Has an account REALLY been assigned when the OC gets a kickback?

[DonkeyB]

One for the legal bods, about debt purchasing and the Law of Property Act (as well as CCA 1974, I dare say).

 

Consider this scenario. A debt buying company buys a delinquent account from a credit card company, under a deed of assignment or a sale agreement. The Notice of Assignment sent to the account holder states the assignment to be absolute, ie. all rights and benefits.

 

However, when using CPR effectively, the account holder (debtor) gets hold of a copy of the sale agreement and notices that there’s a clause which states that the original creditor gets a kickback or percentage of each account where monies are subsequently recovered.

 

Now, I’m aware of several cases where the debtor has contacted the OC and been told the account no longer has anything to do with them. SARs are answered, but at no time does the OC let on that they actually have a vested interest in the recovery process, even though technically they no longer own the debt.

 

Is it just me, or is there something fundamentally wrong with this? I haven’t a clue what laws would apply, but I’m wondering if there’s anything in this sort of arrangement that can be challenged legally.

[Old Cogger]

could be since they get tax relief on so called written off debts on their books, if they get % of any collections do they submit tax on gain?

[postggj]

You can only have two assignment

 

equitable or

absolute

 

if thats a clause in an agreement between the oc and dca then i would think it unlawful

 

you cant have your cake and eat it

 

once assigned all rights and duties go with the assignment

 

interesting question that for which ime intreigued and await case law answer

[broken arrow]

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.

[broken arrow]

1 The transfer of a chose in action by one person (the assignor) to another (the assignee). By the rules of the common law, this was not permissible. If, for example, A was owed a contract debt by B, he could not transfer his right to C so as to enable C to sue B for the money owed. The assignment of certain choses in action is now authorized and governed by particular statutes. For example, the Companies Act 1985 allows shares in a company to be transferred in the manner prescribed by the company's articles of association. These, however, are special cases; in general, choses in action, whether legal (e.g. the benefit of a contract) or equitable (e.g. a right under a trust), can be transferred either by equitable assignment or, under the Law of Property Act 1925 , by statutory assignment. For an equitable assignment, no formality is required. It is sufficient that the assignor shows a clear intention to transfer ownership of his right to the assignee. If, however, it is a legal chose that is assigned, the assignor must be made a party to any proceedings by the assignee to enforce the right. In the above example, C can sue B for the debt, but he must join A as co-claimant or (if A refuses to lend his name to the action in this way) as co-defendant. A statutory assignment under the Law of Property Act 1925 is sometimes referred to as a legal assignment, but since it may relate to an equitable chose in action as well as a legal one this is not wholly accurate. It enables the assignee to enforce the right assigned in his own name and without joining the assignor to the proceedings even if it is a legal chose. There are three requirements for its validity: it must be absolute; it must be in writing; and written notice of it must be given to the person against whom the right is enforceable. For these purposes, an absolute assignment is one that transfers the assignor's entire interest to the assignee unconditionally. If less than his entire interest (e.g. part of a debt) is transferred, or if any condition is attached to the transfer (e.g. that the consent of a third party be obtained), the assignment is not absolute. An assignment need not, however, be permanent to be absolute, and this is exemplified by the mortgage of a chose in action. If A, who owes money to C, assigns to C as security for that debt a debt due to him from B, with the proviso that C will reassign the debt if A settles what is due to him, the assignment is absolute despite the proviso for reassignment.

 

 

Read more: assignment - assignor, assignee, equitable assignment, statutory assignment, legal assignment, absolute assignment http://law.jrank.org/pages/13986/assignment.html#ixzz14c1lSJFe

[postggj]

clause which states that the original creditor gets a kickback or percentage of each account where monies are subsequently recovered.

 

SO BEGS THE QUESTION

 

IS THE ASSIGNMENT ABSOLUTE AND DOES THE OC HAVE TO INFORM THE DEBTOR ON THE SALE BE IT ABSOLUTE OR EQUITABLE AS TO LOP 1925

[broken arrow]

There are three requirements for its validity: it must be absolute; it must be in writing; and written notice of it must be given to the person against whom the right is enforceable.

[coledog]

Subbing - might learn something

[DonkeyB]

I think one or two of you know the sale agreements I’m referring to...

[DonkeyB]

I suppose one of the main things I want to establish here is whether the fact that there’s a benefit in the sale agreement potentially for the OC in some way prejudices the rights or otherwise of the account holder. While credit card T&Cs allow for an account to be sold on, do they allow for what is effectively an additional clause in the contract to be created, whereby the original debt owner can still derive profit from the account AFTER it has been assigned away absolutely? In other words, does such a contract continue to mean the OC is potentially a creditor, and therefore the assignment CANNOT be absolute? (which is what postggj is getting at)

 

Here’s a well-known example. The debtor finds that his account appears to have been sold to a company other than that chasing him for the money. So he sends an SAR to the OC to establish the facts. However, the OC is reluctant to come clean on the facts and prevaricates and obfuscates.

 

So in this instance, there could be a tendency for an OC to act prejudicially in cases where the nature of an assignment, or indeed the true assignee, is in question. There may be a tendency for the OC to provide the answers that will allow the DCA/debt buyer to collect successfully, rather than an answer that is totally open and transparent about the true facts of an assignment.

