Debt Collectors: On the Inside - Q & A's
DCA's: Questions and Answers
Below are OntheBrink's answers to specific questions taken from this thread
See Debt Collectors: On the Inside for info on DCA's: Training, Payment/Letter Processing, Telephone Calls, Letters, Timescales, Actions, CCA Requests, What Should I Never Tell a DCA?, Writing Off a Debt, The Role of the Supervisor
- Why are some DCAs refusing to accept that the account was in dispute and chasing a disputed debt againsts OFT guidelines?
The honest answer is that it is most likely that the DCA have received assurance from the OC that there is no foundation to the dispute. Any paperwork you subsequently sent them will be noted but passed to the OC.
It is likely (although I do not know for sure) that the OC refused to accept liability for the orginal error and thus asserts the debts is owed.
The DCA would continue to pursue the 'debt' on the basis that the assurance they have from the OC overrides your arguement (no matter how legally sound it was). This often continues untill either it is recalled by the OC or the debtor takes legal action (as in your case). The account is then passed back to the OC and more often than not just sent to another DCA.
This ping pong game is sadely common within the industry and to be honest, the fault sits with the OC, and any action should be forcefully pursued with them.
All DCA will 'process' the debt until such a time when it becomes 'to hot to handle' the they wash then hands of it and pass it back to the OC.
On the subject of 'lost paperwork' I am sorry to say this is another common practice. Often, the DCA account manager will read the letter and if that information is already on the file they will just shread you paperwork. When you call to say 'oi, I sent you paperwork' the account manager will not remember and try to confirm a date you sent it. they will then look on the system and see nothing registered around that date. They then state 'nothing was received', which can be bloody frustrating. But the fact is DCA have a practice of not duplicating information, but as a minimum the account manager should note ' letter received same as note 4 above, etc.' But they don't most of the time.
- I have only one debt to a credit dard in default, they have produced no CCA.If however I still offers to a full and final aslong as they remove default, are they likely to go for that?
If the DCA and creditor agree to the amount he is offering then they will mark the account with the CRAs as 'partially settled' and have a £0 balance on the account.
You would need to get his credit report (give it a couple of months to update) and just make sure the record is updated.
In truth, the DCA will just notify the CRA of the settled account and it is possible the default will remain. Ensure you add in the F&F letter the condition of default removal. But I'm not sure if default will actually be removed.
- What triggers the decision to go for a CCJ?
a) if all other options of recovery are exhausted
b) if the creditor would obtain an increased likelyhood of recovery
c) if you have positive equity in you home to allow for a charging order
d) you are in full time employment - to allow an attachment of earnings
e) no response to efforts of recovery
f) refusal to pay
- Particularly, how likely is court action against someone on benefits, with no equity?
Limited but not impossible, it would depend of the total debts owed to all creditors.
- How likely is court action against someone where the debt is years old.
Depends on how old, if they have been paying small amounts, if the debtor was traced to a new address, etc.
- Who makes the decision to continue litigation if the action is defended?
The creditor on the advice of their solicitors.
- Even if the DCA formally buys the debt, is it still the OC who decides if court action will start?
No. If the OC has sold the debt then the DCA will determine recovery action. Please be aware some purchase contracts stipulate that their will be 'joint liability' for the recovery of the debt. In these cases the DCA has 'purchased' the debt at a reduced rate (say 7p in the £) but must still obtain permission from the OC to go to court.
- What effect does the time of month have, in terms of accepting settlements. I've heared people are more willing to offer settlements near the end of the week, month, and especially financial year.
F&F settlements are determined on a number of set criteria and end of financial year settlements are not uncommon (you would however, need to find out when there end of year falls (March/Dec) and also take into account that all business have a 'close down' period that can fall into the new finance year). Week or month end settlements have less impact.
- In terms of higher management, is the role of an account manager actually considered akin to a salesperson.
Yes. They are the workhorses of the DCA and are call 'account managers' to give the perception to debtors they are important, but the reality is they are likely to be in their late teens early tweenties and are their to turn over the debtor accounts as quickly as possible.
- How did your firm react to people getting the debt charities involved, or raising formal complaints with the OFT etc.
