Difference between revisions of "Debt Collectors: On the Inside"

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Excerpts below are from the original thread '''[http://www.consumeractiongroup.co.uk/forum/general-debt-issues/134506-inside-dca.html here]'''
 
Excerpts below are from the original thread '''[http://www.consumeractiongroup.co.uk/forum/general-debt-issues/134506-inside-dca.html here]'''
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Also see here: '''[[Debt Collectors: On the Inside - Q & A's]]''' for OntheBrink's answers to specific questions taken from the same thread
  
  
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When I started I received two days 'on the job' training. This revolved around three pimary objectives.
 
When I started I received two days 'on the job' training. This revolved around three pimary objectives.
  
'''1)''' get them to pay....something.
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''1)''' get them to pay....something.
  
 
'''2)''' obtain as much information from the debtor and document it on the system.
 
'''2)''' obtain as much information from the debtor and document it on the system.
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== The Role of the Supervisor ==
  
  
== Q and A ==
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Lets just start by setting out the hierarchy of a DCA:
 
 
*'''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?'''
+
'''Debt Collector/Account Manager'''
  
The creditor on the advice of their solicitors.
+
The person you talk to when you call.
  
  
*'''Even if the DCA formally buys the debt, is it still the OC who decides if court action will start?'''
+
'''Team Leader/Legal Advisor'''
  
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.
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A more experienced debt collector that is responsible for a section of the floor or legal queries. They also provide the initial ‘on the job’ training. However, they are just glorified debt collectors and they can often be ‘the supervisor’ when you demand to talk to one.
  
  
*'''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.'''
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'''Supervisor'''
  
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.
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See below
  
  
*'''In terms of higher management, is the role of an account manager actually considered akin to a salesperson.'''
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'''Manager'''
  
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.
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Is responsible for the management of the accounts returned to the OC. To ensure compliance with the DCAs policy and procedures. They will also get involved in complex disputes or complaints.
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You will rarely talk to them unless you have formally complained and had that complaint accepted (racial abuse for example).
  
  
*'''How did your firm react to people getting the debt charities involved, or raising formal complaints with the OFT etc.'''  
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'''Senior Manager/Director'''
  
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.
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Responsible for all operational matters throughout the office. You will never speak to them, no matter what the issue.
  
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.
 
  
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====The Supervisor====
 +
In some DCAs the supervisor can also be the ‘manager’ but normally the responsibilities are segregated.
  
*'''Should I talk to the DCA when they call?'''
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The supervisor’s role is:
  
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.
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*Firstly to ensure the accounts are turned over at an acceptable rate.
  
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DCAs work on the rule of percentages. If they have 5000 live accounts for a client (MBNA for example) they will want the team to turnover 20% per day (so all the accounts will be turned over in 5 days), which equates to 1000 accounts per day. With 10 debt collectors that equates to 100 accounts per day. The database, as we have already seen, is automated to just keep calling throughout the day until there is a response. So you can end up with 3-5 calls a day.
  
*'''What is the policy of dca and statute barred debts'''
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The supervisor will be made aware via a system pop-up if the daily target is not going to be matched. It is her responsibility to speed up the calls through a number of methods, including removing debtor accounts on the list to be called where there has been no previous response (these can be allocated to a ‘night call’, which is after 6pm). The supervisor can also select all accounts with employer telephone numbers and delegate them to a team leader to call. Or they can select all accounts where the debtor has failed to pay the monthly instalment and pass them to a team leader. There are others but I think you get the picture.
  
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.
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*Secondly, to ensure the weekly recovery rate per client (OC) is achieved. This is the total revenue recovered from debtors for each defaulted account. This is purely a monetary value and will be linked to debt collection agreements made with the OC upon account set-up. With some OCs there is a set limit of repayments required. For example the OC will have an agreed contract with the DCA to only accept repayments that are equal or more than 1-3% of the total debt outstanding.
  
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*Thirdly, to resolve complaints both informal and formal, and this can be either in writing or on the telephone. Normally, if you had a complaint it will be heard by a team leader. If the team leader cannot resolve the complaint, or prove either way whom is correct, they will request supervisor intervention. The supervisor can listen to any call recorded within the last 7 days instantly via the archive, or the last 28 days via request to the archive administrator (normally takes 48 hours). The supervisor has the authority to issue a formal apology, and can dismiss on the grounds of gross misconduct without further reference to management. Normally the account will be returned to the OC with an explanation as to the DCAs inability to pursue.
  
*'''I take it a dca cant default you if you have already been defaulted and has dropped off of your credit file'''
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*Fourthly, they are responsible for the ‘final determination’ on an account. The aged debtor cycle as previously stated will just keep plodding forward if you don’t respond, but even if you do, there will come a day when the account will automatically be passed for ‘final determination’, or the account manager/team leader can request an F12 (as it is known) to the supervisor.
  
