OFT launches revised debt collection guidance

[Uncle Peter]

Ok... so why are the OFT suggesting that something classed as 'Statute Barred' is still recoverable then... because it isn't really, is it.

[queensclose]

Unenforceable credit agreements

 

Borrowers and hirers are able to ask creditors to send them information about their credit agreements. If information is not provided within 12 working days, the debt becomes unenforceable until they get the information they asked for.

 

Sections 77, 78 and 79 of the Consumer Credit Act 1974 outline the information creditors must provide to debtors under fixed-term, running account and hire agreements.

 

Under these sections a debtor can pay £1 to get:

 

a copy of their agreement

copies of some of the other documents mentioned in their agreement

a statement of account.

If this information is not provided within 12 working days the debt becomes unenforceable. This means a creditor:

 

cannot:

- make the debtor pay the debt before they're supposed to

- get a court judgment against the debtor

- take back anything hired or bought on credit, or take anything used as security in the agreement.

can:

- ask debtors to pay what they owe

- send a default notice

- pass information on to a credit reference agency

- pass information on to a debt collector

- sell the debt to someone else

- take the case to court.

 

confused. can they take a case to court or not

[Abrigadier]

Indeed the debt is still live it is not extinguished

by being stat barred, OFT GUIDANCE is that a debtor

should advise a creditor of the status of the debt

and that they will not be paying .

The creditor can chase for payment but cannot enforce

in court the guidance is that it unfair to chase

the debt after the notification by the debtor.

[silverfox1961]

All statute Barred really means is that the creditor cannot begin court action.

 

Once you tell a creditor that you won't be paying, they have to back off but some will then sell the debt on knowing that you have declared it SB but not telling the new creditor. The new creditor chases, you complain, they go away. This could go on for ages but each time it happens, complain and report

[Abrigadier]

The limitation is on court action a creditor

can start court action but cannot get judgement

if a court claim is issued even day before SB

it can be processed.

THE GUIDANCE IS JUST THAT SHOWING

WHAT THE OFT CONSIDERED FAIR OR UNFAIR.

I some circumstances a judge can allow action

on an SB debt.

 

BRIGADIER2JCS

[sillygirl1]

Trouble is they are only Guidelines and not LAW and therefore open to misuse (but then isn't the law????

 

Two things would help sink this so-called industry

 

1. When a company applies for a licence it is for that company only, and should be initially for 6 months, if any complaints come in in that time then the company can have a chance to put its house in order and proceed to the next level of licencing which should be for a year.

 

2. Cut the statute of limitations to 3 years in line with the rest of the EU, it would kick start the economy and put a stop to a lot of other abuses (workplaces insisting on credit checks being clear before employing people or sacking people who have a poor credit rating amongst others) - Isn't it logical that if somebody has money to repay a debt and is treated reasonably the debt will be repaid, otherwise they sit on it knowing that eventually it 'will go away'.

 

BTW Valid even if not read by you.................

[theghost]

The limitations is a bit of an oddity because if it cannot be enforced in a court it just sort of hangs around.

 

The OFT licencing system is a lot more flexible than law. If this was law then the company would need to be prosecuted or have soemsort of action taken against them in a court everytime.

 

I very much doubt there is any inclination to 'sink' the industry because there are probably billions of pounds worth of unpaid valid debts out there. It just needs tight control/regulation.

 

I would be surprise if the SOL was cut down to 3 years - isn't it logical that it would lead to a higher number of unrecoverable debts? What they should perhaps look at changing to the Scottish way of doing things, whereby a SB debt is dead and not recoverable after 6 years.

[flowerchild]

Ok... so why are the OFT suggesting that something classed as 'Statute Barred' is still recoverable then... because it isn't really, is it.

 

Because, as ever, no-one wants to upset the financial sector so this sounds to them like a good compromise. Many people are not aware of the fact that debts can become SBd and, when presented with a threatening demand for payment, will probably just roll over and pay or set up a payment plan and keep paying for years!

 

The CAB document linked to elsewhere makes no mention of SB at all and goes on to talk about token payments, the only purpose of which is to keep the debt from becoming SBd...

