Restriction K's

[toymaker1]

Toymaker

 

What would be the reasons you are stating an account would fall into the uncollectable/ineligible bracket and cannot be assigned without the debtor's consent?

 

It was certainly my understanding the creditor only had to give notice to you (and proof of the transfer if required) and that was it? I'm not saying you're wrong but I'm struggling to see what type of account would fall into the uncollectable/ineligible you say requires the debtors consent?

 

 

There could be many reasons why a creditor has designated a debt as being uncollectable. There are also many reasons why a debt could be classified as being an ineligible account, that is tyo say, an account which is considered to be ineligible to be sold on by the original creditor to a debt collection company which wants to buy the debt at a discount, so they can collect the debt and make a good profit. My point is all that relevant information between the original creditor and the new buyer of the debt is handled with0out the debtor/defendant ever knowing what is going on. For example, it is common practice for the original creditor to sell the debt, even though it is specifically designated as ineligible to be sold!

The fact is that if it comes up in a ounty court case, the creditor/claimant will black out all the information which would show the debtor defendant that the debt should not have been sold, because it is an ineligble account to be sold.

Another poster said it is nothing to do with the debtor, but I do not agree.

If you are the debtor, and you have a dispute with the creditor regarding the debt, you will want to know if it was bought/sold wghen it should not have been (i.e. because it was an ilegible accounmt5.

If ewverything wqas above board, ask yourself, why would the creditor/claimant blacck out tyhe infrmation.?

It is because he does not want the debtor/defendant to know.

[eggboxy1]

There could be many reasons why a creditor has designated a debt as being uncollectable. There are also many reasons why a debt could be classified as being an ineligible account, that is tyo say, an account which is considered to be ineligible to be sold on by the original creditor to a debt collection company which wants to buy the debt at a discount, so they can collect the debt and make a good profit.

 

But, if there are many reasons, can you not expand on a few specifically that might help us understand what you are trying to explain on this issue?

 

Given, as Gaston stated, you sign up in the T&C's for the debt to be sold on it's a little difficult to follow how an account would become either illegible or uncollectable without understanding how those reasons come into play?

[Gaston Grimsdyke]

I am referring to regulated consumer credit agreements, where the terms are not individually negotiated between the creditor and the debtor. - the terms fall totally within the scope of CCA 1974, and are not individually negotiated agreements. In such agreements the burden of a contract can never be assigned without the agreement of the debtor. As you are very succesfully making clear, it happens al the time, and debtors have no idea it goes on. The reason for that information being redacted (concealed from the debtor) is that the creditor/claimant does not want the debtor/defendant to know that despite a debt being classified as uncollectable/ineligible for sale, it has in fact been sold.

 

Sorry? Since when does the CCA dictate all of the terms of a credit agreement? It impacts on some terms e.g. a term prohibiting a hire purchase customer from terminating the agreement would be ineffective, but other than those the parties can agree what they like. There is no provision in the CCA outlawing a term which allows creditors to assign the benefit and burden of the agreement. If ever there were, credit would be much harder to get and more expensive as the ability to sell delinquent debt is a key factor in lending policies.

 

The reason for redacting, the creditors will say, is to protect commercially sensitive information but even if it is what you say it is that is perfectly in order. It's a matter of concern to the buyer; no doubt a matter of interest to the debtor too, but not something he is entitled to see.

[toymaker1]

But, if there are many reasons, can you not expand on a few specifically that might help us understand what you are trying to explain on this issue?

 

Given, as Gaston stated, you sign up in the T&C's for the debt to be sold on it's a little difficult to follow how an account would become either illegible or uncollectable without understanding how those reasons come into play?

 

Take as an example the following scenario;

 

1 You are the defendant/debtor in a claim against you by a claimant who is a debt collection company which has bought your account from a credit card company.

2 Part of your defence is that the debt collection company had no right to buy your account from the original creditor, because it is the subject of an ongoing unresolved dispute between you and the original creditor.