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.
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It is the supervisor’s main responsibility to determine the future direction of the account. I posted some outcomes very early on but here is a more definitive list.
  
A default notice is registered against the account with the CRAs on one occassion, but the DCA can issue as many default notice <u>letters</u> as it wants, and normal procedure for a DCA is to issue a default letter after a payment plan is broken.
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'''1)''' Agree payment plan of £?
  
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'''2)''' Restart payment plan of £?
  
*'''How can a DCA  put a default on a credit file 12 months before a debt is assigned over from the OC'''
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'''3)''' Refused payment plan of £? (constant default)
  
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.
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'''4)''' Refused payment plan of £? (below de-minimus)
  
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.
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'''5)''' Refused to pay, (can but won't) – recommended CCJ.
  
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'''6)''' Recommend Legal (CCJ) - because of 'reason' (i.e. positive equity)
  
*'''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.'''
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'''7)''' Recommend write-off - because of 'reason' (i.e. Bankrupt confirmed)
  
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.
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'''8)''' Recommend return to client - because of 'reason' (i.e. in dispute - CCA)
  
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'''9)''' Recommend return to client – complaint (OC or DCA – accepted/rejected)
  
*'''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 ?.....'''
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'''10)''' Recommend visit - because of 'reason' (i.e. no contact in 120 days)
 
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.
 
  
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'''11)''' Recommend visit – because of ‘validation’
  
*'''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
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'''12)''' Pass back to client - because of 'reason' (i.e. legal enforcement not possible)
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.
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'''13)''' Pass back to client (end) - because of 'reason' (i.e. Doctors note/death)
  
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'''14)''' Pass to technical team - because of 'reason' (i.e. Legislation quote)
  
*'''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?'''
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'''15)''' Pass to legal/solicitors – because of ‘reason (confirm house sale)
  
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.
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'''16)''' Uneconomical to pursue - 'reason' (2+ CCJs on file)
  
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.
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'''17)''' Pass to…. (other DCA or local agent) reason (debtor pays
  
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'''18)''' Recommend accept F&F offer (£ and %)
  
*'''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?'''
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'''19)''' F&F accepted (£ and %)
  
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.
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'''20)''' F&F accepted (over 80%)
  
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.
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'''21)''' F&F accepted (client offer 35% reduction)
  
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'''22)''' Return to client - Debtor not in default/not issued
  
*'''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'''  
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'''23)''' Return to client – Debtor confirmed settlement in full
  
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.
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'''24)''' Return to client – Debtor confirmed subject to CCJ dated?
  
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'''25)''' Return to client – other (detail)
  
*'''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.)
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The debt will be determined and returned to the client. The file will be suspended and moved to an archive and if you call they will request you contact the OC as ‘we are no longer dealing with the account.
  
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The OC can then choose to take the action as requested, or pass to a different DCA and the process starts all over again.
  
*'''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.'''
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Sad I know, but look on the bright side. It is job creation after all.
  
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.
 
  
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====Why should I care?====
  
*'''Only once any paperwork is received can they stop hiding behind this little loophole.'''
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You don’t have too, to be honest, but the supervisor will review everything you have told them and make a judgement, not based on your ability to pay monthly, that stage has passed (with them), but on the best and most likely outcome for the OC. The supervisor will take into account ALL information from all sources, and will ensure that the DCA has fulfilled it’s responsibilities to the OC.
  
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.
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Up until this point, it is fair to say, you have not been treated ‘fairly’, but when the supervisor makes the ‘final determination’, he will base his recommendation on what would be ‘reasonable’ and ‘realistic’.
  
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'''HINT:''' If you do have an interaction with a supervisor then be polite, helpful (but not to helpful ) and be concise but precise about what you are trying to achieve. For example, if you want the debt written off because of no CCA, say so. Explain why that would be ‘reasonable’ and ‘realistic’.
  
*'''Do you think the CCA request letter can be amended to cut out this fantasy?'''
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'''NOTE:''' supervisors are trying to achieve a different outcome than the debt collector/account manager. You will be talking to someone that knows what their talking about and is trying to find the best solution. If that means a CCJ or even bankruptcy, or likewise, if it is a write-off or token payments, then that will be the final determination.
  
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.
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I should end this with a real fact. The chances of you actually talking to a supervisor will be VERY unlikely, unless they call you. It is rare to ask to speak to a supervisor and they allow you to. It’s not personal, it’s just the policy of the DCA. Supervisors are important people in the DCA process so if you do get a chance to talk to one, use it wisely.

