensure that anyone purporting to sign for the selling organisation is properly authorised to do so. This may still require a power of attorney to be granted in favour of the signatory, so those involved in debt sale may need to refer to their legal or company secretarial departments for clarification.

 

Care must also be taken to ensure that any documents of title which have already been executed and retained offshore (that is, prior to 1 December), pursuant to the underlying Sale Agreements, are not brought into the UK because Stamp Duty under the "old rules" will apply to those documents.

 

Finally, it may be that some sellers will now change the way in which they conduct the debt sale process itself. In the UK, most selling originators undertake a competitive price tendering process when selling debt, which may involve one or more rounds of bidding as the field of potential buyers in narrowed down. Few originators in the UK actually conduct formal auctions, with one reason being that formal auctions require binding bids. If an auction bid is binding, and the parties then purport to enter into a sale agreement containing an offer and acceptance mechanism, our view is that, in such case, the offer and acceptance is merely a sham and Stamp Duty is payable. Or it would have been prior to 1 December 2003.

 

One obstacle to true debt auctions, which are common practice in the US, has therefore been removed. There are others of course, not least the need for sellers who wish to conduct auctions to produce comprehensive and standardised due diligence information - to create a more level playing field amongst buyers. Some UK originators, driven by their procurement departments, will undoubtedly embark on this route. Some have tried it and moved away again; others see no benefit whatsoever over a tightly managed tendering process. Let's wait and see.

[pmhcfc]

Glen Crawford; here's a small extract from another one of his articles.....

 

The more interesting statistic, however, is that the relative price paid for the debt has increased even more dramatically, from an average of four pence in the pound three years ago to nearer eight or nine pence in the pound now. The main reason for this is that most sellers have exhausted their early "dustbin sales", which cleared out the older books. The majority of what is being sold today is freshly charged-off debt, either preagency placement (sold from 180 days delinquency) or post one agency placement, with the non-paying debts having been recalled for sale after the agent has had them for a further 180 days. In general, the fresher the debt, the higher the price it commands.

[pmhcfc]

How Cabot Financial collect statute barred debts (the Glen Crawford way):

 

Ask any collection agent, trace agent or debt purchaser about regulatory compliance and most would bemoan the increasingly stringent legal and regulatory environment within which we operate.

 

Take, for example, the wrangles with the Information Commissioner over the use of electoral roll data and the recent OFT guidelines which, amongst other things, seek to restrict "door-knocking" to "by appointment only". These things make life harder for everyone in the collection industry. Look deeper, however, and the debt purchase model is emerging as the clear winner.

 

One of the recognised benefits of true debt sale over traditional contingency collections is that VAT is removed from the equation. No VAT is chargeable on the sale of debt as no service is being provided by the buyer. Collection agents must, however, charge VAT on all commissions they earn.

 

A lesser-known advantage relates to the collectability of "statute-barred" accounts. If, in most cases, more than six years has elapsed since the date of default on an account (or, if later, the date the customer last acknowledged the debt), no legal proceedings may be brought for recovery. Unhelpfully, the default is automatically removed from the customer's credit bureaux records at the same time. No incentive for a customer to pay then, unless perhaps legal proceedings could be instigated for another debt still within the six year period. Larger debt-buyers like Cabot Financial, with vast portfolios of acquired accounts, see the same customers appearing again and again. We are often able to use related accounts as a means of reaching an acceptable aggregated settlement with a customer - to include statute-barred balances.

 

A contingency collection agent cannot bring this legitimate leverage to bear.

 

The pursuit of statute-barred debts is one area of concern for the OFT, fearful that strong-arm tactics could be used in the absence of the legitimate incentives larger debt-buyers may be able to utilise.

 

The regulators are also keen to stop the inconsistent approach adopted by lenders in collecting overdue or charged-off accounts. It is common for a customer to be subjected first to internal recoveries, then perhaps an in-house agent, followed by a first external collection placement, then a second, and finally maybe a third tertiary placement. Each could typically be for three, six or 12 months at a time. This often serves merely to alienate the customer. The regulators believe that customers have the right to be treated fairly and consistently. Enter the debtbuyers, who are able to take a longterm view of collections without resorting to short-term shock tactics. This issue will not only encourage lenders to sell, but also to sell at an earlier stage - avoiding the intermediary agency placements.

 

At Cabot Financial, we are, for example, seeing increasing numbers of lenders seeking to sell us accounts at less than 180 days delinquency. This doesn't leave much time for external agency placements.

