Is this legal

[guzzleguts]

Could someone enlighten me, i believed that a creditor couldn't sell a debt on without first serving a Default notice, i still believe this to be accurate, so if anyone could point me to the exact regs/legislation for this i would be grateful.

 

GG

[pt2537]

Wrong , wrong , wrong

 

they can sell it to who ever they want, all that happens is the contract then moves in essence to the new owner, they obtain the rights of the creditor

 

they dont need a default first,

 

Just look at when Bank of Scotland sold its Credit Card Pool to MBNA did they default all their card holders before they sold the accounts?

 

of course not

[guzzleguts]

Thanks pt, ive digested so much info over the last 18 months on here, and i haven't got enough brain space to remember everything.

 

Much appreciated

 

GG

[robcag]

Wrong , wrong , wrong

 

they can sell it to who ever they want, all that happens is the contract then moves in essence to the new owner, they obtain the rights of the creditor

 

they dont need a default first,

 

Just look at when Bank of Scotland sold its Credit Card Pool to MBNA did they default all their card holders before they sold the accounts?

 

of course not

 

Hi Paul

 

But isn't there a difference in say, your example above, and a creditor selling to a DCA?

 

In your example one bank is selling the account to another and the account remains 'live', and the debtor can continue to operate the account as before (i.e. continue to make purchases or borrow money) because both banks are licensed 'credit brokers' (or whatever the term is).

 

But if the creditor (bank) sells it to a DCA then wouldn't the account first have to be terminated because the DCAs presumably aren't licensed (and I guess they wouldn't be inclined!) to continue offering credit facilities?

 

One DCA in particular that I'm thinking of is Cabot who often say the account hasn't been terminated and they're just claiming arrears after they issue a claim (and they also claim no DN was required).

 

TIA for any explanation!

 

Cheers

Rob

[Guest]

Hi Paul

 

But isn't there a difference in say, your example above, and a creditor selling to a DCA?

 

In your example one bank is selling the account to another and the account remains 'live', and the debtor can continue to operate the account as before (i.e. continue to make purchases or borrow money) because both banks are licensed 'credit brokers' (or whatever the term is).

 

But if the creditor (bank) sells it to a DCA then wouldn't the account first have to be terminated because the DCAs presumably aren't licensed (and I guess they wouldn't be inclined!) to continue offering credit facilities?

 

One DCA in particular that I'm thinking of is Cabot who often say the account hasn't been terminated and they're just claiming arrears after they issue a claim (and they also claim no DN was required).

 

TIA for any explanation!

 

Cheers

Rob

 

good point. as you say, isn't it the 'debt account' that gets 'sold' to the dca rather than the 'credit account'? the 'debt account' being 'created' when the 'credit account' is terminated? therefore, a (lawful ) dn would be required before terminating?

Edited June 7, 2010 by Ford
typo

[sickboy]

*Subject to case law*

 

Advice about legal action I know, but you'll get the picture. Enjoy!

 

31.9.28 Types of assignment

There are four categories of assignment of a thing or chose in action:

statutory assignment of legal choses;

statutory assignment of equitable choses;

equitable assignment of legal choses; and

equitable assignment of equitable choses.

 

 

See paragraphs 31.9.29 - 31.9.33 below for the formalities of statutory assignments (under section 136 of the Law of Property Act (LPA) 1925) and equitable assignments. It is also necessary to consider, however, whether the assignment of a particular right of action should be legal (ie statutory) or equitable. The distinction, so far as the substantive law is concerned, between legal and equitable things in action is often more apparent than real. However, there is one very important procedural consequence which attaches to the distinction. A statutory assignee can sue without joining the assignor as a party to the action, whereas an equitable assignee often (although not always) cannot do this. Furthermore, a statutory assignment passes a legal right to the assignee, an equitable assignment passes only an equitable right.

link Edited June 7, 2010 by sickboy
1+1=2

[rhodium78]

Hi Paul

 

But isn't there a difference in say, your example above, and a creditor selling to a DCA?

 

In your example one bank is selling the account to another and the account remains 'live', and the debtor can continue to operate the account as before (i.e. continue to make purchases or borrow money) because both banks are licensed 'credit brokers' (or whatever the term is).

 

But if the creditor (bank) sells it to a DCA then wouldn't the account first have to be terminated because the DCAs presumably aren't licensed (and I guess they wouldn't be inclined!) to continue offering credit facilities?

 

One DCA in particular that I'm thinking of is Cabot who often say the account hasn't been terminated and they're just claiming arrears after they issue a claim (and they also claim no DN was required).

 

TIA for any explanation!

 

Cheers

Rob

 

PT is absolutely right, there is no difference between selling to a DCA or to another Creditor. This is more complicated than LoPA 1925 but also involves licensing rules in CCA 1974 and the OFT, and also WHEN the relevant DCAs obtained their licenses due to the subsequent amendments. The DCAs can be licensed as creditors. Case in point is Cabot, they are licensed to provide credit. So in this case, they are not required to "terminate" the agreement to pass on the account and seeing that in a normal loan account, there are no more advancements to be made, then I don't understand the concept of an account remaining live. An account is live, regardless of whether the OC or the DCA is administering it. What is important is whether they terminated the account or you terminated the account. Also, by assigning the account, it does not constitute termination, from loans worth £100 to ones worth millions of pounds because even big loans get defaulted on and assignment follows the same doctrine of equity in conjunction with LoPA.