Latest revision as of 16:46, 22 March 2008

With thanks to Onthebrink, who worked as a staff member (called Account Managers or Debt Collectors in the industry) and as a Supervisor from 1992 - 2005.

Excerpts below are from the original thread here

Also see here: Debt Collectors: On the Inside - Q & A's for OntheBrink's answers to specific questions taken from the same thread


Training:

I was allocated to a client account (Halifax). It was my responsibility to collect as much money for the Halifax as possible. If my memory is correct I had in excess of 4000 accounts on file.

When I started I received two days 'on the job' training. This revolved around three pimary objectives.

1)' get them to pay....something.

2) obtain as much information from the debtor and document it on the system.

3) Assess the likelyhood that objective 1 can be achieved through the use of objective 2.

I was provided a script that should be followed verbatim. In bold letters was the sentence 'NEVER TRUST A DEBTOR'. There was a number of responses to key 'excuses' put forward by the debtor, i.e -

- 'I cannot afford to pay this' = response, 'you will need to resolve this Mrs X or you will have to appear in court.' (fear tactic)

- 'go on then, take me to court' = response 'Mrs Y, if a CCJ is issued the court can instruct the bailiffs to seize your goods.'


Throughout my 2 day training I was never told about legislation, or the requirements under the CCA, etc. Such information was irrelevant. The only exception to this was regarding CCJs. If a debtor stated they already had a CCJ we were required to check the credit file of the individual at his last two addresses. If a CCJ was registered we were to send the account to a supervisor for determination.


If a debtor gave information that was 'out of the norm' (legislation, etc.) we were required to pass the account to a supervisor.


When you are a DCA staff member you are required to collect as much money as possible. On the wall of the office was an tv screen that detailed the recovered amount per 'client' (Halifax) for the proceeding day. It was the first thing that the staff checked when they arrived at 8am.


Payment/Letter Processing

When you send a letter or cheque they are opened and the chq/cash/debit card instruction are processed by a Finance asst. They would update the finance section of the debtor records. Any letters were passed to the 'account manager' (staff member but it sounded more senior), Hence when you say, I want to speak to a manager the script reply is 'I am the person that manages your account, it is me you need to discuss this with'. I was told to keep the pressure on the debtor and only pass the account to a supervisor if the debtor got abusive or quoted legislation.


Anyway, as the system is calling debtors I would go through each letter in the in-tray and update the system notes. It really depended on the content of the letter that determined action. Mostly it was the normal 'I cannot pay' or 'I need more time'. If my headset bleeped I would take a call.


If I got a letter I did not understand, from a solicitor, or quoting legislation I was required to pass it to a supervisor.


Telephone Calls.

Staff members work on an automated calling system where each account is rotated and called. If you answer it is picked up by a member of staff that gets a bleep in the headphones. Each member of staff would only talk to a debtor for his client (Halifax). If YOU call them, and the Halifax account managers is on a call it is diverted to a supervisor (your details are requested). Staff cannot see who the computer is calling! if a call gets 'a hit' the screen they are in closes and your account details come up, the conversation is then recorded and a clock appears on screen, staff have a time limit to talk to you (they won't chat all day!!) and this can be btween 2-15mins, at the 15min point the computer notifies a supervisor that a 'long call' is in progress and will automatically tune his headset into the conversation (if the supervisor is not on a call themselves), if they are on a call a message is flashed on their screen.


The whole point of the telephone call is to get you to pay. The staff member will start with 'you need to pay the balance in full today' and slowly give ground until a 'compromise' is reached.


HINT: stick to your guns, offer what you can afford. Don't get angry (easy to say I know) but they are working from a script and enjoy it when they wind you up.


NOTE: the staff member is their to get information out of YOU, they won't give you any information except what YOU have already told them in previous calls!!


When the call ends the recorded conversation is shunted to an archive file and can only be replayed by a supervisor. The member of staff has 2 minutes to update the screen before the computer starts the call cycle again.


If there is no answer to your 'phone the computed will reallocated a new slot later in the day. This could be in 2, 4 or 6 hours depending on the number of debtors from that client. DCAs can only make a max of 25 calls a week (6 days from 7), so this can be about 3 unanswered calls a day. Once they have spoken to you the system needs to be given an 'action' when the screen is completed by the staff member. This action will depend on what the staff member feels is appropriate (see 'actions' at the bottom for more info).


Letters

You are correct in you assumption that 90% of the letters sent out by a DCA are pre-written or template letters. The system can generate a letter every 5 days if no phone call is answered and it will move up a scale of seriousness from say, 'call us' to 'pre-Litergation', etc. The member of staff can also request a letter based upon the conversation you had with them by pressing the F1-12 keys.


Each letter sent out is just a template and when the DCA has run out of letters with NO response at all, it is passed back to the client for legal action to commence.