Charities are unpopular with DCAs because they know the debtors 'rights' and used that knowledge appropriately. The CAB are seen as an inconvience because they are seen to hamper the process rather than help, and to be honest, a bad debt advisor from the CAB could give away far more infomation than was required, often not helping the debtor at all.
Complaints to the OFT were often shrugged off by the DCAs, we would get at least one a week and they would result in a 'you must do better' request. But the DCA would not change a thing.
- Should I talk to the DCA when they call?
Not every call NO. Once you have notified the DCA of your financial status and offer of payment and followed this up with a letter then responding is your decision. You should only tell them as much as they need to know in order to determine if they will accept a payment plan.
- What is the policy of dca and statute barred debts
If the debt was not subject to a CCJ then they cannot pursue you for it. But it will take a few letters for them to get the message. Keep sending them. The letters will continue due to the process. Let it run it's course but ensure you have notified the DCA that you dispute the debt.
- I take it a dca cant default you if you have already been defaulted and has dropped off of your credit file
It is correct that the DCA can only issue a 'default notice' if you have, funny enough, defaulted on the repayments. What would have happen was back in the 1990s when you stopped paying a default notice was put on your credit file because you stopped payments. Because you didn't agree a new payment plan the original notice remained on file then was deleted after 6 years.
A DCA can issue a new default notice if you have agreed a revised or new payment plan and defaulted on that. If the debtor had received a new default notice (in order to re-ignite the account that had dropped of his record) then he should have it removed from the CRA records.
A default notice is registered against the account with the CRAs on one occassion, but the DCA can issue as many default notice letters as it wants, and normal procedure for a DCA is to issue a default letter after a payment plan is broken.
- How can a DCA put a default on a credit file 12 months before a debt is assigned over from the OC
In MOST cases it is not the DCA that registers the default with the CRAs, it is the OC. If the DCA is an in house DCA, then they will register the default, but they are only a DCA in name and actually are often staffed by OC staff.
A default notice is normally registered with the CRAs 90 days after the last contracted payment is received. From that point on the OC can assign the debt to a DCA.
- The OC sells an account to a DCA, who collects on it for several years before defaulting on a CCA request. It's then discovered that the account that was purchased contains an amalgamated balance with 2 other accounts.... BUT, no new regulated Agreement was ever issued to cover these amalgamated funds.
Such an undertaking, although rare, may be 'justified' under s18 of the CCA 1974 (multiple agreements) IF, and only IF, the creditor could justify to a court that agreements should be amalgamated in order to reduce costs for both parties (debtor/creditor) and bring about a 'fairer' settlement to the accounts. The creditor would have to show that the debts do not exceed £25k, that any new undertaking was agreed IN WRITING with the debtor, that the debtor agreed to be bound by the new repayment terms. However, such consolidation or amalgamation of accounts would require either a new agreement OR the express written consent of the debtor.
- FOS are currently investigating this one.... as the DCA are very reluctant to put anything in writing as a "final response". Is this a common practice ?.....
Yes. They may be on dodgy ground as I bet they just amalgamated the accounts without written permission from the debtor. The DCA will have to prove they acted without knowing the debt they were enforcing was an amalgamated balance.
- A DCA having been sent a Subject Access Request, send a response of 'typical letter which have been sent to you' meaning template letters with no actual personal details or address
What is your take on the legality of complying with their obligations under the Data Protection Act
The DCA don't actually keep copies of the letters they send to you. The system will tell the account manager/debt collector, which letter template has been sent when you call them (the only exception is if a supervisor or manager writes to you directly and then they will store a copy on their harddrive), thus when you make a S.A.R - (Subject Access Request) they just provide copies or templates of the letters and not actual letters sent.
- A credit card debt sold to same DCA showed a default on the Credit report the same day as it was bought, given your previous response re defaults - what right would a DCA have to do that when no arrangements had been entered into at that point?
As long as the account had a defualt the DCA would be allowed to pursue the debt. When it is passed to a DCA and when the default is issued can be the same day. But if a DCA is contacting you prior to the default notice been issued OR, registered on you CRA, they are acting contrary to law.
This, however, only tends to happen when the DCA is an in-house DCA. The OC will put the account in 'default' and pass to the in-house DCA, which then issues a default notice. In these cases you must see the DCA not as a true 'DCA' but as nothing more than a department of the OC in all but name.
