Debt purchase price - CPUTR/Unfair Relationship

[Rhia]

This is one for the legals amongst us. This is intended to be a work in progress and open to debate.

 

I have long been thinking of this business where a OC writes off a debt to tax and then sells it on to a DCA for anything between 2% and 20% (10% appears to be the norm).

 

The DCA then adds its own interest, costs etc and attempts to claim the entire amount. Notwithstanding the fact that they are trying to make 90% profit (is that correct my maths is crummy) on a collection the addition of the extras could mean the profit is way over that.

 

My question is could this be challenged under the CPUTR 2008 regulations as far as the DCA is concerned by trying to collect on this - being excessive profit, the way they collect etc? In this case I am thinking strictly of the amount they try to collect. (Yes I know some will say that's business)

 

My next question is that surely by selling off a debt to a DCA for 10% (say), and the DCA will try and recoup it in its entirety the OC or DCA or both also fall foul of the Unfair Relationships section 140A of the CCA 2006 which says:

 

(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and debtor arising out of the agreement (or any related agreement) is unfair to the debtor because of one of the following:

 

(a) any of the terms of the agreement or of any related agreement

 

(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement.

 

© any other thing done (or not done) by, or on behalf of the creditor (either before or after the making of the agreement or any related agreement).

 

Going on to 140 A (4) goes on to say this applies to a debt that has been assigned to a third party (i.e. DCA).

 

 

Is this a feasible line of attack as it sticks in many a craw when someone is struggling to pay a debt and it gets flogged off for peanuts? Had said debtor been offered the chance to repay at a modest cost theyw ould most likely have been able to.

 

I have a couple of incidents whereby the debtor has evidence of what it has been sold for. However I am certainly aware that you would have to push for disclosure of the sale price and they claim this to be sensitice commercial information (my ass they just don't want us to know)

 

OK forum over to you...

[Decanus]

This is an interesting angle to approach this from. At work at the moment, so can't contribute, but hopefully others will chip in...

 

always seemed ridiculous anyway they would refuse fair offers of payment, offer you 30%, and then go off and sell debt for 10% of its value!

 

go figure...!

[creditcardmug]

But they get 100% back via tax, plus 10% from DCA, and they no longer have the hassle/cost of trying to collect the unenforceable debt.

 

One sad point is that the taxpayer picks up the tab for it.

 

So the OC loses nothing,and makes a profit from both previuos account transactions, and the 10% from DCA.

 

The DCA in most cases also makes a fortune, as most claims are not contested.

 

Happy OCs/DCAs

[tifo]

I have long been thinking of this business where a OC writes off a debt to tax and then sells it on to a DCA for anything between 2% and 20% (10% appears to be the norm).

 

The DCA then adds its own interest, costs etc and attempts to claim the entire amount. Notwithstanding the fact that they are trying to make 90% profit (is that correct my maths is crummy) on a collection the addition of the extras could mean the profit is way over that.

 

My question is could this be challenged under the CPUTR 2008 regulations as far as the DCA is concerned by trying to collect on this - being excessive profit, the way they collect etc? In this case I am thinking strictly of the amount they try to collect. (Yes I know some will say that's business)

 

My next question is that surely by selling off a debt to a DCA for 10% (say), and the DCA will try and recoup it in its entirety the OC or DCA or both also fall foul of the Unfair Relationships section 140A of the CCA 2006 which says:

 

(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and debtor arising out of the agreement (or any related agreement) is unfair to the debtor because of one of the following:

 

(a) any of the terms of the agreement or of any related agreement

 

(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement.

 

© any other thing done (or not done) by, or on behalf of the creditor (either before or after the making of the agreement or any related agreement).

 

Going on to 140 A (4) goes on to say this applies to a debt that has been assigned to a third party (i.e. DCA).

 

 

Is this a feasible line of attack as it sticks in many a craw when someone is struggling to pay a debt and it gets flogged off for peanuts? Had said debtor been offered the chance to repay at a modest cost theyw ould most likely have been able to.