 

With reputational risk ever-more important to credit originators, and more consumerorientated legislation on its way from Europe, this trend is sure to continue, leading lenders to choose buying partners like Cabot Financial who are able to work within the spirit, and not merely the letter, of evolving laws and regulatory guidelines.

[Seahorse]

Strange then, how Cabot appear to forget the very laws and regulatory guidelines that they say they work within the spirit of. If that were so, as soon as they were told they are chasing an unenforcable debt, they would merely put up their hands and tell us they a ceasing all attempts at collection, and acknowledge the fact that they should no longer demend payment.

 

This would also seem to confirm that Cabot have been right all along and DON'T have the duties of the origial creditor. And as the assignment is equitable, they cannot sue a debtor in Cabot's name alone. They must be joined in any action by the OC. I suspect this has NEVER happened. And I suspect any OC being dragged into court to hold Ken's hand would be horrified. Which brings Glen's "concern" forthe OC's reputation into wuestion somewhat.

 

Right, the floodgates are open. If a debt purchaser tries to take you to court, ask where the OC is in the equation. I can't wait to see how many OC's have a quiet word in Glen and Ken's ear over this.

[Seahorse]

I'm also in stitches over Glen's admission that they use the law to evade Stamp Duty.

 

And these feckers have the cheek to suggest that consumers have no right to use a "loophole" to evade a debt!!!!!!

 

Pot, Kettle, Black.

[Curlyben]

An awesome thread and a real eye opener.

[djgordyp]

I needed a lie down after trying to read it. Mind you, I'll use any excuse for a lie down.:D

[elizabeth1]

I'm also in stitches over Glen's admission that they use the law to evade Stamp Duty.

 

And these feckers have the cheek to suggest that consumers have no right to use a "loophole" to evade a debt!!!!!!

 

Pot, Kettle, Black.

 

 

ha ha ha ha and they call their "customers" ROGUES !!! HA HA HA HA

 

You really couldn't write the script for this crap could you?

 

GEEZ this company are rubbish - how can they go around bragging this stuff publicly and have the nerve to call the "customers" who question their validity to collect accounts/debts "ROGUES" because genuine "HONEST" questions are being raised to check Cabots out.

 

ha ha ha I do laugh cause the clock is ticking away nicely and the ropes are swinging ready

[andrew1]

I think we ought to set up a four way link.:

 

This thread - - -> Inland Revenue----->Glen Crawford et al ------>Jail

[Seahorse]

I've highlighted Glen's comments in a well known credit industry forum, as it seems a good excuse to ask some pertinant questions. I don't expect a reply from anyone though. A bit too near the bone, methinks. But you never know.

[bed32]

I'm also in stitches over Glen's admission that they use the law to evade Stamp Duty.

 

And these feckers have the cheek to suggest that consumers have no right to use a "loophole" to evade a debt!!!!!!

 

Pot, Kettle, Black.

That's not "evade" but "avoid". It is perfectly legal and in fact widely used in different circumstances in the financial markets.

 

Stamp duty is an awful tax as it is paid on the full value of the transaction each time the instrument is sold. It distorts markets in lots of ways and I can see no moral justification for it.

 

Not that I want to support Cabot

[sosumi]

Is there any way you could port a copy of this thread over to the CAG Debt Collectors and Debt Collection Agencies forum? What this guy (ie: GC) has written looks important for all of us!!

[Rhia]

That's not "evade" but "avoid". It is perfectly legal and in fact widely used in different circumstances in the financial markets.

 

Stamp duty is an awful tax as it is paid on the full value of the transaction each time the instrument is sold. It distorts markets in lots of ways and I can see no moral justification for it.

 

Tough guano! It's somewhat akin to them buying debts for 5pence or possibly 10 pence in the pound without the correct paperwork or having undertaken due diligence, then whacking unlawful interest on as well as demanding full payment at 100s of percent profit. This isn't morally justifiable either so they get all they deserve.

If there was any justice in this world these directors would be behind bars.

[Seahorse]

That's not "evade" but "avoid". It is perfectly legal and in fact widely used in different circumstances in the financial markets.

 

Stamp duty is an awful tax as it is paid on the full value of the transaction each time the instrument is sold. It distorts markets in lots of ways and I can see no moral justification for it.

 

Not that I want to support Cabot

 

Avoid it is. But the point I was making is, Cabot use perfectly legal ways to avoid paying anything they can. So why is it so difficult for them to accept that consumers have laws that they can use too?