[Abrigadier]

Also a debt that is statute barred can on an application

to a judge be opened to trial, certain submissions such

as continued contact in the six year period or overriding

factors can be put before a court it is a mine filed for

both claimant and debtor but cases do succeed especially

when the claim is significant.

[theghost]

Because, as ever, no-one wants to upset the financial sector so this sounds to them like a good compromise. Many people are not aware of the fact that debts can become SBd and, when presented with a threatening demand for payment, will probably just roll over and pay or set up a payment plan and keep paying for years!

 

The CAB document linked to elsewhere makes no mention of SB at all and goes on to talk about token payments, the only purpose of which is to keep the debt from becoming SBd...

 

Debts are accrued from places other than large finacial institutiosn you know. changing the law to address one specific problem could cause many side effects.

 

You should also bear in mind consumers benefit from long limitation periods - for exmaple the rights you get under the sale of goods act etc

[dadofholly]

Ok... so why are the OFT suggesting that something classed as 'Statute Barred' is still recoverable then... because it isn't really, is it.

 

Do they say that?

 

I know they say it still exists - but that is not the same thing.

[dadofholly]

I would be surprise if the SOL was cut down to 3 years - isn't it logical that it would lead to a higher number of unrecoverable debts? What they should perhaps look at changing to the Scottish way of doing things, whereby a SB debt is dead and not recoverable after 6 years.

 

I would be surprised to.

 

But i think 3 years is more than enough time for a creditor. If they keep their house in order, hold all the correct paperwork and treat people in trouble with respect and are sympathetic to genuine short term problems, then they could enforce debts in the courts against anyone who simply fails to pay or correspond. Then no one would need the amount of debt collection agencies we have.

[Uncle Peter]

Ok... I'm getting sick already of the constant texts and calls from my friends at Mackenzie Hall who have somehow obtained my mobile number, (which to be fair I could change but I'd rather not unless I have to), in the last few months.

 

The bulk get binned by the phone the minute they hit it, but bless them, they have wangled some way of texting you from a name rather than a number and the blacklist app I've put on to deal with these unwelcome interventions for some reason can't bin those along with the rest of the pap they send me from conventional numbers (if anyone knows of a way to get these blocked, I'd be grateful - I'm not speaking to them on the phone / on the doorstep or whatever until such times as I can wave 'Statute Barred' in their face).

 

Have been counting down the days until I can tell them it's most definitely not happening, as it were.

[Uncle Peter]

Do they say that?

 

I know they say it still exists - but that is not the same thing.

 

My first comment on here was lifted from the OFT link at the start of this thread... so it would appear they do.

[dadofholly]

Well i stand corrected. Or rather i'll sit corrected if you don't mind, it's my age

 

They do say though that once you inform a company that it is SB an you won't be paying then they should stop the recovery action.

 

It should cease to exists once it is SB'd, as Ghost points out, similar to the Scottish system.

[coffeeangel]

Que? What do mean a name rather a phone? What type of phone do u have?

 

Best,

 

Coffee

[Uncle Peter]

iPhone.

 

I've had two texts so far from 'MackHall' - this isn't a name I've given them, (the name I've given them isn't for use on a public forum!), this is what pops up on the phone when they come in.

 

Just to make sure it's not me being more special than usual, I've gone to save them as a contact - where you would see a phone number usually, it says 'MackHall'.

 

Be interesting to work out how they're doing it - must have some sort of call centre set up that allows them to broadcast a name rather than a number as their caller ID.

[theghost]

I would be surprised to.

 

But i think 3 years is more than enough time for a creditor. If they keep their house in order, hold all the correct paperwork and treat people in trouble with respect and are sympathetic to genuine short term problems, then they could enforce debts in the courts against anyone who simply fails to pay or correspond. Then no one would need the amount of debt collection agencies we have.

 

I am not sure what the magic number is - but as we have ad 6 so for long it sounds reasonable.

 

What about people who have short term financial problems but then play the waiting game to try and make debts statute barred even though they are in a position to pay them? Under a 3 year system the creditor would have to give up if the person hasn;t recovered financially within 3 years but 6 years gives them more time. Obviously you could extended that to 10 years and so on.

[dadofholly]

Sounds like they are using a misleading method to try and contact you - thats against the new OFT guidelines. I would complain.