NOTE: some DCAs have a legal section that can issue CCJs via an associated solicitor, but the client must approve such action. When an account is passed back to the client for a decision there is usually a 14 day 'quiet' period, where you hear nothing at all from the DCA. After this you may get it passed to another DCA (and the process starts again) or sent for legal action.


If you have asked a question outside the norm and a template letters does not answer the query, this will be sent to a supervisor for determination.


DCA staff do not have the function to respond to your letter in person. And sometimes this can be VERY frustrating for the member of staff/supervisor. One of the biggest problems with DCAs is this lack of 'human' consideration. The staff member may actually agree with what your saying but may not have the option (within the 'action' list) to satisfy your request. She has to move you from a position they cannot (note I didn't say will not) agree to because the system won't let them, to a position the system will allow.


In the 10% of cases where a 'personal' letter is sent out, this is always where you have made a formal written complaint regarding a recorded conversation that either breach the rules or where you were abused by the account manager/staff member (same thing).


NOTE: You may complained about a staff member swearing at you but if during the conversation up to that point you swore at him/her, you complaint would be ignored. The principle of 'get what you give' is very much in operation at DCAs.


HINT: If you do receive abuse, then take a step back and think 'did I start this?' if you are 100% confident you didn't, COMPLAIN in writing, stating the date and time of the call and what was said. I have released staff because they lost their temper (it's unprofessional and should NOT be tolerated). You have a right to be treated with respect, but so do the staff you are talking to!


Timescales

This is a basic rule: a DCA should not be acting unless a DEFAULT NOTICE was issued. If you have not received a defualt notice inform the DCA immediately. They will have a procedure where the account is put on hold for 48 hours and the client must send out a copy of the DEFAULT NOTICE. When the account is passed to a DCA the client must put the date the default notice was issued. the DCA then have 120 or 180 days to recover or start to recover the debt. If after 120 or 180 days there is no progress or contact with the debtor, the account is normally passed back to the client for legal action or a home visit, etc. It is the clients decision on what would happen after that. So the Defualt notice is a key document (not just for CCA reasons) because it is the start date for recovery action. I have seen a number of cases where a default date was entered on the debtors file by a client but no default notice was ever issued (if there is a dispute between the debtor and client over the issue of a Default notice then normally a supervisor would check the debtors credit file to see if the notice is recorded - this would normally be a min of 31 days after the default notice is issued and the debtor account would be put on hold by the DCA). The supervisor can refuse to process the debtor account until a valid default notice is issued and I did do this during my time (particularly with Lombard Tricity Finance).


NOTE: the default notice can be issued by the DCA and with some you could get a 'pre-default notice' letter sent to you. This can form part of the DCA procedure but is often only done by 'in-house' DCAs (but not exclusively).


Assuming you make NO contact with the DCA (either phone or letter) then the system will normally generate a letter every 5-7 days for 'aggressive' DCAs and each letter gets more 'serious' as they escalate (these DCAs are working to the 120 day aged debtor cycle). With some medium aggressive DCAs this could be every 14-21 days. And the maximum 'cycle' is every 28 days (these DCAs are working to the 180 day aged debtor cycle).


Defualt Notice issued = 90 days after last payment


Legal action determined (after NO contact) 180 days after default issued. Please understand that this is just a general rule. It will be decided by the client based upon YOUR actions. If you are trying to resolve the debt by making an offer they are less likely to go for a CCJ. However, if the information you provide the DCA staff member could give the client an advantage (say for example, you have a mortgage with positive equity) then they may speed up a CCJ in order to issue a charging order, etc.


Actions:

This, funny enough, is the most important stage of the process. At the end of the conversation or letter, the staff member must decide 'follow up action' they only have 12 letter options with a 13th as 'pass to supervisor'.

Most action generate another threatening letter. But a few do not, they are:

1) Agree payment plan of £

2) Refused to pay, (can but won't) - pursue.

3) Recommend Legal (CCJ) - because of 'reason' (i.e positive equity)

4) Recommend write-off - because of 'reason' (i.e Bankrupt confirmed)

5) Recommend Hold - because of 'reason' (i.e S.A.R - (Subject Access Request) request/CCA request)

6) Recommend visit - because of 'reason' (i.e no contact in 120 days)

7) Pass back to client (hold) - because of 'reason' (i.e Account in Dispute)

8) Pass back to client (end) - because of 'reason' (i.e Doctors note/death)

9) Pass to technical team - because of 'reason' (i.e Legislation quote)

10) Uneconomical to pursue - 'reason' (2+ CCJs on file)


CCA Requests

Let me start by clarifying a point:

A CCA request is not ‘Prove to me the debt is owed by providing a CCA’

But it is ‘Prove to me the debt is enforceable because a valid CCA can be provided’

There is a BIG difference between the two: the first is not valid because by the very fact you are requesting a CCA indicates the debt is owed (or more precisely ‘the debt has been incurred’). What you are trying to ascertain is whether the creditor can actually take you to the CCJ stage and obtain judgement.