[Guest]

yes, it can technically still be 'sold'. but the new 'owner' would have to answer for a lack of dn/invalid dn if the cr card account had been 'terminated' etc by the o/c. in practice, it seems that most, if not all, cr card agreements are 'terminated' (whether lawfully or not) by the o/c before being 'sold' on to a dca! for some reason!

Edited June 8, 2010 by Ford

[robcag]

good point. as you say, isn't it the 'debt account' that gets 'sold' to the dca rather than the 'credit account'? the 'debt account' being 'created' when the 'credit account' is terminated? therefore, a (lawful ) dn would be required before terminating?

 

Hi Ford

 

I was thinking along those lines

 

 

 

PT is absolutely right, there is no difference between selling to a DCA or to another Creditor. This is more complicated than LoPA 1925 but also involves licensing rules in CCA 1974 and the OFT, and also WHEN the relevant DCAs obtained their licenses due to the subsequent amendments. The DCAs can be licensed as creditors. Case in point is Cabot, they are licensed to provide credit. So in this case, they are not required to "terminate" the agreement to pass on the account and seeing that in a normal loan account, there are no more advancements to be made, then I don't understand the concept of an account remaining live. An account is live, regardless of whether the OC or the DCA is administering it. What is important is whether they terminated the account or you terminated the account. Also, by assigning the account, it does not constitute termination, from loans worth £100 to ones worth millions of pounds because even big loans get defaulted on and assignment follows the same doctrine of equity in conjunction with LoPA.

 

Hi Rhodium

 

Thanks for your reply.

 

Sorry if I didn't explain myself very well, but I was referring to credit card agreements (not loans).

 

Don't take this the wrong way, but in PTs example, BoS sold their credit card business to MBNA, presumably lock stock and barrel. Those BoS credit card accounts then became MBNA credit card accounts, with new MBNA credit cards being issued and monthly statements being issued by MBNA (I know for sure, because I had one of those accounts and it obviously happened to my account).

 

I can't remember all the details right now without checking as to whether there were account number changes, but I'm pretty sure there were. Any existing balances were carried over to the new MBNA account, and things then continued much the same as before, but probably with different ways of doing things. I can't remember if new T&Cs were issued, and I certainly don't recall signing a new agreement, but I'd bet the MBNA T&Cs weren't the same as the BoS ones.

 

Which then begs the question; when has anybody ever held a Cabot credit card? Certainly not me!

 

Cheers

Rob

[rhodium78]

The same defences that arose with the OC are also applicable to the assignee. That is a given. Credit card agreements are terminated because otherwise it makes the whole assignment complicated. For example, in commercial agreements for rolling credit which is where this is most commonly seen, the assignee will agree to pay its share of advances as part of the assignment. But the assignee pays the OC, not the debtor and in that situation, the OC is at a big risk of the assignee defaulting itself in payments to it whereas it still has to fulfil its obligation to the debtor and still lend the amount to the debtor despite that amount being in default with the assignee. This is one thorn bush that the OCs don't want to get involved in so they prefer to terminate the account rather than sell it "alive".

 

That is one of the "some reason"s...

[rhodium78]

I can't remember if new T&Cs were issued, and I certainly don't recall signing a new agreement, but I'd bet the MBNA T&Cs weren't the same as the BoS ones.

 

Which then begs the question; when has anybody ever held a Cabot credit card? Certainly not me!

 

Cheers

Rob

 

By assignment, your agreement inherits the T&Cs of the assignor... they could have varied the agreement at a later date. If MBNA, HBOS, or any other card holder sold the agreement to Cabot, they have the right type of license for a credit card business so when looking at it purely on legal paper, they are the same as MBNA. I haven't had dealings with Cabot so I don't know their MO so I can't comment further on how they treat the accounts or deal with assigned debt.

 

There are other things associated such as borrowing limit is restricted or removed and hence if there is no real burden for them to pass over to a DCA or that the agreement is terminated because they took away your benefit of contract. Other things which are peripheral but raise complex points of law.

 

It is unfortunately not logical...

[Guest]

By assignment, your agreement inherits the T&Cs of the assignor... they could have varied the agreement at a later date. If MBNA, HBOS, or any other card holder sold the agreement to Cabot, they have the right type of license for a credit card business so when looking at it purely on legal paper, they are the same as MBNA. I haven't had dealings with Cabot so I don't know their MO so I can't comment further on how they treat the accounts or deal with assigned debt. here's an apparent eg of their MO http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/262804-interesting-info-cabot.html

 

There are other things associated such as borrowing limit is restricted or removed and hence if there is no real burden for them to pass over to a DCA or that the agreement is terminated because they took away your benefit of contract. Other things which are peripheral but raise complex points of law.

 

It is unfortunately not logical...

 

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