Debt sold on

milly6

My friend has received a letter regarding a credit card debt from a debt recovery agency. When he moved address he tried to contact the credit card company to change his address but they wouldn't let him because he didn't know the limit on his credit card! So he paid a lump sum direct from his bank and assumed that covered the outstanding amount. Unfortunately, he has now received this letter. Can he refer back to the credit card to obtain statements and repay the outstanding amount, or does he have to deal with this debt recovery agency?
Your help would be much appreciated.
Thanks

Tixy

Hi milly

If the debt has been sold on to the debt collection agency then he will need to deal with them direct.

When did he receive the letter? have they provided a breakdown of how the balance is made up?

I would start by sending the prove it letter and wait to see what they come back with - http://forums.moneysavingexpert.com/showpost.php?p=11570893&postcount=2

milly6

He received the letter 2 days ago. They state that a previous agency has failed to get hold of him - but this is the first he's heard of it. It really doesn't make sense because his credit card limit was very low and he hadn't reached that limit by half when he tried to change his address (twice - but failed). So, in order not to be in debt with them he's paid, in total, over and above his credit card limit since moving address (he's printed off his bank statements to prove it) - and hasn't used the card since (because he couldn't get through to them). He was under the impression that they probably owed him - not the other way round. He's not disputing he might owe them some money, if that is the case, as it could be the interest that's accrued, but it would only be a small amount and certainly nowhere near what this agency are asking for. I guess the only way to see how this has accrued is with a copy of his statements. If we can find an address, can he apply direct to the credit card for a copy of the statements? Surely, his debt is with them, not the agency. If not, is he liable for ALL the money they ask? I assume a vast amount of it is their fee. Whats the legal stand on this? What is he legally obliged to pay? Any info would be appreciated.

Tixy

His debt might still be owned by the credit card company but they have instructed the debt collection agency to pursue it. Or it could have been sold on to the debt collector and now be owed just to them (they can legally do this and both options are equally common).

First send the prove it letter to get them to prove that its his debt and that they have a right to collect it (could be that the debt isn't his at all and is a debt belonging to someone with the same name who also had a credit card - this happens a lot as well).

If they send proof that the debt exists then he would need to request a full statement of the account so he can see what balance was due, how much he paid, what charges & interest etc have been added on since. Until you know what has been added on then you can't decide whether its the correct balance or whether he may be able to challenge any part of it.

So get him to send the prove it letter and then come back and tell us what they send in reply (if anything).

milly6

Ok, thanks. Will do.

milly6

Update: He sent the 'prove it' letter as advised and last week, whilst on holiday, he received a further letter from them. It states the following...

Credit card name
Credit card number
Date Account Opened: May 2006
Last Contact Date: Nov 2009
Last Payment Date: May 2010
Last Payment Amount: £###
Default Date: January 2009

As you can see, the default date was 2009, his last payment date was 2010. He was paying money to them without actually knowing what he owed because in 2009 they refused to change his address and thus, he received no statements. So, he just payed lump sums in the hope that it cleared the debt.
They are still insisting that he pays the full amount that they state he owes (which is WAY more than his credit card limit!), yet they haven't 'proven' he owes this amount.
Any ideas what to do next?
Many thanks
Milly

Tixy

Probably another letter, similar to the prove it one.

Please provide a full statement of account to substantiate the balance of X which you allege is owed on this account.

Or you might want to try writing asking for a copy of the consumer credit agreement and also a statement of account -
national debtline template

1 High Street,
Newtown,
Kent
R21 4RH
September 7, 2011

The Loan Company
Company House,
Church Street,
Newtown,
Kent,
R1 7HG

Account No: 4563210025897412

Dear Sir/Madam

With reference to the above agreement, we would be grateful if you would send us a copy of this credit agreement and a full breakdown of the account including any interest or charges applied. We understand that under the Consumer Credit Act 1974 [sections 77-79], we are entitled to receive a copy of any credit agreement and a statement of account on request. We enclose a payment of £1 which represents the fee payable under the Consumer Credit Act 1974.

We understand a copy of any credit agreement along with a statement of account should be supplied within 12
working days.

We understand that under the Consumer Credit Act 1974 creditors are unable to enforce an agreement if they fail to comply with the request for a copy of the agreement and statement of account under these sections of the Act.

We look forward to hearing from you.

Yours faithfully

Mr A

milly6

Thanks - that's great. Are the collection agency legally allowed to add on their own charges?... I'm guessing this could be the reason why the figure is so high.

milly6

Hi, I'm back. Four months later and they've just sent through the paperwork! It looks like he has been paying into the account up until 2010, though he will need to check his bank account to see if he has made any further payments since 2010. However, the balance (which includes interest) is very small, but the credit agency want 4 times that amount. Has anyone had similar dealings with an credit agency who wanted 4 times more than the debt. How did you deal with it? Is he legally obliged to pay the full amount? Any advice would be much appreciated. Thanks