- Solicitors obtained a CCJ on a C.card debt in 2004 They were cca'd and the result was that no agreement could be found by the oc. They replied and said debt would not be pursued. Wrote asking for evidence of what they relied upon to obtain CCJ - no response. Wrote again asking for CCJ to be declared unlawful if no agreement was in place - no response - what should be done in your opinion?
It's no good talking to the solicitors, they will ignore you because they have done what they were legally requested to do (issue a CCJ), they have then 'notified' you that the debt would not be pursued. As far as they are concerned no further communication is required, unless YOU take action.
If the CCJ was not contested (defended) at the time, and you want to have the CCJ revoked now on the grounds you did not have the opportunity (because it was issued in absence at a previous address for example) to defend its issue, then you should pursue that now. However, the court will want you to justify why the CCJ was not defended in the first place. To say, and sorry for my bluntness, 'I didn't know the lawfully requirement regarding CCAs' just won't cut the mustard.
- A DCA takes you to court over an alleged debt, but the claim gets thrown out of court (say for none production of the CCA). What happens to the debt? Do they write it off or would they just sell it on
It is most likely to be sold on at a reduced rate and each DCA will try their luck. You should have a template letter ready stating what has happended to the debt previously and what they need to provide for you to further communicate.
- Can you clarify that DCA's do not receive any paperwork of "agreements" when debts are bought by themselves.
That is correct. They are provided with a electronic 'file' which contains all the information the OC knows (date agreement taken, debt outstanding, etc.)
- So when they receive the CCA request they are not bound by the CCA because they *do not know* if the agreement is actually one regulated by the CCA.
Sort of, they are only bound by the CCA 1974 if they accept it is a 'regulated' agreement. If your request calls that into doubt, they can justify a refusal to meet your CCA request and tell you to contact the OC direct. They are not saying 'we will not comply', they are saying 'we cannot comply'. They would have to suspend ALL action on the account to support such a stance.
- Only once any paperwork is received can they stop hiding behind this little loophole.
Yes. Because not only will they know it is a regulated agreement, they will know it is enforceable. Also, the paperwork provided the debtor and DCA may not be a valid agreement with the prescribed terms, but it will confirm it's a regulated agreement.
- Do you think the CCA request letter can be amended to cut out this fantasy?
Only if you was to admit the debt is covered under a regulated agreement!!! I don't think that would be wise though, but open to suggestions.
- I must take issue on the point that the DCA's right to 'pass the buck' if they don't have copies of the CCA or account statements required to fulfil a CCA request. This is wrong in law. In law any agent of the OC has a duty to comply with the CC Act & without a doubt that includes complying with statutory requests.
I agree 100%. Never said or claimed otherwise. Under the CCA the agents does have a legal responsibility to pass all request for information to the OC. And I have affirmed that the debtor can make a formal complaint on the grounds of this non-compliance, BUT, my point was that DCAs (the bad ones) make the rules up as they go, and while your bogged down 'standing up for your legal rights' the clock is ticking toward a CCJ.
My advice was to bypass the DCA, go to the OC and get that confirmation that they do not have a valid CCA (remember the DCA must hold the account while you do so). Then sit back, fat, dumb, and happy in the knowledge you have the upper hand.
Then start a legal complaint on their failure to comply with (i think it's s175, off the top of my head, but if I'm wrong please drop the correct section in) the CCA. But all good DCA will always pass the request to the OC.
- Some DCA's threaten or even commence proceedings in the full knowledge that they DO not even have a valid CCA & in some cases again in the full knowledge that the debt is actually time barred.
They would know both at the point of commencing CCJ procedures as the 'management check' (see post later on 'supervisors') would highlight both.
Is it safe to assume that they are relying on the ignorance of the debtor & the most disturbing fact of all that the court will not peruse the papers as they should when issuing such proceedings?
They do rely on the ignorance and fear of debtors, yes.
Also, it should be understood that any action taken in court (except when you defend (mostly)), is administered by a court clerk that may have 100-150 CCJs to peruse that week, and each one is unlikely to get his full attention.
- Why & who makes the decision to spend what can be a few hundred pounds in various fees when they must know at the outset that the debt is unenforceable thereby risking having their claim struck out at the 1st hurdle & what,if any, is the result for the person making that decision if it fails?