 

3 In connection with paragraph 2 above, note that the OFT Debt collection Guidance states that debt collection activity should cease whilst a dispute is being investigated. It is specified as being an unfair business practice to carry out debt collection activity whilst a dispute is being investigated.

 

4. A typical contract for the sale/purchase of a debt between the original creditor and a debt collection company buying the account at a discount will include a clause stating that the account is ineligble to be sold by the original creditor if the account is subject to a valid dispute, or is subject to any collection arrangement at the time it is sold.

 

5 If the original creditor sells the account despite the fact that it is the subject of a valid dispute (i.e. the dispute between you and the original creditor mentioned in paragraph 2 above), that will clearly have a major affect on the proceedings currently being taken against you as mentioned in para 1 above.

 

6 My point is, that it is normal practice for the claimant in such cases to black out the relevant information which shows the account is ineligible to be sold to him by the OC. - this is in documentation which will usually be in the claimant's witness statement, buried in in a very thick file of documents.

 

7. Because the claimant blacks out that information, and no one challenges it being blacked out, you the debtor/claimant never realise the slkulldugery which has been going on. Because it happens every week in every court and no one challenges it, it is made to seem normal, and, as is apparent from this forum, hardly anyone understands that it happens, or it's significance in particular court cases, such as the scenario I have described.

 

8. Can you not see that if you have a valid dispute with your original creditor, and he sells your account despite there being a clause in the sale contract between the original creditor and the new purchaser stating that the account should not be sold if it is the subject of a valid dispute, and the claimant blacks out that information so that you won't know that he should not have bought the account, that something is seriously wrong?

 

By the way, despite what Gaston says, IMHO every term, repeat, every term, in a regulated consumer credit agreement is subject to the provisions of CCA 1974, with no exemptions. Check out S173 of CCA.

 

Regards.

[Gaston Grimsdyke]

Well your HO is way off beam I'm afraid. All s173 says is that you can't contract out of the CCA, so parties cannot agree to make what otherwise would be a regulated agreement unregulated, or to exclude a provision of the CCA. Can you point me to where in the CCA it says a creditor is prohibited from assigning the burden of an agreement? In the absence of any such provision, there is nothing wrong with putting an assignment clause in a regulated agreement because it's not a clause inconsistent with the Act.

 

As for your scenario - again, completely misconceived. A debtor cannot defend a claim because he thinks the seller didn't have a right to sell the agreement to the buyer. Try reading up about the concept of "privity of contract" - only a party to a contract can rely on its terms, and since the debtor is not a party to the contract it's not for him to argue his account shouldn't have been sold.

 

It's possible, of course, that you are right and me, the entire judiciary, all the advocates acting for the debt purchasers and the academics and the rest of the legal profession are wrong I suppose.

[BRIGADIER2JCS]

Can you actually prove the statements that creditors

are ''blacking out'' parts of documents with intent to deceive

if so I would like to see irrefutable proof of that statement as

I may be able to use it when I next represent a debtor in court,

the proof of this could be invaluable, please post it up asap.

[toymaker1]

Can you actually prove the statements that creditors

are ''blacking out'' parts of documents with intent to deceive

if so I would like to see irrefutable proof of that statement as

I may be able to use it when I next represent a debtor in court,

the proof of this could be invaluable, please post it up asap.

I dont see how the blacking out of material in another case would be of direct relevance in your particular case, where it may not have been blacked out (redacted). The point I was making is that it would be wise to check that it has not occured in the specific case you are dealing with. - if the matter of whether or not an account is an ineligble account (to be sold) is of central relevance to your case then you should carefully check the relevant parts of the creditor/claimant's witness statement. - if the parts which refer to eligibility of accounts are redacted, and you therefore cannot clearly establish if the account is eligible or is ineligble, then you should take the matter further, and obtain the information from the other side. - dont just leave it unanswered. Each case will have it's own circumstances. It will be very obvious where it has been redacted.