If they can provide a valid CCA then they are more likely to obtain a judgement, whereas not to provide a valid CCA may rule out that stage of the ‘enforcement’ process.

OK, more about the ‘process’:

Within DCAs there are three main levels of staff:

1) Account Managers/debt collectors (they call you up)

2) Managers/Supervisors (they sort out disputes and complaints)

3) Technical Experts/Legal Services (Legislation)

When you send in a CCA request (always recorded delivery) the Admin Asst will stamp to confirm receipt from the Postman. The letter is opened and checked for payment – your £1 chq/PO is processed by the finance Asst and your file updated (at this point £1 is removed from your debt!!). The letter is put in the account manager’s in-tray.


The account manager will up-date your screen with ‘CCA requested’ and the letter is passed to a supervisor. The supervisor puts your account on hold (48 hours) and updates the finance section to remove the £1 from your debt and pay it to the client (Cahoot for example). The 48 hour hold is so the client can receive the CCA request.


The supervisor will read the request and note the DATE RECEIVED on the debtors screen. The letter is faxed to the client and the original then posted. The client will notify the DCA to ‘confirm hold on account’ and the DCA will then put a 14 day hold on the account.


If no acknowledgement is received from the client after 48 hours the system will send the supervisor a reminder ‘request for action’. The supervisor will chase the client and the 14 day hold is actioned on the system.

They find the paperwork…

The client will notify the DCA that the debt should be pursued and send the paperwork they have to the DCAs legal section. This is then forwarded to the debtor by the legal services team.


Alternatively, the client can send you the paperwork they have directly and notify the DCA to ‘pursue the debt’. In this case the DCA receive no paperwork.


If this is before the 14 day ‘hold’ deadline then action begins after 14 days, but if it is afterwards it starts the following day. A supervisor will update the system and put on the file ‘request complete’.

The account manager/supervisor will not have seen a copy of the CCA or paperwork issued by the client/legal team. The only information they have is that your request was ‘complete’.


If the CCA is valid.

The DCA will reactivate the account and pursue. You and the DCA staff are in the same boat.

If you think the CCA is NOT valid

Then clearly you are going to write a letter and tell the DCA why you don’t think it is valid. The letter is processed and either sent to the client or legal team. Don’t bother calling them (see below).


NOTE; at this stage the client and/or legal team WILL KNOW if it is valid or not, but as stated in previous post, DCA staff will only give you information that you have already provided. And policy is that only ‘operational’ staff can update your files (account managers/supervisors), and remember, they haven’t seen the paperwork!!


Your file will NOT be updated with information pertaining to the validity of the CCA by the legal team for this very reason (because if you do a S.A.R - (Subject Access Request)/data protection request that information would be sent to you (proving your grounds for dispute)).


If you do call them it may appear the left arm doesn’t know what the right arm is doing, but think about it, they certainly DO know what their doing.

When you call up and argue that ‘the CCA is not valid…’ the staff are ignorant to whether it’s valid or not. On their screen it tells them to ‘pursue’, and so they return to the script ‘you must pay this NOW Mr X’.


Staff ignorance….

DCA staff only know as much as is on their screen, and to be honest, very few bother to read up on the technicalities of CCAs or Default Notices, etc. Why, because that’s what legal services are paid to do. Also, the staff have to process a target number of debtor accounts each day and getting bogged down in legislation does not help them hit their target.


HINT: So the next time you want to call the DCA about an invalid CCA, just don’t bother. It’s a waste of money. Send them a letter instead.


Supervisors

Most supervisors have a good knowledge of the law, and will (hopefully) act upon the information they provided with.


HINT: If they were to receive a letter that says ‘this CCA is not valid because…detail the dispute’ and ENCLOSE THE PAPERWORK you received from the client or legal team, they will have a look and may even have a chat with someone in legal services. If they know it’s not enforceable they can…..ummmm…. speed the process up shall we say. I mean they're not going to get paid are they, and your one less account in the system.

What will they do? Send the account back to the client with the recommendation to pursue through litigation (debtor refuses to pay). They pass the ball back to the client.


Will the creditor write-off my debt then?

In honesty, I don’t know. More than likely they will pass it to another DCA and the process starts again. If it does, send a letter and ENCLOSE THE PAPERWORK you received again.


They still don’t listen, and calls keep coming.

They will do, won’t they? The DCA is on a cycle remember, 120-180 days. When they have run the cycle it will be passed back to the client anyway. It is then up to the client to decide on the next course of action.

