Trouble with Meritforce

Vagabond_UK

Hi,

I hope you can advise me with a problem I'm having with a DCA called Meritforce. Here's the story...

Back in 1998 I had a loan with the Co-operative bank which I defaulted on soon after the break-up of my marriage. After being bandied about several DCAs subsequently, it ended up in the hands of Meritforce around 2003.

I admitted the debt at the time, thus resetting the 6-yr rule and began small payments which Meritforce were happy to accept. While the repayments would cause me to almost take the debt to my grave, it was no problem and both the DCA and myself were happy with the arrangement.

Apart from a small period last year when Meritforce stopped taking money from me (sorted) I've paid my small sum every month. Then 3 or 4 months ago, I got a letter from a company called NewSec who said they were now the owner of the debt and I was to make payments to them, not Meritforce. They wanted £75/month which I couldn't afford so wrote to them telling them I would stick to my original payment, and not having heard back from them subsequently made payments to Newsec of the amount I had always paid previously, but they returned each payment to my bank account a few days after my making payment.

Then last week I got a letter from Meritforce stating that I had broken my agreement and that legal proceedings blah blah blah... the letter cites the client's name as NewSec.

Now, I'm not disputing the debt - i do owe it, and i've been paying off a little every month but now I don't know who is the owner of the debt, or who to pay.

I've half a mind to ask for proof of debt now, but I'm worried it would blow up in my face and I'm not sure who to address anyway! So, who actually owns the debt? NewSec return my money, but according to the letter i have i'm to pay them - not Meritforce, but it's Meritforce who claim i haven't paid despite instructions to the contrary and they are collecting on behalf of NewSec?

I'm utterly confused!

malestrom07

Debt puchase is raising quite a few issues at the moment over the respective rights and obligations of the original creditor and the assignee.

The current view is that under s.136 of the Law of Property Act 1925 until notice of the assigment has been given to the debtor, the assignee cannot 'give a good discharge' for the debt (ie, a valid receipt) or take proceedings in its own name and so any assignment has no effect upon the debtor who should continue to deal with the original creditor.

So, if you are considering doing a s.77/78 request, it should be addressed to the original creditor and the assignee to be on the safe side.

At the moment, the client's defence to any court action to recover the debt is that the assignee has no right to seek payment of the debt in its own name as no notice of the assignment of the debt has been given to the client. However, the assignee can cure this by serving a notice and starting again.

If you get to a situation where s.77/78 requests have gone to both original creditor and assignee and have not been complied with, then the agreement would be unenforceable by either of them unless and until one of them complied. In your situation, the assignee has said that it has only bought part of the rights ? If the original creditor said similar then this would be a case for a formal complaint using the Financial Ombudsman Service.

There was a court case ongoing which would have resolved this issue once and for all but a settlement was reached rather than set a precedent or become case law. I would suggest that the client write back to the creditor objecting to the way they have 'split' the rights from their responsibilities and refer to the ombudsman in the normal way if you get no satisfactory response.

Vagabond_UK

malestrom07 wrote: »

Debt puchase is raising quite a few issues at the moment over the respective rights and obligations of the original creditor and the assignee.

The current view is that under s.136 of the Law of Property Act 1925 until notice of the assigment has been given to the debtor, the assignee cannot 'give a good discharge' for the debt (ie, a valid receipt) or take proceedings in its own name and so any assignment has no effect upon the debtor who should continue to deal with the original creditor.

So, if you are considering doing a s.77/78 request, it should be addressed to the original creditor and the assignee to be on the safe side.

At the moment, the client's defence to any court action to recover the debt is that the assignee has no right to seek payment of the debt in its own name as no notice of the assignment of the debt has been given to the client. However, the assignee can cure this by serving a notice and starting again.

If you get to a situation where s.77/78 requests have gone to both original creditor and assignee and have not been complied with, then the agreement would be unenforceable by either of them unless and until one of them complied. In your situation, the assignee has said that it has only bought part of the rights ? If the original creditor said similar then this would be a case for a formal complaint using the Financial Ombudsman Service.

There was a court case ongoing which would have resolved this issue once and for all but a settlement was reached rather than set a precedent or become case law. I would suggest that the client write back to the creditor objecting to the way they have 'split' the rights from their responsibilities and refer to the ombudsman in the normal way if you get no satisfactory response.

So, if I ask for a CCA I should do so to both NewSec (who claim to own the debt) and Meritforce (who administer on behalf of NewSec)?