[toymaker1]

 

A debtor cannot defend a claim because he thinks the seller didn't have a right to sell the agreement to the buyer.

 

Why not?. IMHO if a debtor could demonstrate that in a particular case the creditor breached the OFT debt collection guidance by, for example, selling an account without having investigated the debtor's complaint, he could have grounds for applying for an order against the creditor under S140 of CCA 1974 in respect of unfair relationships. - it would then be for the creditor to prove to the judge that he had not acted unfairly in selling the account in the middle of a dispute.

On 23rd November 2010 the OFT issued a notice stating that chasing debtors without proper investigation of the issues in dispute constitutes a breach of the OFT's guidance on debt collection. The OFT also made a specific order against Aktiv Kapital stating that they must not pursue debts where it has been notified in writing that the debt is disputed until the dispute has been properly investigated. - I would regard selling the debt to a debt collection company as falling within the meaning of "pursuing the debt".

[toymaker1]

there is nothing wrong with putting an assignment clause in a regulated agreement because it's not a clause inconsistent with the Act.

 

Of course a creditor can put an assignment clause in a regulated consumer credit agreement. - the point is though that such a clause only applies to the creditor's rights - he can assign those to whoever he wants. But he cant assign the burden of the contract.

You will see that credit card agreements normally say something along the lines of "we may assign our rights under this contract at any time, but your rights will not be affected" - "your rights" are the "burden" which the creditor cannot assign without your agreement. - which would then be novation.

[Gaston Grimsdyke]

Er I think you'll find the assignment clause will say something more like "we may assign our obligations under the agreement" rather than "rights". Bit of a difference. What's the point in making a contractual provision for a right that already exists?

 

As for your OFT guidance point, how does the mere assignment to a debt purchaser constitute "pursuing the debt"? The creditor ceases to have any interest in the debt at that point so can hardly be pursuing it.

[Basil Fawlty]

If you were a joint property owner with all the debts in a single persons name, would it still only be a restriction if you went for a voluntary charging order?

 

BF

[eggboxy1]

If you were a joint property owner with all the debts in a single persons name, would it still only be a restriction if you went for a voluntary charging order?

 

BF

 

Should be as the circumstances would still be the same in that the CO would still only be able to be registered against the debtor's "Beneficial Interest" in the joint property.

 

Can I ask why you would want to make the CO voluntarily?

[Basil Fawlty]

Should be as the circumstances would still be the same in that the CO would still only be able to be registered against the debtor's "Beneficial Interest" in the joint property.

 

Can I ask why you would want to make the CO voluntarily?

 

I dont at the moment, but its just another option. I'm led to believe that sometimes its advantageous to do so.

 

Tks for the reply

 

BF

[eggboxy1]

I dont at the moment, but its just another option. I'm led to believe that sometimes its advantageous to do so.

 

Tks for the reply

 

BF

 

I understand but be careful as, whilst its extremely rare, it does open the door to the creditor being able to apply for an OFS if things don't go the way you had planned.

[Gaston Grimsdyke]

There is no practical difference between a voluntary charge and a court-awarded charging order; if against only one of multiple owners it will still be protected by a restriction rather than substantive charge. The benefit for the debtor is that it can prevent a CCJ where the creditor is hell-bent on issuing proceedings for the sole purpose of getting a charging order. Provided you tie the creditor down to a formal payment arrangement in exchange for granting the charge voluntarily, you will avoid a CCJ. There is a significant disadvantage too, however, in the case of debts arising out of a CCA regulated agreement. With a charging order, no interest can accrue once judgment is given. With a voluntary charge outside of a CCJ, almost certainly the charge will be drafted in such a way as to include ongoing interest. You should attempt to negotiate that out of the voluntary charge.

[Clynite]

RE: Restriction - sole debt joint ownership.

 

Is it feasable for the debtor to remove his/her name from the house deeds, thereby making the restriction worthless?