[elizabeth1]

Avoid it is. But the point I was making is, Cabot use perfectly legal ways to avoid paying anything they can. So why is it so difficult for them to accept that consumers have laws that they can use too?

 

 

Exactly !! they don't like it when the consumer relies on clear cut laws to protect themselves from this unlawful collection of money. So why is it fine they use such measures to avoid taxes?

[Unforgiving]

This is the first I've heard about Cabot buying debts under the LoP. How did it become apparent that this is what they've been doing?

 

Does anyone know WHEN they started this practice?

 

They've just discontinued 2 cases aganst me which I assume is because they couldn't supply decent copies of agreements and notices of assigment. They hadn't tried to deny their responsibility to supply them in those particular cases although I know they do try to claim that sometimes (when things haven't gone legal or aren't LIKELY to i.e. when they are just blowing smoke and don't have a strong enough case to be worth issuing).

 

Has ANYONE yet attempted to sue them for causing stress and violating rights by defaulting on a CCA 1974 request for copy documents and continuing to press for payment of an alleged debt?

[Edz11]

Have I misread this thread? When the Act refers to "owner" it means the owner of the goods. The CCA means "creditor" full stop, period, when it refers to a fixed sum or running account credit agreement. There is no acknowledgement of someone being the "owner" of a debt due under a regulated agreement. They are either the creditor or they are nothing. The creditor may change (after transfer of rights and duties) but there is no provision that that is a partial change - its al or nothing.

[Rhia]

Cabot play fast and loose with this "not the creditor for the purposes of this etc". They use the LoP as the mechanism by which they arrange the sale I believe. However the agreement is governed by the Consumer Credit Act and whatever they try and claim the law's the law. If they do own rights and not duties then the assignment is equitable (ownershp shared between them and OC) and needs the orginal creditor's name on the N1 if they want to sue.

It's all nonsense from Cabot. The CCA rules.

[Curlyben]

This is a Cabot tactic with the rights but not the duties cobblers.

 

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 15 new pence, 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

© 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

“ 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;

 

When read with LoP makes for an interesting case.

 

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

©

the power to give a good discharge for the same without the concurrence of the assignor:

 

Absolute Assignment - COMPLETE owner of the "debt" EVERYTHING !!!

[pt2537]

12. Provisions for legal assignment of debts and other legal things in action.

Provided certain conditions are complied with, any debt or other legal chose or thing in action1 may be assigned so as to vest

in the assignee the legal right to the same and all the remedies for it, with power to give a good discharge without the

concurrence of the assignor2.

The conditions which must be complied with are: (1) the assignment must be in writing under the hand of the assignor; (2)

the assignment must be absolute, and not purporting to be by way of charge only; and (3) express notice in writing of the

assignment must be given to the debtor, trustee, or other person from whom the assignor would have been entitled to claim

the debt or thing in action3.

Such an assignment takes effect from the date of the notice4 and will be subject to equities having priority over the right of

the assignee5.

The provisions described above do not affect the enactments6 enabling assignees of policies of life assurance granted by

assurance companies to sue on them in their own names7; nor do they apply to any transfer of title to uncertificated units of a

security8 by means of a relevant system9 or to any disposition or assignment of an interest in uncertificated units of a security

title to which is held by a relevant nominee10.

 

1 See paras 14-15 post.

 

2 Law of Property Act 1925 s 136(1).

 

3 Ibid s 136(1).

 

4 Ibid s 136(1); and see para 21 post.

 

5 Ibid s 136(1). As to these equities see para 23 post.

 

6 Ie the enactments of the Policies of Assurance Act 1867: see INSURANCE vol 25 (2003 Reissue) para 548 et seq.

 

7 Law of Property Act 1925 s 136(2). The effect is that a policy of life assurance granted by an assurance company may be assigned at law by

virtue of the Policies of Assurance Act 1867, and also by virtue of the Law of Property Act 1925 s 136(1): see INSURANCE vol 25 (2003 Reissue)

para 548 et seq.

 

8 For the meaning of 'unit' in relation to a security, and 'uncertificated' in relation to a unit of a security, see the Uncertificated Securities

Regulations 2001, SI 2001/3755, reg 3(1); and COMPANIES.