 

I said this last year with my arguments against the FOS wanting to pay the DCA my charges refund, whereby the DCA would gain much more than they've paid, from the payments they've had from me and these charges, all from an invalid agreement where the legal amount owed has not been investigated. And the FOS will not contact them as they're not allowed to include a third party within a complaint but can somehow pay them.

Edited February 14, 2009 by tifo

[Rhia]

Not the same issue Tifonet. You are talking about actually getting a balance refunded to you when it's overdrawn I think.The FOS is saying you aren't entitled to the cash only to have your balance reduced as you never paid it out in the first place - which is correct. The only way you could get a refund is after the charges and interest have been totted up and they exceed the outstanding balance. This isn't the same thing.

My angle is re the DCA attempting to collect the full balance when they have paid a very reduced price for it.

[pt2537]

hmm, arguably an unjust enrichment situation isnt it

[tifo]

My angle is re the DCA attempting to collect the full balance when they have paid a very reduced price for it.

 

My angle is the same as yours. The DCA has paid a reduced price to buy the debt but my charges refund clears almost all the amount they're asking, i.e. they bought the debt for £100 and ask for £1,000 as stated by the bank and my refund is, say, £900.

 

I have stated the same as you, in that the DCA is not due the whole £900 or £1,000 but only the purchase price but the FOS say they can keep it all. I know that once it is paid to them, it is almost impossible for me to get this money back from the DCA.

 

I've further stated that the DCA can only ever be entitled to the purchase price plus interest as per original agreement if valid, otherwise no interest under an invalid improperly executed agreement. This has been ignored by the FOS as have all my arguments regarding the bank and DCA and legal entitlements.

 

I haven't taken the matter up separately with the DCA but intend to do so. The FOS suggested i make a separate complaint about the DCA but i said, no thanks, after the decisions i've received regarding bank charges, i don't think i trust the FOS enough to be fair or impartial.

[pt2537]

restitution restitution restitution tifo, the principles of unjust enrichment would clearly apply here

[cadencealex]

restitution restitution restitution tifo, the principles of unjust enrichment would clearly apply here

 

 

But if FOS are ignoring it, wouldn't it take a courtcase to sort it out?

[tifo]

But if FOS are ignoring it, wouldn't it take a courtcase to sort it out?

 

Yep, most likely.

 

The FOS is not going to help.

[tifo]

restitution restitution restitution tifo, the principles of unjust enrichment would clearly apply here

 

I've been saying this all along and asking the FOS to investigate the DCA's entitlement to a proper amount before they pay them and they say they cannot include a third party within a complaint and i say, well, how can you agree to paying them and how do you know how much the DCA is entitled to, to which they don't answer. Decision made, go away i am told, or make a separate complaint against the DCA.

[cadencealex]

So someone needs to tackle a DCA with this - any offers

[Rhia]

Test case is called for isn't it? I don't have a case to test I'm afaid or I would definitely offer.

 

PT - when you're back online properly can you either lay down a suggested POC or point us to a thread if there is one elsewhere on here.

 

I actually believe the biggest hurdle to this would be forcing the DCA to reveal the purchase price. Even though it is well known throughout the industry that this is all they pay it would be a different thing to admit it publicly.

 

Any such action, as I see it, would not be to get a cash refund but to get the debt they claim reduced to a reasonable level. i.e. what they paid for it.

[tifo]

So someone needs to tackle a DCA with this - any offers

 

I would do it with the proper support. It's lack of confidence in tackling them on this issue that's stopped me so far.

 

As some may know, the FOS 'gave' away some £12,000 of my refunds to DCA's and if it came to purchase price only, i could get some of this back.

 

I didn't accept the decisions so the money should still be with the banks but many said they've sent the refund to the DCA anyway, following the FOS decisions. I still told them i didn't accept their offer so that's on their own initiative.

 

How about claiming charges from the DCA, as they do say they bought the debt and even according to banks now, the DCA owns and handles everything. Has anyone done this?

 

Note to Rhia : i'm not taking the thread over, my points are still regarding the issue of what the DCA is entitled to following purchase of a debt

[cadencealex]

Test case is called for isn't it? I don't have a case to test I'm afaid or I would definitely offer.

