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Debt Collectors

Hi all

Newbie here.

I have a question that has been puzzling me for some time.

If a debt collection company buys a £500 debt for (say)40p/£ then the cost of the debt is £200 so how can they claim they are 'owed' the original amount of £500?
This question does not relate to my personal circumstances,I'm just curious.
TIA

Regards.

Freeman01
«1

Comments

  • KingElvis
    KingElvis Posts: 4,100 Forumite
    Maybe because, in this crazy old world, they intend to make a profit?
    "We want the finest wines available to humanity, we want them here, and we want them now!"
  • Peelerfart
    Peelerfart Posts: 2,177 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    The debt is still £500 but the orginal holder doesn't think it's going to get all the money and so will settle for less just to get something back.

    The purchaser of the debt will then pursue the debtor for all of the money thus making a wedge.

    It's a tough old world innit!
    Space available for rent
  • And they'll collect diddley squat from a lot of the debts (all the ones who plan to duck and dive for 6 years), so they need to make a profit from those they can collect on.
  • Thanks for the replies so far.
    I am aware of the profit motive but..................
    I would like a Legal Eagle to define the legality of debt collectors pursuing someone for more money than the cost of the debt.

    Is this scenario not covered by the CPUTR or CCA?

    Regards.

    Freeman01
  • It's covered by the CCA. There is a clause in all I;ve seen that allow the lender to transfer the terms of the debt to a third party.
  • chanz4
    chanz4 Posts: 11,032 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Xmas Saver!
    turn the question another way, what gives someone the right to take something and not pay for it?
    Don't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.
  • chanz4 wrote: »
    turn the question another way, what gives someone the right to take something and not pay for it?

    If that is the case I support the collection of the debt,however;
    What if you're made redundant and or in a lot of debt? AIUI you are encouraged to 'prioritise' your debts but some companies are not prepared to work with you and send in the hounds.

    I'm making a general enquiry,my question does not relate to my personal circumstances.

    Regards.

    Freeman01
  • geoffky
    geoffky Posts: 6,835 Forumite
    They pay pennies for the debt...ie 8p in the £ is high.
    It is nice to see the value of your house going up'' Why ?
    Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
    If you are planning to upsize the new house will cost more.
    If you are planning to downsize your new house will cost more than it should
    If you are trying to buy your first house its almost impossible.
  • geoffky wrote: »
    They pay pennies for the debt...ie 8p in the £ is high.

    Yes,thanks.

    Can anyone on this forum answer my question?
    Don't be afraid to say no,I will not be offended.

    Regards.

    Freeman01
  • geoffky
    geoffky Posts: 6,835 Forumite
    Freeman01 wrote: »
    Yes,thanks.

    Can anyone on this forum answer my question?
    Don't be afraid to say no,I will not be offended.

    Regards.

    Freeman01

    Because that is what the person who took out the loans signed for or owed when the payments stop.
    It is nice to see the value of your house going up'' Why ?
    Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
    If you are planning to upsize the new house will cost more.
    If you are planning to downsize your new house will cost more than it should
    If you are trying to buy your first house its almost impossible.
This discussion has been closed.
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