PayPal Negative Balance and Debt

Freddo5p

Hello! I made a similar topic on another forum, but I figured out that asking as many people as possible could only help.

Last week I was gambling and lost control. I gambled away all of my savings (I have already spoken with GamCare about that). On top of that, PayPal (via Direct Debit) somehow managed to debit me several thousand pounds more than I had in my bank account. They have made a few attempts to take the money, and my PayPal balance is currently negative. I will call them again in a few days, but from what I have read, I assume that they are going to give me 90 days (which have already begun) before they pass on the 'debt' to a DCA.

1. Is what PayPal did legal? I managed to find other similar cases, such as an article about a man who managed to deposit £150k the same way, which is simply outrageous! 

2. If it is not legal, how could I dispute this? Obviously, I do not to want to pay something I am not legally compelled to.

3. If it is legal, what would the best way to sort it out be? I do not want to deal with any DCAs, but paying back that amount of money in 3 months is impossible. Could I reach an agreement with PayPal themselves? 

On the one hand, from what I have read online, the consensus is that I should simply ignore both PP, which are based in Luxembourg and have no legal authority in the UK, as well as any DCA, given that they are not bailiffs and cannot do anything, unless they send me a letter of claim (i.e. try to take me to court), which—according to what I was told—has never happened (yet?). In addition, I was informed that ignoring the debt collectors would not have any effects on my credit score and that PP/the DCAs would not be able to file a CCJ against me. 

On the other hand, I am slightly uncertain. If I am legally liable for the 'debt', PayPal should somehow be able to find a way to take me to court—perhaps they do not bother because the amount is insignificant to them? Or are they (and the DCAs) truly powerless? In addition, I heard of some recent (post-Brexit) changes, which provide PP with more legal authority, but from what I understood, that does not concern me as I have not taken a 'PayPal Credit'.

Finally, I have contacted Citizens Advice, and I have an appointment with one of their debt advisors in a couple of weeks.

Thank you!

sourcrates

PayPal never take court action in the UK.

Something to do with it being an American company based in Luxembourg, operating in the UK, not entirely sure how that makes any difference, but that is 100% the case with them.

They pass bad debts over to the likes of Moorcroft or similar DCA`s, the DCA does not own the debt, so you may get them ringing you, and writing to you, but that is the full extent of their capability in this matter.

They can`t do anything basically.

On a more serious note, please try and get the gambling under control, its a very slippery slope once you start slipping.

Freddo5p

Thank you for the response.

From my understanding, you are confident that neither PP nor the DCA will send me a letter of claim or file a CCJ against me (even now, after Brexit). Thus, this 'debt' will not appear on my credit report, and my credit score will therefore not go down at all. Is this correct?

Regarding the gambling, I plan to stop completely before it develops into an addiction. 

sourcrates

I believe PayPal credit debts are reported to your credit file, but not normal bank related PayPal activity.

Credit scores move up and down with the tide, ignore the score, its credit history that you are judged on.

Post`s similar to this have cropped up over the years, PayPal have never yet taken court action against anyone for any debt of this nature in this country, I know this with a high degree of certainty from past experience, may they potentially do so in the future ?

Well I'm not clairvoyant, so can`t answer that one for you, all I know is they haven`t done thus far.

Freddo5p

I see. Thank you. 

So am I right in thinking that—as far as the 'debt' is concerned—there is not much to worry about?

MalMonroe

Freddo5p said:

Thank you for the response.

From my understanding, you are confident that neither PP nor the DCA will send me a letter of claim or file a CCJ against me (even now, after Brexit). Thus, this 'debt' will not appear on my credit report, and my credit score will therefore not go down at all. Is this correct?

Regarding the gambling, I plan to stop completely before it develops into an addiction. 

Hi, I'm sorry to hear about this. Did you know that the NHS offers free gambling addiction advice - which is also confidential - you can access it through your GP? Sorry to say it but from what you have posted here, it appears that your gambling has already developed into an addiction. 

There's some info here - https://www.nhs.uk/live-well/healthy-body/gambling-addiction/

I know you say you have an appointment with Citizens Advice but for financial help you can't do better, in my opinion, than StepChange. Their info is here: https://www.stepchange.org/  They are non-judgmental and very helpful. They deal only with financial problems, whereas Citizens Advice have lots of other problems to deal with and may not be quite as precise as StepChange.

PayPal will report it to the credit reference agencies and it will  appear on your credit report and your score will go down. But only you can see that score. The thing to be bothered about is the debt on the credit report. That is why I advise contacting StepChange as soon as you can. Don't feel embarrassed or ashamed, they are used to dealing with all kinds of debt and the sooner you get help with both the debt and the gambling, the sooner you can stop feeling anxious and worried. I have no doubt you could come to some arrangement with PayPal (I'm not sure whether you are disputing the debt or accepting it? Did you use that money or not? If you did then it's not illegal for them to try to recoup) and if you have the backing of StepChange I think that can only help.