 

PT - when you're back online properly can you either lay down a suggested POC or point us to a thread if there is one elsewhere on here.

 

I actually believe the biggest hurdle to this would be forcing the DCA to reveal the purchase price. Even though it is well known throughout the industry that this is all they pay it would be a different thing to admit it publicly.

 

Any such action, as I see it, would not be to get a cash refund but to get the debt they claim reduced to a reasonable level. i.e. what they paid for it.

 

 

I would happily be a test case, I owe a couple of small debts to Red but my main debts have been passed back to the OCs.

 

 

I would of course need someone to write the POCs!

 

 

Next reckon they are passing it over to Lewis.. so there's 2k if it does get passed

[Rhia]

It would be good to try this with a small debt like yours I think - keep it into small claims.

 

Tifo I know you're not trying to take over the thread but I still think there is a small but distinct difference between what I am suggesting and you have been through.

 

I agree the DCA should refund the charges but we have all been a bit confused as to whether this is the correct road as many say they have bought rights not responsibilities. If you could link your thread on here then we can try and keep this one on track and be able to follow what you have experienced too. There will be some useful comparisons I have no doubt.

[cadencealex]

It would be good to try this with a small debt like yours I think - keep it into small claims.

 

Tifo I know you're not trying to take over the thread but I still think there is a small but distinct difference between what I am suggesting and you have been through.

 

I agree the DCA should refund the charges but we have all been a bit confused as to whether this is the correct road as many say they have bought rights not responsibilities. If you could link your thread on here then we can try and keep this one on track and be able to follow what you have experienced too. There will be some useful comparisons I have no doubt.

 

 

So a small amount wouldn't be a problem then?

 

If you want me to start a claim I will, provided someone explains what to do

[pt2537]

trouble is, i doubt it would fall in SCT due to complexity issues, the SCT would be unlikely to be the proper place to hear this stuff.

[cadencealex]

trouble is, i doubt it would fall in SCT due to complexity issues, the SCT would be unlikely to be the proper place to hear this stuff.

 

 

is there any case law similar to this?

 

You can apply unjust enrichment to several different scenarios - does anyone know of any case law on this issue?

[Rhia]

Thinking back, a barrister told me never to start and action unless forced to as it's easier to defend.

 

Let's see what the legal brains amongst us say (PT I mean you of course) as starting an action without funding is tricky - don't want you landing with the costs. I guess we need someone who is about to defend.

[pt2537]

Thinking back, a barrister told me never to start and action unless forced to as it's easier to defend.

 

Let's see what the legal brains amongst us say (PT I mean you of course) as starting an action without funding is tricky - don't want you landing with the costs. I guess we need someone who is about to defend.

with us, we bring actions on a CFA with ATE legal expense insurance, this is to ensure that if it goes wrong the client is not liable for legal costs of both sides

 

it is extremely dangerous pressing on with litigation without adequate protection, however some people have legal cover on their home insurance and dont even realise it

[tifo]

I agree the DCA should refund the charges but we have all been a bit confused as to whether this is the correct road as many say they have bought rights not responsibilities.

 

I believe this is the way DL now advises and some of your own experiences are used as the basis for this advice.

 

In the cases at the FOS where the bank wanted to pay the DCA, they now refuse to correspond with me and state to contact the DCA as they bought the debt in full with everything, i.e. claim the charges off them, don't ask us. Even letters of intended court action, CPR requests under any rule, letters quoting unfair relationship etc are all responded to by stating it's been passed to the DCA to reply to and so will all future correspondence.

 

Of course, neither i or the FOS has contacted the DCA in any of my cases so i don't know why the bank now wants to pass the buck to them. This means I am being pushed to chase the DCA for everything, under the reasoning that they bought the debt and the bank now has nothing to do with it.

[tifo]

with us, we bring actions on a CFA with ATE legal expense insurance, this is to ensure that if it goes wrong the client is not liable for legal costs of both sides

 

I've never been able to find a local'ish solicitor to take on any 'consumer credit' action for cases less than £5k but i would love to sue banks and DCAs under a CFA. I can give about 10 of my own personal cases, a mixture of diferent things.