The final decision is made by OC legal staff, or legal representative, based on the information provided by the DCA. Any court action will be determined on the likely 'risk' factor of them winning. If they fail to gain a judgement then very little happens to 'determining officer', you win some you lose some. Unless of course, they lost because he failed to realise the defendents reason was justified. Blindly pursuing a debtor when your walking through a minefield is suicide. But thankfully they do it everyday
- I wrote to DCA telling them they had still not supplied a CCA. I also told them one of the monthly statements was missing ! Should i have let it go to court before pointing this out ?
Not really, the court is not going to reject a CCJ claim because you don't have all your statements. But no valid CCA is a good reason.
- Could it not be claimed that i had made a large payment to the account during missing month ?
YOU would have to prove you did to support your case, and any payment made thereafter would also have to be justified. You should NEVER lie to a court, no matter how desperate you are. It just aint worth it.
- Do the statements have to be complete for a court to make a ruling ?
They don't need all the statements to take you to court but they do need a valid CCA with the prescribed terms. Just keep pointing that out to them each time they write.
- You stated that the DCA has to pass a CCA request back to the OC. Whilst this may be correct the DCA if the request is addressed to them has a duty not just to pass the request on but to comply with that request themselves as per the regs.
I agree, but don't get caught in the trap I have seen from debtors of getting entrenched in their legal position. Demanding that the DCA 'meet their regulatory requirement' may be lawfully correct but may not be realistic. The fact is that nearly all DCAs do not have access to the CCA, or any other paperwork for that matter, and will refer it to the OC. Whether the OC passes what they have to the DCA for forwarding to the debtor or does it themselves is, in the view of the DCA, not important. What is important is that the information IS provided.
Real Example: I have had debtors demand the DCA provide the CCA information they have requested and have a regulatory requirement to provide. My attitude was, 'if you want to play semantics I can do that, but it won't help your case', I informed the OC and passed on the chq/PO. I would then respond with a letter that the DCA does not have that information to provide. The debtor proceeded in the false belief a valid CCA was not available to provide only for the OC to produce the prescribed terms during the court hearing.
As a debtor your only concern in requesting a CCA is to get what paperwork they have, and the best way of doing that is to contact the OC directly. If you do contact the DCA you should request the information and not 'demand' a response from them.
- Passing it on to OC does not free the DCA from complying with the law. In other words if the DCA does not have the a true copy of the properly executed agreement they have no lawful right to pursue the debt.
And that is why you should ensure the account is put on hold until the information is provided. But please note, they may provide the paperwork and in their view it is correct, they will then proceed with the enforcement action. If you are the debtor, and are confident they have no valid CCA, you can sit back and await the CCJ and then defend knowing YOU have the ace up you sleeve.
- A couple of months ago a 1 line claim was submitted by a creditor without any supporting documents & they where granted a CCJ on what was later found to be a time barred debt. It was appealed, set aside & struck out as being out of time This only happened because it was asked of the court to examine the circumstances of the granting of the CCJ
When it comes to CCJs the onus has always been on the debtor defending rather than the creditor proving. All undefended CCJ don't even pass under the eyes of a district judge, they are determined by a court clerk. And this can, and has caused a problem where the debtor didn't even know the CCJ was issued (issued 'in absence'). And in fact, when you return the 'admission form' it goes back to the OC or their agent and not the court. It's only if the CCJ is defended that both side have to then 'prove' their position.
- Can you elaborate on the words in point 13) Pass back to client (end) - because of 'reason' (i.e. Doctors note/death)
The doctor would have to support your claim that your financial circumstances were unlikely to improve in the short or long term due to ill health, and thus it would be 'reasonable' and 'realistic' for the OC to write off the debt.
In the more extreme case it may be a letter from your doctor confirming you were sectioned under the Mental Health Act.
It would need to be 'serious' medical condition with little prospect of an improvement to your financial position for this to be successfull.
- When they send those letters with half of the contents visible through the large window of the envelope , is this just a 'mistake' or a deliberate ploy at trying to 'embarass' the alleged debtor into paying
No. Most DCAs use a computerised system of delivery which automates the procedure. I mean, would you lick 1000 envelopes a day. And to be honest, I doubt the postie notices with the amount of mail they have to deliver.