It's not a good idea to ignore creditors - I speak from personal experience here - the debts just get larger. Negotiation is better but, as I say, if you can get help and advice from StepChange or similar, so much the better.

Good luck - I know it's a worrying time but there is help out there for you.  

sourcrates

MalMonroe, 

PayPal do not report activity to your credit file, unless its PayPal credit you are using, which this is not.

The OP has stated they have an appointment with CAB in the near future.

Hopefully something can be worked out.

Freddo5p

Thank you for the suggestions.

I contacted StepChange, and they told me that they could not offer me legal advice regarding the 'debt'. I am currently disputing it, but if I do decide do pay it, I might get in touch with them again.

My CA appointment is with a debt advisor, so I think that they will be capable enough to provide assistance.

Are you certain that the PayPal 'debt' will appear on my credit report, given that I have not used 'PayPal Credit'? 

sourcrates

Freddo5p said:

Thank you for the suggestions.

I contacted StepChange, and they told me that they could not offer me legal advice regarding the 'debt'. I am currently disputing it, but if I do decide do pay it, I might get in touch with them again.

My CA appointment is with a debt advisor, so I think that they will be capable enough to provide assistance.

Are you certain that the PayPal 'debt' will appear on my credit report, given that I have not used 'PayPal Credit'? 

^^^^^^^^^^See my post above.^^^^^^^^^^

Salamandrino56

Hi Freddo5p,

Please could you let me know what the outcome of this was? - and your resulting actions

My younger brother is going through a similar situation now with Paypal, and we don't know what to do for the best?

MCG313

Salamandrino56 said:

Hi Freddo5p,

Please could you let me know what the outcome of this was? - and your resulting actions

My younger brother is going through a similar situation now with Paypal, and we don't know what to do for the best?

I’m in the same position, seems like it’s a common issue to be honest. I owe them £8k after they allowed me to deposit money in to a spread betting account (share trading) which I subsequently lost. I also owe £13k to other creditors on credit cards and overdrafts. Basically got no income right now but my parents give me enough to cover minimum payments on my £13k of debt, so it’s the PayPal debt that tips me over the edge in terms of being able to stay solvent.

Where I’m at with it is that I’m eligible for a debt relief order so if push comes to shove I can just do that and get rid of it all. However, this might obviously effect my future career prospects and basically remove any possibility of getting a mortgage within the next 6 years until it drops off my credit report. So therefore I’d rather not go forward with that if at all possible, and it’s not something I would look to do if I just owed the £13k which I’m managing.

With that in mind, I could do with finding out what my position is with regards to the PayPal debt since that is the one which is tipping me over the edge. I can’t get a definitive answer really. I spoke to National Debtline, was on hold for ages, and they were comparing it to a store card but I don’t think that’s correct. All of my other debts are covered by the Consumer Credit Act 1974 where the creditors have supposedly assessed my credit worthiness and ability to repay plus expressly set out what interest and charges are due plus what repayments need to be made. 

PayPal I haven’t signed any sort of credit agreement with, it basically comes down to the terms and conditions of the PayPal user agreement which has implicitly been agreed to in using the service. I’ve read this throughly now and I’m not convinced it would stand up in a U.K. court. There are a few points within it which I believe they haven’t done properly, one of which is the fact that when I set up the direct debit mandate on there, I gave them access to my linked bank account balances for 90 days. At the time the payments were made they could see that I was maxed out on my overdrafts so they shouldn’t have allowed the transactions to be made, they should have been rejected immediately. 

It’s basically no different to owing someone money whereby they haven’t fulfilled the terms of the contract which could make it null and void. I’m not sure a court would find in my favour or theirs to be honest, but I believe there are points of contention.

The payments were made at start of November so 3 months since. After a week PayPal started chasing me for the money, which I ignored. After 2 months they passed my details on to Moorcroft the debt collection agency, who have then subsequently given me a month to sort myself out before speaking again. That ends this week so they will be contacting me again about it but nothing has changed from my end.

Basically, what I’ve decided to do is this. Pay my other creditors minimum payments as I have been doing. Put PayPal to one side for now and focus on making some money and improving my financial position. I’m then saying to Moorcroft that I can’t afford to pay any of this right now, and that I’m not convinced that I owe PayPal this money so they need to prove my liability as I believe they’ve breached the T&Cs of their user agreement by allowing the payments to be made in the first place. 

Therefore, balls in their court. They can either escalate this and take me to court for a CCJ and see if it gets found in their favour. I’d imagine this will take them some months to do during which my financial position might have improved and I might be in a better position to settle it. Or if this happens and I haven’t improved my position and I’m found to owe them the money then I will file for a DRO and they’ll get none of the money back anyway in that case. Alternatively they might not escalate it or it could be found in my favour in which case I wouldn’t look to pay it at all.

Its down to them to prove I owe the money now, so I’m putting it back on them.

Its not ideal as no closure but not much else I can do as I can’t afford to make any sort of payment towards it right now nor can I guarantee when I would be able to.