Gale_10

I think thats what he means!

It makes sense to request both organisations.

Gale

Vagabond_UK

Ok, follow up to this...

A third company, called Merit Finance have now written to me regarding this account.

I have since CCA'd both Meritforce and Merit Finance, with today being day 12. As of today i've yet to hear back from Meritforce but I received a letter from Merit Finance today. It states:

I refer to your letter dated 22nd October 2007 regarding above account, the contents of which I have noted. Please find below the information requested.

Your outstanding balance relates to a Co-operative Bank Account Sort code xx-xx-xx Account Number xxxx xxxx which subsequently defaulted and was passed to Meritforce on 27th January 2003. As this account relates to a Co-operative bank account there is no credit agreement.

Your balance at the time of default was £xxxx

In December 2004 the Co-operative Bank sold your account to Newsec Limited who continued to use Meritforce to collect the outstanding balance.

You were making payments to Meritforce, including a payment received by Standing Order on 06/04/07. The last payment made to Meritforce was in May 2007 and Newsec stopped using their services in Jone 2007. Newsec wrote to you in June 2007 advising you not to pay Meritforce Ltd.

Your current balance is £xxxx

If you require further confirmation regarding the assignment of your account yo Newsec you can contact AN Other at Co-operative Debt Management suite on XXXXXXXX quoting your old Co-op Bank Reference number xxxxxx

Also it is important that you contact us within the next 7 days on the above phone number to discuss how you plan to settle your remaining balance.

While I had an account with the Co-op, which went into authorised overdraft and was subsequently defaulted on, the vast majority of the outstanding balance claimed is for a loan that I had through the Co-op bank - probably as much as 90%! The only reason I had the account was to get the loan in the first place and the defaulted account balance is pretty much bank charges.

Now, i'm not sure where I stand with this. Can Merit Finance/Newsec claim the balance relates solely to a bank account, even though the majority balance is a defaulted loan?

Vagabond_UK

Anyone help..?

GeorgeUK

What letter did you send - was it one of the templates from here?

If you have requested a copy of the CCA (did you send it recorded delivery?) along with the £1 cheque or postal order (cheque so you can see if it gets cashed ) They have approx 14 days to produce the CCA before the agreement can no longer be enforced without a court order - and after a further 30 days, if still pursuing will have committed a criminal offense.

You may even be able to reclaim any payments made to them.

Have a read through http://forums.moneysavingexpert.com/showthread.html?t=578486
The 2nd link is hopefully the one you originally sent asking for the CCA (with the part in bold so that they are aware the debt is in dispute)
Followed up by weller's letter - the 1st link
{I think that's the way i had it}

Let us know if this is what's happened so far.

EDIT: Just noticed that it's an overdraft they are saying this is for. According to the DTI, overdrafts are partially regulated by CCA but i can't find what these parts are
http://forums.moneysavingexpert.com/showthread.html?p=6705392

Vagabond_UK

I never had an overdraft on the account, what they're chasing is charges and fees for unauthorised overdraft plus a defaulted loan. The defaulted loan makes up the vast majority of the balance outstanding.

The letter I sent was similar to the one given in the 2nd link.

GeorgeUK

We need others to throw some ideas into the pot here.

The only thing i can think of is that as this DCA now owns the debt, that they will probably be liable for refunding the bank charges if the etst case goes in the consumers favour. Not sure if you can use this as leverage to get a final settlement figure.

I suggest writing to them again asking for a "subject access request". I'll try to see if there is a template about. It may be the case that you need to write another CCA letter specifically for the loan and possibly pay the account/overdraft, but i would also start the reclaiming process for the overdraft charges so that they have on record the date from which you intend to recoup your money from. (Possibly limited to 6 years) I would do this as the test case could take some time.

This way you should at least be able to see how much is owed on the loan and get that written off if they cannot provide a CCA for it.

Straw grasping i know, but thats all i've got.
Might be worthwhile asking some of the specifics in their own thread as to what is or isn't possible to do with the above.

Vagabond_UK

Thanks,

In the absence of other advice, i'll look into issuing the Co-op Bank with a S.A.R request.

Vagabond_UK

Ok, I have issued a SAR request to the Co-op.

Meantime, Merit Finance have written to me again, simply asking me to contact them as they have received no response from me.

Any advice on how I should respond? By letter only, obviously - I never deal with these people on the telephone.

Cheers!