 

I think many of you know where I’m going with this, but there’s a wider question needs to be addressed. I imagine it might even come under human rights legislation.

[coledog]

In my experience, which is so far limited, I am coming to the conclusion that OCs could be working 'hand in glove' with the debt purchaser for what ever reason and not acting in the 'professional manner' expected of a financial institution.

 

It is evident that the purchaser never has any supporting evidence, to hand, as to the validity of the account they have bought and its enforcability - they have to get this from the OC if requested.

 

What is even more worrying is that that the OC never passes on any information about the account holder i.e if they have been informed that the person is ill. suicidal, jobless, has no knowledege of this debt etc etc

[dadofholly]

subbing

[Master Chief]

Subbing too, knowledge is power!

[DonkeyB]

As if by magic, I have discovered this quote in a Credit Today supplement:

 

Martin Dunphy, chief executive of Marlin Group, says: “Sellers have the opportunity to potentially enhance their longterm returns through profit share agreements or vender [sic] finance; however, this would need to be structured in a way that satisfied both its internal stakeholders and external auditors.”

 

In other words, they’re already doing it (working with the debt seller AFTER the sale – outrageous!) but are finding ways to make it acceptable to auditors! This makes me think they KNOW it should not be acceptable. This quote was part of an argument about negotiating with debt sellers to fix a price (10 to 15p in the pound is stated), where the vendor wants more money. So let’s give you a kickback... sorry, ‘profit share’. How can you have a profit share in something you no longer have an interest in?

 

It also menions vendor finance. How can the vendor finance sale of its own property? It would surely retain an interest, and therefore would remain a creditor! The whole thing stinks.

 

This Debt Sale & Purchase supplement is downloadable at the bottom left of this link. It’s a Lowell-sponsored job. Its content will make your hairs stand on end. The quote above is on page 7.

 

http://www.credittoday.co.uk/supplements.cfm

[coledog]

Please don't send out information like that again when I am eating!

[dadofholly]

Please don't send out information like that again when I am eating!

 

Bet you nearly dropped your biscuits back in your bowl

[coledog]

That document was absolutely appalling - I think the worst bit is their 'responses' to the genuine complaints they have received about the way they approach their 'victims'. What a corrupt and money grabbing industry to be a part of!

 

AND THAT WAS MY 1,000th POST:ranger:

[DonkeyB]

Only 3,872 to catch me....

[thewar_man]

I'm a newbe. Hi

 

Hasn't the OC in most cases already received tax relief having written off the claim and sold it (sorry I meant assigned it although they both have different meanings). What is even more annoying is that the OC in most cases being a bank or other financial institution created the money in the first place since banks and credit card companies do not lend there own money but create it out of thin air. What actually happens is an exchange my promissory note for a certain amount of computer credits called pounds created and paid into my account. Sorry for going off thread there.

 

Seriously how can the OC write off the debt and still have an interest after selling or assigning it?

[dadofholly]

I'm a newbe. Hi

 

Hasn't the OC in most cases already received tax relief having written off the claim and sold it (sorry I meant assigned it although they both have different meanings). What is even more annoying is that the OC in most cases being a bank or other financial institution created the money in the first place since banks and credit card companies do not lend there own money but create it out of thin air. What actually happens is an exchange my promissory note for a certain amount of computer credits called pounds created and paid into my account. Sorry for going off thread there.

 

Seriously how can the OC write off the debt and still have an interest after selling or assigning it?

 

In the case of banks or a builing society you have a very good point.

 

Some loan companies will loan their funds from the banks - so it will be different in their cases - but you make a good point.

 

The whole thing needs re-looking at and i think that is what Donkey is doing - and looking for a legal view point on it.

 

We are hoping that some of the more legal eagles on here may be able to throw in a bone ot two.

 

A bit off the topic of this thread theWar_man but here is a thread you may be interested in reading - in relation to the banks creating money supply.

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?282884-BBC-News-Celebrity-and-the-threat-of-bankruptcy

Edited November 10, 2010 by dadofholly

[DonkeyB]

The whole thing needs re-looking at and i think that is what Donkey is doing - and looking for a legal view point on it.

 

We are hoping that some of the more legal eagles on here may be able to throw in a bone ot two.

 

That is indeed exactly what I’m after, DoH!

[rebel11]

Hi guys

 

Due to recent cases, the creditor can continue to add interest to the debt, even though there is a possibility that the debtor will never pay that debt. I wonder if a creditor would keep adding interest for 6 years, then write the debt plus interest off. So in effect they are creating a greater loss then if they had to write it off after 6 months.

[dadofholly]

Hi guys

 

Due to recent cases, the creditor can continue to add interest to the debt, even though there is a possibility that the debtor will never pay that debt. I wonder if a creditor would keep adding interest for 6 years, then write the debt plus interest off. So in effect they are creating a greater loss then if they had to write it off after 6 months.

 

Almost like another type of "legal" Tax evasion.

[thewar_man]

Thanks for the link dadofholly. A subject very dear to my heart. *@"$@@ banksters

Edited November 11, 2010 by thewar_man
just wanted to say thanks not make the page look untidy!

[DonkeyB]

Bumping this...