NOTE: this 180 day cycle often restarts if you respond to a letter or call.

HINT: If you are 100% confident they do not have a valid CCA, and have exhausted all attempts to get one, and you want to take this to judgement stage. Then ensure your dispute is known to both the DCA and client through the sending of a legal letter to both parties (there are templates on here) and then let the cycle run its course.


As far as any DCA is concerned the lack of a 'valid' CCA has to be proven in court.


When you request a CCA what you are trying to do as the debtor is prove there is no valid CCA, this then means the debt is 'non-existent' and thus the default has to be removed from the CRA records.


HOWEVER the only way of achieving such an outcome is for the creditor/DCA to take you to court via a CCJ in order to pass judgement. The court WILL NOT accept a judgement if you, the debtor, contest/defend that no valid CCA is in operation, and thus the debt does not exist and so cannot be enforced, and win.


But the creditor/DCA has to take you to court in order for you to win.


If they know there is no valid CCA it is very unlikely they will take you to court. They will instruct the DCA to 'pursue the debt' untill the DCA get fed up.


Having no valid CCA just removes the CCJ option from the process.


Now the DCAs know that, but sending you letters and calling you 3 times a day is also a part of the process that can only be stopped if you have proven the debt is 'non-existent'. Which you won't be able to because the creditor needs to issue a CCJ.


What Should I Never Tell a DCA?

We need to first identify what the main options for the OC, and then look at what information they need to determine which option to take.

Enforcement actions:

1) Payment plan with OC.

2) Pursue through DCA.

3) Bankruptcy.

4) Write-off the debt on your CRA file.

5) Offer Full & Final Settlement (future date).

6) Offer Full & Final Partial Settlement.

7) County Court Judgement:

  • Full settlement of account
  • Payment plan set by the court

(if you default on this court judgement then the OC can get an)

a) Warrant of Execution (County Court Bailiffs)

b) Attachment of Earnings.

c) Charging Order.

d) Third Party Debt Order.

e) Administration Order (if you have a number of debts less than £5k).


What Information Do They Already Have?

Put simply, anything you told then on your original application

  • Name, including maiden name.
  • Address
  • DoB
  • Employer
  • Salary
  • Bank details
  • Dependents
  • Debts (at the time of application)
  • Accommodation
  • Etc.


So What’s Really Important for Them to Know, and What Should I Not Tell Them?

As I stated in an earlier post, the DCA is not just interested in getting your cash. It’s also interested in building a picture of your Assets and Liabilities.

Assets (an item of value, from Houses to motors, from shares to washing machines)

  • Are you a homeowner?
  • Are you in rented, unfurnished accommodation?
  • Do you own a car.
  • If your debt was a loan, what was the loan for? A car? Home improvements?
  • Was it to buy an assets?
  • If your debt was a credit card, what did you buy in the last two years? White goods? Furniture? TVs? DVD players?

The more assets the DCA knows you have the more likely the OC will pursue a CCJ: They know that if you fail to pay they can instruct the county court bailiffs to seize your ASSETS.


DON’T TELL THE DCA ANYTHING ABOUT WHAT YOU OWN.


Liabilities (debts you have, both secured and unsecured)

  • Mortgage (amount, to whom) –
  • Secured Loans (amount, to whom) -
  • Loans (how many, How much)
  • Credit Cards (how many, How much)
  • Etc.


DON’T TELL THE DCA ABOUT YOUR SECURED LOANS


Your financial position:

Income

If you are employed and earn a good salary you must be aware that the DCA will want you to prove you salary details. (They will request your last three pay slips)

Why? They will find out:

  • who you work for,
  • payroll number,
  • NI number,
  • tax paid in year (very important to the DCA for Bankruptcy),
  • your personal allowance,
  • if you have any other court payments (this appears in the section for Tax/Ni as a SLR/CO payment),
  • Pension contributions (Bankruptcy (depending on age)).

And this will also open the option of an Attachment of Earnings (AoE) if you default o the CCJ.

NOTE: An AoE is not set by you, it will be determined by the court and based upon the Statement of Affairs (budget) you provide the court. If you have surplus income above the ‘prescribed limit’ the court will determine what monthly payment should be taken directly from your salary (and your employer can also add £1 for paying it to the court! Cheek of it).

Benefit payments confirm you are living on a low income and will help support your case for reduced payments and even potential write-off.

But don’t tell the DCA about your Working tax credits and certainly not about your Children’s tax credits.


Expenditure

Don’t include ‘luxuries’, like Sky TV, or Broadband, personal pensions, they will remove this amounts from your budget and demand a higher pro-rata payment.

When they review your budget or SoA, it is a certainty they will refuse to accept your offer unless they receive your payslips, and proof to support your highest expenditure items.

