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

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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.
 
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.
  
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== What Should I Never Tell a DCA? ==
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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.
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====Enforcement actions:====
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1) Payment plan with OC.
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2) Pursue through DCA.
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3) Bankruptcy.
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4) Write-off the debt on your CRA file.
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5) Offer Full & Final Settlement (future date).
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6) Offer Full & Final Partial Settlement.
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7) County Court Judgement:
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* Full settlement of account
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* Payment plan set by the court
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(if you default on this court judgement then the OC can get an)
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a) Warrant of Execution (County Court Bailiffs)
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b) Attachment of Earnings.
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c) Charging Order.
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d) Third Party Debt Order.
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e) Administration Order (if you have a number of debts less than £5k).
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====What Information Do They Already Have?====
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Put simply, anything you told then on your original application
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*Name, including maiden name.
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*Address
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*DoB
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*Employer
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*Salary
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*Bank details
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*Dependents
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*Debts (at the time of application)
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*Accommodation
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*Etc.
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====So What’s Really Important for Them to Know, and What Should I Not Tell Them?====
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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.
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'''Assets  (an item of value, from Houses to motors, from shares to washing machines)'''
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*Are you a homeowner?
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*Are you in rented, unfurnished accommodation?
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*Do you own a car.
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*If your debt was a loan, what was the loan for? A car? Home improvements?
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*Was it to buy an assets?
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*If your debt was a credit card, what did you buy in the last two years? White goods? Furniture? TVs? DVD players?
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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.
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'''DON’T TELL THE DCA ANYTHING ABOUT WHAT YOU OWN'''.
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'''Liabilities (debts you have, both secured and unsecured)'''
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*Mortgage (amount, to whom) –
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*Secured Loans (amount, to whom) -
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*Loans (how many, How much)
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*Credit Cards (how many, How much)
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*Etc.
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'''DON’T TELL THE DCA ABOUT YOUR SECURED LOANS'''
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'''Your financial position:'''
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<u>Income</u>
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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)
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Why?  They will find out:
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*who you work for,
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*payroll number,
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*NI number,
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*tax paid in year (very important to the DCA for Bankruptcy),
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*your personal allowance,
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*if you have any other court payments (this appears in the section for Tax/Ni as a SLR/CO payment),
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*Pension contributions (Bankruptcy (depending on age)).
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And this will also open the option of an Attachment of Earnings (AoE) if you default o the CCJ.
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'''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).
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Benefit payments confirm you are living on a low income and will help support your case for reduced payments and even potential write-off. 
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But don’t tell the DCA about your Working tax credits and certainly not about your Children’s tax credits.
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<u>Expenditure</u>
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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.
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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.
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'''HINT:''' Provide them but blank out all key information except the monetary values (but do blank out the tax paid to date).
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Only give enough information that allows then to determine your offer of payment is realistic.
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'''Always remember…………………..'''
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The DCA wants to build a full picture of everything you own and owe.
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 +
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.
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YOU SHOULD NEVER INFORM THE DCA YOUR HOME IS UP FOR SALE. THEY WILL PROCEED WITH A CCJ IMMEDIATELY.
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One step that the DCA can advise is to file a petition for bankruptcy.
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They would do this if their chances of recovery of the debt, even through a CCJ, are zero.
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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.
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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.
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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.
  
  

Revision as of 21:14, 13 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.



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.



Q and A

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 he 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.