Education required.

doylie1984

I'm kinda new to the whole debt thing and need some advise i seem to remember at school being told there are companies who buy someones debt from you and then then chase them up as i've been looking and cant find any. i had someone stay with me who agreed to pay some of the rent/bils while here but they kept giving me excuses and it was left anyway this person had left while i was away one weekend. and i'm fed up of chasing this person what can i do as i really need the cash.

Dellers

Is there any contract in place with this person that states they will pay you x amount for rent etc ?

doylie1984

no signed contract in place all i have is a copy of a letter i gave and the text messages between us.

Hannah_10

Lesson 1: Debt buying companies...

In short, those buy your debt companies are a scam, this lesson we shall explore why.

• They take a sizable fee from you to apparently buy your debts. If I sell my car, the buyer gives me money, lets say he gives me £500 for the sake of a round number. When these do called debt-buying companies "buy" your debt YOU give THEM money, lets say again it's £500. It's the wrong way round. Instead of being £500 in pocket, you're now £500 out of pocket (for a service you wont get, I'll come to that).
• The sums they alledgedly "buy" your debts for (remember they don't buy them, you have to pay them), are higher than the sums that you could get the original creditors to take the debt off you for. Confused? To achieve this you would use a very common process called reduced settlement offers (or sometimes called Full and Final Settlements, so they tend to be called F&F's here for short). People have often got F&F's for less than 25% and sometimes for less than 12.5% of the value of the debt. It all depends how stale the debt has become, if you've been a bad payer and the company feels like it might never get it's money back then they'll take a lower F&F. I'm guessing you've been a bad payer, so in terms of clearing your debts with lump sums F&F's would be potentially a very good route to persue.
• The debt buying companies at first glance are shady. In fact, to the best of the collected brains of this boards ability we can find none of the usual security safeguards consumers should expect such as membership of key bodies. We can find no way to bring comeback on the management of these companies, as they are not regulated. We can find no evidence that their claims are true. To give you a direct comparrison, one this forum recently looked at claims to have done 1.1 million pounds worth of business in 3 months, but a trace on thier website shows they had been online for 1 month at that time and Google Earth/ Streetview shows they work out of what is effectively a shed in a slum area of a deprived northern city. Contrast this to what one would expect of a regional insurance broker, which will have a similar turnover. The insurance brokers I use for motorcycle cover, happen to turn almost exactly this kind of money. They work from an upstairs office above a regional town high street, with 3 or 4 suited staff. Concrete sheds on industrial estates notable only for thier graffitti issues do not inspire trust really!
• The clincher though, they are not just charging you, charging you way over the odds and visibly shady... They are an actual scam, with criminal action having been taken against the owners of such business's for making claims that simply aren't true. They can't buy your debt. They can not legally remove responsibility for your debt from you. The reason they're working out of the kind of hovels you wouldn't walk past in the dark is because they are not reputable business'. Your money will be gone and your debts will still exist.

Further Reading:

"Trading Standards obtained the Order following an Illegal Money Lending Team investigation which revealed that the company's activities were causing significant detriment to vulnerable consumers."

Next lesson when Ms Hannah has had a tea break...

worried_jim

I am guessing that without anything signed that a debt collector would have nothing to enforce. You could offer to go 50/50 on any collected funds with a big psycho from down the pub or a bouncer.

Hannah_10

Lesson 2: Everything in writing...

In short you haven't got a leg to stand on with your former housemate not paying bills in your name unless you had it signed, in writing and in a reasonably correct format. In this lesson we wil explore that further.

• In writing means a letter, it doesn't mean texts or emails, these have little to no legal standing.
• If you had a signed contract you could take action to recover the debt through the small claims court. This would cost you a small fee (£74 I believe, but not sure) which you could then claim back if you won.
• You still can go through the small claims court without a contract, there is no rule to stop you trying, but to save you the embarrassment it's best not to, you're not likely to win.
• Your only option is to speak to the person in question and hope you can reach an amicable agreement.
• Taking up the services of that bloke called Bruiser from The Dog and Duck is likely to get you a police record for harrassment, if not for malicious wounding or worse. Offences you persuade someone else to commit can still be charged to you, it is in effect as if you had done those things using Bruiser as your weapon rather than a knife or bat.
• That you are owed money makes no difference, even if you could prove that the person owed you, you would still not have a right to do anything upsetting in any way to get it back.
• Even professional debt collection agencies (DCA's) don't have any more rights than the Avon lady and so you can wipe the floor with any threats from them if you're savvy (or you can ask us to help you learn to be savvy).