HINT: Provide them but blank out all key information except the monetary values (but do blank out the tax paid to date).

Only give enough information that allows then to determine your offer of payment is realistic.


Always remember…………………..

The DCA wants to build a full picture of everything you own and owe.

This allows the OC to decide if they should go for a CCJ where their options of enforcement are significantly extended if you default.

NOTE: If they identify you own a home they WILL check with the land registry to ascertain how much its worth (based on the most recent sale of a similar property in your street) and compare this with the outstanding mortgage balance on your CRA file. This will show whether you are in positive or negative equity. Having secured loans on the home will also enter the calculation as they may reduce any ‘profit’ after the mortgage is paid. The DCA will determine the likely success of a charging order and advise the OC to start CCJ proceedings.


YOU SHOULD NEVER INFORM THE DCA YOUR HOME IS UP FOR SALE. THEY WILL PROCEED WITH A CCJ IMMEDIATELY.

One step that the DCA can advise is to file a petition for bankruptcy.

They would do this if their chances of recovery of the debt, even through a CCJ, are zero.

If they know you are in employment, have a large liability of debt, assets that can be sold, but offering nothing to reduce the amount outstanding, then bankruptcy is a realistic option. This is why you should not tell them how much tax you have paid in year.

NOTE: When you are a bankrupt the Official Receiver will reclaim all the tax you have paid during the year, and put you on a NT Code (No Tax) through your employer, and you have to pay the Official Receiver the tax you would normally pay. Also, if you have a surplus over expenditure and it is higher than £100 month you will have an IPA (payment Arrangement) of 50% of surplus income for 3 years.

Both these procedures could prove a better recovery option for the OC. But it is only a realistic possibility if YOU give them the information to make the decision.


Writing Off a Debt

There are two types of debt write-off.

The first is purely an accounting treatment. Under the International Financial Standards all businesses (operating over a certain turnover) are required to show a 'true and fair' view of their financial position at the year end.


As part of that financial accounting requirement all debts, which sit on the companies balance sheet as an asset (just like 'cash at the bank' is an asset) and thus make the company look financially more stable than they may actually be!, these debts 'under default' MUST go onto the companies aged debtor list, and under the rules these debts must be 'written-off the accounts' on a 'timely basis', this reduces the amount of 'assets' the company has and thus provides investors with a 'truer' picture of their financial picture.

So far this type of 'write off' has not changed YOUR position. That happens when:


The other type of 'write off' is when the OC has done the above but then makes the decision to actually write-off the debt. They will do this by formally updating you CRA file with a £0 balance but (normally) with no narrative like 'settled in full' or 'partially settled'.


What you saw in your S.A.R - (Subject Access Request) was the OC doing the first type of write-off. Writing it out of their accounts.


I must stress that when the OC completes the first type of write-off they ARE NOT admitting the debt is going to be written off, nor are they going to stop pursuing the debt. It is only done as an ACCOUNTING TREATMENT.


What can happen at this stage of the process is the debt is passed around the DCAs to attempt recovery or it is sold to a DCA at a significant reduction. The OC has passed the debt on and you are likely to be chased by the DCA.


The Role of the Supervisor

Lets just start by setting out the hierarchy of a DCA:

Debt Collector/Account Manager

The person you talk to when you call.


Team Leader/Legal Advisor

A more experienced debt collector that is responsible for a section of the floor or legal queries. They also provide the initial ‘on the job’ training. However, they are just glorified debt collectors and they can often be ‘the supervisor’ when you demand to talk to one.


Supervisor

See below


Manager

Is responsible for the management of the accounts returned to the OC. To ensure compliance with the DCAs policy and procedures. They will also get involved in complex disputes or complaints. You will rarely talk to them unless you have formally complained and had that complaint accepted (racial abuse for example).


Senior Manager/Director

Responsible for all operational matters throughout the office. You will never speak to them, no matter what the issue.


The Supervisor

In some DCAs the supervisor can also be the ‘manager’ but normally the responsibilities are segregated.

The supervisor’s role is:

  • Firstly to ensure the accounts are turned over at an acceptable rate.

DCAs work on the rule of percentages. If they have 5000 live accounts for a client (MBNA for example) they will want the team to turnover 20% per day (so all the accounts will be turned over in 5 days), which equates to 1000 accounts per day. With 10 debt collectors that equates to 100 accounts per day. The database, as we have already seen, is automated to just keep calling throughout the day until there is a response. So you can end up with 3-5 calls a day.