- I have had success with just putting the number these autodiallers call from on the choose to refuse list . Is this a major inconvenience for them ?
The system can identify the following: busy engaged, dead number, call barred, fax, data communication (modem) and can update the file accordingly. The system can also automatically register a 'fault' on the line with BT if it keeps getting an 'engaged' tone. As a last resort your file can be passed to a team leader for a manual call. It should also be noted that only large DCAs have automated call centres, the small DCAs remain on a manual dial up system.
- Do DCA's deliberately employ unknowledgeable people in positions ( such as complaints/ compliance etc), when it is possible such ill-knowledge leads to the befuddling and confusing and negating of genuine and legitimate claims from alleged debtors concerning such debts ?
Not intentionally no. there is a high turnover rate at DCAs, as you can imagine. So sometimes it can be just a case of getting 'a body' on the phone that can read a script.
- Have you ever been aware of any kind of nefarious activities that have been alleged to have taken place in some DCA's. Such as (DCA) making a payment to an account to break an otherwise 6 year statute barred period or use of photoshopped signatures ?
Not in any DCA I worked in, nor would I accept such behaviour. But that is not to say it don't happen. The smaller the outfit the more likely the procedures and controls will be poor, likewise, you do tend to find in-house DCAs make up the rules as they go along.
- How seriously do these DCA's take their own complaints process? Now we can complain to the FOS, should this be the first line of attack in these cases?
All DCAs have their own complaints procedure which normally is started upon receipt of a formal complaint in writing. The complaint is normally dealt with by a supervisor and can range from abuse to a debtor to failure to provide information. The process is taken seriously but will not prevent enforcement action continuing, so you could still be getting calls/letters while the complaint is investigated.
DCAs do not normally have a time limit on responding to a formal complaint but it should take no longer than 28 days, and that's normally the complex cases. To be honest, whether they take it seriously really comes down to the complaint. If you saying a debt collector 'threatened me with...?' then it is unlikely to be a positive outcome for the debtor.
The whole point creditors use DCAs is because they are prepared to say things a high street bank just couldn't say (because of customer/media relations, I mean, they are unlikely to be seen as 'the singing bank' if they are threatening their customers with bailiff action!). You would be surprised how much DCAs recovery for their clients by using such tactics, back on topic though.
A complaint to the FoS normally starts with a basic request to the DCA for a response to the complaint...' Mr X has complained about Y event, what have/are you doing to resolve this'. Communication between the DCA and the FoS is normally done in a non-confrontational way (the old 'lets work together to resolve this'), and more to confirm the DCA has acted 'reasonable'. I have never read a FoS complaints enquiry letter that has ever quoted the law, or regulation. Their letters, for example, don't have comments like, 'under s77/78 you are required to....you have failed to conform to s77/78, etc.
When it comes to the charges imposed on DCAs, in my experience this normally only occurs if the FoS have to send an investigator to the DCAs office with the power to read, recover and remove data or information relating to the complaint. The DCA is normally given advanced notice of any such visit.
And you do have to have exhausted the DCAs complaints process before the FoS will get involved (just like TS), but to be honest the FoS will in the first instance be looking to see if the DCAs response was 'reasonable'.
- The In-house DCA have not contacted me for several months. What is the possibility that the acc has been passed to a non in house DCA and if so how long would it usually take for a DCA to contact me?
If it had they would have contacted you by now. You should have a look and see if you account is in default. I would suspect it is, and the in-house DCA have put enforcement on 'suspend' or 'hold', and the account is just generating statements. At some point the account will automatically be passed for determination, and it is at that point it will be passed to an external DCA. When that will happen, not sure, but no less than 90 days from the date of you last contracted payment.
- When a defaulted account is in the hands of a dca does the collected money get passed back to the original creditor?
Yes, less a % fee, but all monies you pay reduce the balance outstanding on the account. The % fee taken by the DCA is the cost to the OC for their 'service'.
You need to establish whether the dca has bought the debt or just collecting on behalf of the Original Creditor and acting as an agent. If it's collecting as an agent then the monies get passed back to the original creditor and the dca gets a % commission for collecting. If it's sold then the DCA keeps it having already paid a small % in the £ for the alleged amount of debt for the 'purchase' of the debt, invariably somewhere between 7% - 12% of the face value.
