debt complaint

Many debt collectors and debt purchasing firms use such questionable means on a daily basis. Many are regularly featured in the various consumer websites which have sprung up in recent years and which have helped spread the word about DCA malpractice, much to the discomfort of the DCAs themselves, and have attracted the interest of government bodies such as the Office of Fair Trading and local Trading Standards offices.

The laws regarding what DCAs are allowed to do are bizarre and, it seems, not subject to logic. Even though bad debtor accounts have been closed and written off by the original lender, and the insurance and tax breaks have been taken to the benefit of the bank, the bad debt somehow comes to life again in the hands of the Debt Purchaser (who has bought the data relating to the closed accounts rather than the accounts themselves , as these have been written off), and who then seems to get away with making your life a living Hell in the pursuit of profit.

These bottom-feeders of the insolvency world make a living buying and selling information about debts of ordinary folk who have fallen on hard times, and then harassing and bullying them for the full amount, sometimes to the point of driving people to suicide, in order to turn a profit of 100s of percentage points.

Astonishingly, this practice is not illegal.

But you are now empowered to use the law to your own advantage.

The 1974 Consumer Credit Act made debts taken out before April 6th 2007 unenforceable (even by a court) if the original credit agreement did not contain certain details, known as the “prescribed terms”.

It is thought that a large proportion of credit agreements drafted before this date do not meet the stipulations as laid down in the Act, and that they are therefore unenforceable. The very basis of their validity in law is unsafe.

The great news for people whose accounts have been bought by these debt purchasing companies is that you are much more likely to be able to write off these debts because the chances are very much higher that the debt purchasing firms who bought them would not have in their possession the original documentation. This is because they buy the information about bad debts in job lots, often as simple printouts or floppy disks which contain incomplete data sets.

This applies to any of the following types of credit agreement (not just credit cards):

Credit Cards
Secured and Unsecured Loans
Store Cards
Car Loans/Finance (up to £25,000 each)
Hire Purchase agreements

There have been problems in finding reputable companies to do this for you, which is why we recommend you do this yourself. We do not supply this service ourselves and we do not know of any service which currently does (or at least none that we can fully recommend). The problem is the time it takes – it can take many months. If you have the lender’s (or the DCA’s) “Final Response” which shows that they cannot produce the original credit agreement, or what they do produce is nothing like a credit agreement (i.e. it does not contain ALL of the prescribed terms) then that’s the battle mainly over (but see below).

Either they produce a copy of the original credit agreement or they don’t. It’s quite simple, which is why anyone can do it. Advice on how to go through the various stages of this is given on the consumer financial websites; their treatment of it is comprehensive, so there is no need for it to be duplicated here.

A case in the Court of Appeal (Phoenix Recoveries v Kotecha Jan 2010) found that “A creditor had failed to satisfy a debtor’s request under the Consumer Credit Act 1974 s.78(1) for a copy of a credit card agreement as it had not, on the evidence, included the original, actual terms and conditions in respect of interest rates then in force. The creditor was, accordingly, not entitled to proceed to enforce the debt under s.78(6).”

This judgment is of the Court of Appeal Civil Division, it is binding on all lower courts including High Court. That means that it would almost certainly be binding in all cases heard by District Judges who normally preside over cases involving debt in a County Court, for example.

In more recent times there has been case law which shows that what was originally taken to be a valid credit agreement may also be a reconstituted document from a number of sources or different documents, and this has muddied the waters a bit. The cases of judges Carey and Waksman, in particular, have tended to shift the law slightly in favour of the debt purchasing companies. But nevertheless, documentation of some sort is still needed. We recommend that you take legal advice before making any decisions about going down this route. In particular, make sure that the solicitor whom you contact has a current knowledge of the law as it stands at the time you enquire, as the validity of your argument is likely to rest with the most recent precedent.

It should be made clear at this point that establishing that your account is unenforceable will not make the debt disappear. It will probably remain on your credit file for 6 years, unless the debt itself is proven to be in error or a factual mistake. Only then can the debt be eliminated from your credit file more or less immediately.

It should also be made clear that this website does not approve of people taking on debts which they have no intention of paying back! Everyone is responsible for the loans or other credit agreements that they voluntarily make, and should ensure that they have budgeted to meet the repayments according to the terms of such agreements. People should also ensure that they are able to meet the obligations of rent, mortgage, utility bills and council tax in addition to the debts which they have also taken on. The point of this website is not to encourage profligacy, but to curb the excesses of certain debt collectors and debt purchasing companies (and their solicitors, if applicable), and to pursue those who would wish to abuse the provisions of the law to make a quick and easy profit at the expense of the sanity and dignity of ordinary folk.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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