 

9 For the meaning of 'relevant system' see ibid regs 2(1), 3(1); and COMPANIES.

 

10 Ibid reg 38(5). For the meaning of 'relevant nominee' for these purposes see reg 38(6); and COMPANIES.

 

13. General effect of statutory provisions.

The provisions relating to assignment1 did not create any new rights, but they enabled the legal right to a debt or other chose

or thing in action to be transferred to the assignee, together with all legal remedies, including the right to sue in his own

name2. They have not made assignable contracts which were not assignable in equity before3; nor, on the other hand, have

they impaired the efficacy of equitable assignments which would previously have been valid4. The statutory provisions

effected an improvement in the position of a donee of a legal chose in action by enabling him to sue at law in his own name

as assignee without regard to whether or not the assignment was for valuable consideration5. To be a valid assignment within

the provisions described above, an assignment must be of the whole debt or chose in action6.

 

14. Meaning of 'debts'.

To be within the relevant provisions of the Law of Property Act 19251, the debt must be a debt of a definite sum2. An

assignment of the balance which may remain after satisfying a third party debt order is effective and attaches to the balance

in the hands of the debtor after payment into court under the order3.

An absolute assignment of a specified future debt is within the Act4; as, for example, the balance standing at any time after

the date of the assignment to the credit of the assignor at a bank5, or future rents6, or a retention fund under a building

contract7.

Examples of debts within the Act include the following: a debt due on the covenant in a mortgage deed8; rent already accrued

due under a lease9; a judgment debt10; a balance11, or a deposit12, standing to the assignor's credit at his bank; the amount due

on a solicitor's bill of costs, even before the delivery of a signed bill13; a debt due from a solicitor to a town agent14; a debt

certified as due from a company in liquidation15; and the balance due to a legatee of his share in the residuary estate of a

deceased person1

 

16. Necessity for assignment to be absolute and not to purport to be by way of charge.

 

In order that an assignment may be within the Law of Property Act 1925 it must be absolute, and must not purport to be by

way of charge only1.

An assignment which is conditional and not absolute, as, for example, an assignment expressed to be until money advanced is

repaid2, or an assignment of a policy of life insurance authorising the assignee to draw the insurance money in the event of

the assignor predeceasing the assignee3, is not within the Act. An assignment of salary to become due to the assignor under

his employment with third parties is, however, an absolute assignment4.

The existence of a trust in favour of the assignor, whether of the whole debt assigned5 or of the surplus after retainer of a

definite sum by the assignee6, does not prevent the assignment being absolute, if it is absolute in point of form. Likewise a

promise to pay the assignor a sum of money calculated according to the amount received by the assignee as the fruits of the

assignment can have no effect at all on the nature of the assignment if otherwise absolute7.

A document given by way of charge is a document which only gives a right to payment out of a particular fund or property,

and does not absolutely transfer the fund or property8. In order to determine whether an assignment purports to be by way ofcharge only, all the terms of the instrument must be considered, and, whatever may be the phraseology adopted in some

particular part, the intention must be determined on consideration of the whole9. It is immaterial whether the consideration is

a fixed sum or a current account, nor does it matter that the assignee has obtained a power of attorney and a covenant for

further assurance10. The fact that the assignment is expressed to be by way of security is not by itself sufficient to make it

purport to be by way of charge only11, but such an expression coupled with other circumstances may have that effect12. An

assignment of so much of a future debt as shall be enough to satisfy an uncertain future indebtedness is an assignment by way

of charge only13.

A mortgage in ordinary form which transfers the property with a proviso for redemption and reconveyance is an absolute

assignment within the Act14; and where there is an assignment of a debt, absolute in form but in fact made by way of

security, it will be within the Act, although an equitable right to reassignment on redemption will be implied15. Where,

following the assignment of insurances to the mortgagee, the insurances continue to protect the owner's interests in respect of

any losses and liabilities which he had incurred as mortgagor and owner or as operator of a vessel, the assignment does not

constitute an absolute assignment16

 

 

 

the above is an extract from Halsburys Laws of England

 

it from my reading of it seems to blow the LoP arguement from the like of cabot right out of the water

 

shouold anyone want a full copy of the text let me know

[rory32]

Cabot attempt to confuse Paul. They have even attempted to quote the LoP arguement to people residing in Scotland. It would be interesting to know how they would argue that in court

[pt2537]

Hi Rory,

 

im beginning to see that my self with what ive read on Cabot

 

now then, i would be very interested to see them try that LoP arguement in Scotland, that would be fun and well worth a trip up from southampton just to see it:)

 

regards

 

paul

[elizabeth1]

Cabot attempt to confuse Paul. They have even attempted to quote the LoP arguement to people residing in Scotland. It would be interesting to know how they would argue that in court

 

 

 

:D I have visions of a packed court house - cause this explanation would be worth the travel - Judge would be on the floor laughing