Further Reading:

The Golden Rule and safe payments.

Hannah_10

Lesson 3: What you CAN do now...

In this lesson, having discussed what you can't do, we will explore what you can do to get out of debt.

There are lots of different ways in which people can come to grips with a debt problem. Here is a quick list, with the forum shorthand in brackets to help you later...

• Snowballing, paying off cards and loans in a certain order so you get them cleared as cheaply as possible.
• Informal agreements with creditors.
• Debt Management Plan, dividing up your spare money between your creditors, no matter how small that is (DMP)
• Debt Reduction Order, legal way to reduce debts undr £15k (DRO).
• Administration Order, legal way to reduce debts under £5k (AO).
• Individual Volontary Agreement, legal way to reduce debts over £15k (IVA)
• Bankruptcy, legal way to clear your slate (BR)
• Settlement offers (F&F)
• Reclaiming part or all of the loan/fees, especially payment protection insurance (PPI) or bank fees.
• Getting a grant or charity payment to reduce the debt, most often used for utitlity debts.
• Unenforcibility, some debts older than 2007 don't have to be repayed (UE).
• Statute Barring, when a debt is too old/stale to enforce, this is 6yrs Eng & Wales, 5yrs Scot (SB)
• Claiming compensation, certain regulatory authorities award compensation for your time where a creditor has been unfair and you have tried to sort it out, which in effect can reduce the debt.

Now having just read the list I expect you are totally confused! You can probably see a few of those that wont work for you, a few you had heard of as well as some that are totally double-Dutch and maybe some that look interesting. That's Ok, I didn't expect you to read it and think "aha, I'll get a DRO", it was just to illustrate to you how broad your range of options can be. Next we will look at how you find out which one, or which ones are right for you...

You need to do a Statement Of Affairs (SOA), this is basically a big sheet listing your income, your essental expenditure (TV licence, food, car insurance etc) along side every debt you owe and the interest on it and your assets. The more accurate your SOA is the better. There is a link at the bottom of the page about this, they are far easier to do than they sound.

Once you have done a SOA then it will start to become clearer to anyone helping you which options are open to you and by talking with you about your SOA and your preferences someone would be able to help you pick the right one for you.

You should do a SOA whether you would like our help or not. This is because only a SOA will show what your true financial situation is. Anything anyone says to you about a solution before they see a SOA is just a guess.

There are lots of companies out there who to promise to solve your debt problems, you have probably seen them on TV and in newspaper and magazine adverts. They are all sharks. They make thier money from you for providing services you can do yourself with only a little education or that a charity can do for you. They are also famous for making a total hash of peoples credit files and for abandoning people if court action is taken. Avoid even the ones that say they "write off part or all of your debt". If it's possible to write one or more of your debts off we will tell how to do so for nothing and probably give you pre-written template letters to do it with. These business' also claim to be free services, which has recently got them in trouble under a crackdown on outright lying, see further reading.

Business' who make money from your misery are out, but don't think that means we're the only place to get help, there are others. They are not business's but charities. They are... National Debtline (ND) the Consumer Credit Counselling Service (CCCS), the Citizens Advice Bureax (CAB) and Christians Against Poverty (CAP). Again see further reading.

Last thing, as complicated as it currently seems, you can get out of debt, no matter how impossible it seems, there is no debt problem that can not be solved. See Martin Lewis' advice under further reading.

Further Reading:

• Martin Lewis' initial advice on what to do and where to get help and where not to. I recommend the video too.
• All about SOA's
• Debt Managment Companies (DMC's) in trouble for lying

And that's the end of todays education... *Wanders off to get own apple*...