[theghost]

If they are sending you 'constant' texts then you should save them as they can be used as evidence - not deleting them!

[dadofholly]

I am not sure what the magic number is - but as we have ad 6 so for long it sounds reasonable.

 

What about people who have short term financial problems but then play the waiting game to try and make debts statute barred even though they are in a position to pay them? Under a 3 year system the creditor would have to give up if the person hasn;t recovered financially within 3 years but 6 years gives them more time. Obviously you could extended that to 10 years and so on.

 

The Creditor still has the option of enforcing the agreement via the Courts. If someone has not recovered financialy within 3 years i would call that a long term problem, and a fresh start is probably called for.

 

The problem with 6 years is someone can lose their job, be unable to pay their debts, get defaults and CCJ's against them, and then they find a new job - and become financialy ok again within 12 months. But even though they may have cleared any outstanding debts they still have a poor credit record for another 4/5 years.

 

Their only options then are non-status loans at high interest - Thing is these loans are backed by the same high street banks that probably defaulted them in the first place.

[theghost]

If the SOL was reduced to 3 years a side effect might be that creditors are more aggresive in making people bankrupt because they would lose that latter 3 year period when the person may have made some money back. Of course DCAs would probably become far more aggresive as they would have less time to chase debts.

 

With regards to credit records. There are some who have fallen on financial difficulties and some who are just poor debtors - how do you differentiate (without it being complex and expensive) - after all a creditor should have a way of knowing whether the debtor is credit worthy or not.

[flowerchild]

If the SOL was reduced to 3 years a side effect might be that creditors are more aggresive in making people bankrupt because they would lose that latter 3 year period when the person may have made some money back. Of course DCAs would probably become far more aggresive as they would have less time to chase debts.

 

With regards to credit records. There are some who have fallen on financial difficulties and some who are just poor debtors - how do you differentiate (without it being complex and expensive) - after all a creditor should have a way of knowing whether the debtor is credit worthy or not.

 

"Past performance is no guarantee of future performance" That applies also to consumers! Both ways (good and bad)!

[dadofholly]

If the SOL was reduced to 3 years a side effect might be that creditors are more aggresive in making people bankrupt because they would lose that latter 3 year period when the person may have made some money back. Of course DCAs would probably become far more aggresive as they would have less time to chase debts.

 

With regards to credit records. There are some who have fallen on financial difficulties and some who are just poor debtors - how do you differentiate (without it being complex and expensive) - after all a creditor should have a way of knowing whether the debtor is credit worthy or not.

 

The majority of people in this position have little or no assets - so it would not be financialy viable for DCA's to go down the bankruptcy route.

 

As regards differentiating - you don't - thats the risk a lender takes, whether the SB limit be 3, 4, 5, or 10 years they will still face the same problem. Should we punish the innocent for the sins of the guilty?

 

If it can work in most of europe, parts of the USA and now even the northern territories in Australia, then it can work here.

 

As for DCA's becoming more aggressive - Thats why we have legislation and guidelines to stop them, though admittedly a more robust enforcement procedure would need to be put in place to stop them.

 

The banks already have the right to create money out of nothing, it's not like they realy need any protection, they are already the richest businesses in the world.

 

But consumers are not financial experts and need protection from the excesses of financial institutions who, as we already know, have ripped them off with PPI, Secret Commissions, Bank Charges, Endowment Mortgages and the like.

 

So along with a change in the SB time limit you change the rules on making people bankrupt. The OFT have already stated that this method should not be use as a debt collection tool.

[dadofholly]

"Past performance is no guarantee of future performance" That applies also to consumers! Both ways (good and bad)!

 

Well said Flower

 

Thats why I am against companies being able to do credit reference checks on people as part of their recruitment process, (apart from on people selling financial products etc.), as the CRA's are claiming people with poor credit ratings are a risk to the business.

 

Well I was in Retail management for over 20 years, and some of that as a loss prevention manager, and i can tell you that the correlation between a poor CRA file and the honesty of an individual is minimal. Greed and opportunity is the most common factor behind employee theft and deception. I have worked with, and come accross many senior people in these businesses, that have committed crimes purely to supplement their life styles. Having a poor CRF does not = dishonesty.