 

Or, could the property be sold to the children for a nominal sum? This would be legal I assume, and meet the criteria that has been explained via this thread.

[BRIGADIER2JCS]

To propose or carry out such a tactic may have

repercussions in the long run.

[Gaston Grimsdyke]

RE: Restriction - sole debt joint ownership.

 

Is it feasable for the debtor to remove his/her name from the house deeds, thereby making the restriction worthless?

 

Or, could the property be sold to the children for a nominal sum? This would be legal I assume, and meet the criteria that has been explained via this thread.

 

Yes both of these are possible (the first scenario is simply a transfer of one owner's interest to the other). If, however, it is done purely to avoid paying the debt then an aggrieved creditor could bankrupt the debtor and the trustee in bankruptcy would have the power to reverse the sale.

[Ganymede]

RE: Restriction - sole debt joint ownership.

 

Is it feasable for the debtor to remove his/her name from the house deeds, thereby making the restriction worthless?

 

Or, could the property be sold to the children for a nominal sum? This would be legal I assume, and meet the criteria that has been explained via this thread.

 

 

The first scenario is a sale so would have to have permission of you mortgagor if you have one. There could also be stamp duty to pay depending on the value of the house.

 

The second one would have tax consequences if you were to continue to live in the property after selling it to your children or don't survive 7 years after the sale etc.

[eggboxy1]

The first scenario is a sale so would have to have permission of you mortgagor if you have one. There could also be stamp duty to pay depending on the value of the house.

 

Just to throw something into the mix

 

"SDLT (Stamp Duty Land Tax) is exempted if it is effected in pursuance of a court order or an agreement between the parties in connection with divorce, nullity of marriage or judicial separation, or the dissolution of a civil partnership (Schedule 3 Finance Act 2003)."

[Clynite]

What if?

 

1. The debtor was to leave the matrimonial home and decide to transfer his/her share of property to their siblings, or transfer sole ownership to the remaining partner.

 

2. Or, sell to siblings and debtor / partner move out.

[BRIGADIER2JCS]

IMHO this should be dealt with by a solicitor,and or a financial

advisor experienced in the transfer/sale of property in this type

of situation.

[Ganymede]

What if?

 

1. The debtor was to leave the matrimonial home and decide to transfer his/her share of property to their siblings, or transfer sole ownership to the remaining partner.

 

2. Or, sell to siblings and debtor / partner move out.

 

 

1) Same answer as my last post.

 

2) Is there a mortgage on the property? If there is you would certainly need a new mortgage to include the new owners.

[eggboxy1]

What if?

 

2. Or, sell to siblings and debtor / partner move out.

 

This would definitely be your preferred route if a cash sale was available.

 

You won't, then, have the hassle of possibly having to explain the LR/Restriction details to an "outside" party.

[Clynite]

I attended the CO hearing 27 July - final CO granted!

 

I submitted objections prior to hearing, as suggested. Claimants barrister present my sol didn't come. DJ asked me to raise my objections. I began listing my objections, got to point 3 when he stopped me and said that I was citing evidence? He wouldn't let me continue and said that he was obliged to grant the CO but, if the litigation was to ensue ( I presume he meant OFS ) then he could excercise his discretion and authority and hear my 'evidence' and act accordingly?

I attempted to explain about the rejected instalment app and where did that leave me. He suggested that I maintain the vountary payments I had been making previously. I explained that I wanted an instalment order in place. He mearly stated that I should make a new application. I said what if the claimant rejects that one? He was getting quite flustered and told me to discuss it with the court staff. He just wanted me out of there. I noticed on the court board that there were 8 CO applications that morning, all with a time window of approx 10 mins each. I think it was just a formality with the DJ and court.

Outside the court, I spoke with the claimants barrister. She informed me that my sol had offered a vol CO and payment plan early in July. This was news to me! She suggested I liase with the claimant to agree an informal payment plan.

Where does this leave me now?

Any suggestions welcome.