The supervisor will be made aware via a system pop-up if the daily target is not going to be matched. It is her responsibility to speed up the calls through a number of methods, including removing debtor accounts on the list to be called where there has been no previous response (these can be allocated to a ‘night call’, which is after 6pm). The supervisor can also select all accounts with employer telephone numbers and delegate them to a team leader to call. Or they can select all accounts where the debtor has failed to pay the monthly instalment and pass them to a team leader. There are others but I think you get the picture.

  • Secondly, to ensure the weekly recovery rate per client (OC) is achieved. This is the total revenue recovered from debtors for each defaulted account. This is purely a monetary value and will be linked to debt collection agreements made with the OC upon account set-up. With some OCs there is a set limit of repayments required. For example the OC will have an agreed contract with the DCA to only accept repayments that are equal or more than 1-3% of the total debt outstanding.
  • Thirdly, to resolve complaints both informal and formal, and this can be either in writing or on the telephone. Normally, if you had a complaint it will be heard by a team leader. If the team leader cannot resolve the complaint, or prove either way whom is correct, they will request supervisor intervention. The supervisor can listen to any call recorded within the last 7 days instantly via the archive, or the last 28 days via request to the archive administrator (normally takes 48 hours). The supervisor has the authority to issue a formal apology, and can dismiss on the grounds of gross misconduct without further reference to management. Normally the account will be returned to the OC with an explanation as to the DCAs inability to pursue.
  • Fourthly, they are responsible for the ‘final determination’ on an account. The aged debtor cycle as previously stated will just keep plodding forward if you don’t respond, but even if you do, there will come a day when the account will automatically be passed for ‘final determination’, or the account manager/team leader can request an F12 (as it is known) to the supervisor.


It is the supervisor’s main responsibility to determine the future direction of the account. I posted some outcomes very early on but here is a more definitive list.

1) Agree payment plan of £?

2) Restart payment plan of £?

3) Refused payment plan of £? (constant default)

4) Refused payment plan of £? (below de-minimus)

5) Refused to pay, (can but won't) – recommended CCJ.

6) Recommend Legal (CCJ) - because of 'reason' (i.e. positive equity)

7) Recommend write-off - because of 'reason' (i.e. Bankrupt confirmed)

8) Recommend return to client - because of 'reason' (i.e. in dispute - CCA)

9) Recommend return to client – complaint (OC or DCA – accepted/rejected)

10) Recommend visit - because of 'reason' (i.e. no contact in 120 days)

11) Recommend visit – because of ‘validation’

12) Pass back to client - because of 'reason' (i.e. legal enforcement not possible)

13) Pass back to client (end) - because of 'reason' (i.e. Doctors note/death)

14) Pass to technical team - because of 'reason' (i.e. Legislation quote)

15) Pass to legal/solicitors – because of ‘reason (confirm house sale)

16) Uneconomical to pursue - 'reason' (2+ CCJs on file)

17) Pass to…. (other DCA or local agent) reason (debtor pays

18) Recommend accept F&F offer (£ and %)

19) F&F accepted (£ and %)

20) F&F accepted (over 80%)

21) F&F accepted (client offer 35% reduction)

22) Return to client - Debtor not in default/not issued

23) Return to client – Debtor confirmed settlement in full

24) Return to client – Debtor confirmed subject to CCJ dated?

25) Return to client – other (detail)


The debt will be determined and returned to the client. The file will be suspended and moved to an archive and if you call they will request you contact the OC as ‘we are no longer dealing with the account.

The OC can then choose to take the action as requested, or pass to a different DCA and the process starts all over again.

Sad I know, but look on the bright side. It is job creation after all.


Why should I care?

You don’t have too, to be honest, but the supervisor will review everything you have told them and make a judgement, not based on your ability to pay monthly, that stage has passed (with them), but on the best and most likely outcome for the OC. The supervisor will take into account ALL information from all sources, and will ensure that the DCA has fulfilled it’s responsibilities to the OC.

Up until this point, it is fair to say, you have not been treated ‘fairly’, but when the supervisor makes the ‘final determination’, he will base his recommendation on what would be ‘reasonable’ and ‘realistic’.

HINT: If you do have an interaction with a supervisor then be polite, helpful (but not to helpful ) and be concise but precise about what you are trying to achieve. For example, if you want the debt written off because of no CCA, say so. Explain why that would be ‘reasonable’ and ‘realistic’.

NOTE: supervisors are trying to achieve a different outcome than the debt collector/account manager. You will be talking to someone that knows what their talking about and is trying to find the best solution. If that means a CCJ or even bankruptcy, or likewise, if it is a write-off or token payments, then that will be the final determination.

I should end this with a real fact. The chances of you actually talking to a supervisor will be VERY unlikely, unless they call you. It is rare to ask to speak to a supervisor and they allow you to. It’s not personal, it’s just the policy of the DCA. Supervisors are important people in the DCA process so if you do get a chance to talk to one, use it wisely.