- What would the DCA response be to a debtor saying they were filling for bankrupcy ?
They will bring forward the 'final determination' stage and assess what action should occur in order to bring about a quick recovery. The OC will be notified and normally enforcement action is increased, but it is a 'last resort' for both creditor and Debtor.
Creditors (except HMRC, which is known as a 'preferential' creditor) will rarely file a petition for bankruptcy unless they have identified major assets, and even then it is normally the largest unsecured creditor because they will be the first in the Q after secured and preferential creditors.
- Can a DCA add collection charges or is it that charges can only be added if it is a specific part of the agreement between the contracting parties e.g. the creditor and the debtor at the outset.
Within the contract between the DCA and the OC there will be provision for the DCA to add 'reasonable' charges (notice how that word keeps appearing), however, any such provision should be contained within either the original agreement that the debtor signed OR within the T&Cs that were provided at the time credit was obtained. I cannot remember the exact wording but it is normally in the same paragraph where they set out how they will share your information with 'other agencies'. If there is no such provision regarding 'additional charges' then there is no basis to allow the DCA to add charges.
Just to be clear, a DCA CANNOT add charges if the OC cannot prove YOU the debtor agreed to be bound by such 'terms & conditions'.
If a DCA is adding charges or fees to your account, write a letter to the OC requesting information regarding the assignment of such a 'right' and request written proof that you agreed to be bound by such terms.
If the DCA has purchased the debt from the OC, send the letter to the DCA direct requesting on what legislative grounds they believe they can add charges or fees to the account.
- Why do DCAs sent you a letter saying we are taking u to court in 7 days unless you make immediate payment when this is there first contact?
This is a shot in the dark. The debt is an old one and they have no information (they have most likely bought it for 2p in the £) and so they jump to the end of the debt cycle (court action with no further reference to you stuff) in order to gain a response and payment .
Just send them back a standard 'prove I owe it with the evidence you will use in court' letter, and be prepared for a couple more nasty 'we play hard ball' letters.
These type of DCAs (bottom of the pile) work on a hard line fast payment approach and rarely bother with court action. However, they do tend to send a 'visitor' to get you to pay. Tie them up in legalities of debt ownership and they will be gone.
-Why do DCAs pass my debt on?
Basically because they have run the debt cycle and the chance of recovery is nil. As I said in an earlier post, they are working on % of debtors and turnover of accounts. If the supervisor has determined they won't get paid it will be passed on.
- If I move address can the OC/DCA find me?
Not if you move to the moon. . At some point in the future your going to go looking for debt again (sorry credit ), and they link you with two key pieces of information - you date of birth and you place of birth (the chances of two joe bloggs born in Hackney on the 25 Feb 1905 is rare!), your address is only the first port of call.
DCAs have a number of routes to find you -
- Spoof websites offering credit (you get rejected but they have the info)
- Mobile phone contracts
- HP agreements
- Mortgage applications.
- On-line marketing surveys
- Electoral register
- How does the size of the debt figure in the equation, ie, it's to big to put through small claims, etc.
The balance owed will have a significant difference. The smaller the balance the quicker the point will come when it is 'uneconomical' to pursue, whereas the higher the balance the greater need will be to recover the debt and less likely that it will just be written off. But the ultimate determination on the outcome of any debt is the assessment of your ability to pay, or more accurately, the OCs ability to recover (through CCJ, charging order, Attachment of earnings, etc.)
- A letter was recently sent to my address to someone unknown but with with the same surname, a different title and initials.
This is a shot in the dark from a DCA. Just send ALL letters back addressed to this person and write 'not know at address' (that's if there is a return address , if not bin them), worse case they will send an agent to confirm you are not the debtor. to be honest, I have done such visits as part of my 'training' and they last about 5 mins: they just confirm your name and ask for one proof of identity. If you provide it they wipe their records of your details and send it back. Problem gone.
It is true that you are not allowed to open mail addressed to someone else, but hay, we all want to know what's going on. But you should just return it unopened (but I wouldn't make a special trip to the letter box ).
Also be aware that it is not unknown for a DCA to be looking for YOU but change the details of the 'debtor' in order to get you to confirm who you really are. Then 2 months after calling and telling them your not Miss X but Mrs Y they start chasing you for a statute barred debt because they were really looking for Mrs Y.