Does a guarantor transfer when a debt is sold?

misterbarlow

My daughter recently completed her first year at Uni where she stayed at a halls, and I had to co sign her contract as guarantor.
She met her boyfriend who lives and works locally soon into the course and when she finished year1 they decided to flat share together in year 2, and they went staright ahead and rented from June, and she is staying there for the summer.

Unknown to myself she used everything she had to sort out this flat and left halls owing a few weeks rent to the halls of residence company.
They have made no effort to contact me about this as her guarantor.

The first I knew of it was a few days ago when I had a email from a DCA saying they now have this debt and have wacked on £300 in charges, and demanding full payment from myself within 7 days as I am liable as guarantor.

I spoke to my daughter, she says she spent up securing the flat and told the housing she could make small token payments over the summer and would then settle the balance in Sept when she had her next student loan payment, but they did not respond and have obv declined this and without contacting me as guarantor, have just gone straight to DCA.

She has also had the DCA email and again just told me she intends to pay it in full in a few weeks when she gets her student loan through mid Sept, we advised them of this but they are refusing to accept this and continue moaning about full payment asap from myself or me agreeing to pay £200pm, or they will start procedings against me which could affect my credit etc.

I contacted the housing company, but they said they cannot help me now as the debt is with them, and I must only deal with the DCA, so i'm assuming they have sold this debt on, but my assumption is I co signed the contract with the housing company for the rent not the DCA, if the housing wanted the chase me and make me liable that would be fair enough, but they have removed themselves from the equation and passed the debt on, and I have signed nothing to say I will pay this DCA, so surely only my daughter is liable if they have sold on the debt?? 

Does guarantor liabilty transfer if a debt is sold on??

GrumpyDil

They won't have sold the debt on but have outsourced collection to the DCA.

One option to consider is whether the guarantee agreement was legally valid.

In order to be valid a guarantee agreement has to be executed as a deed and witnessed plus a few other things.  My daughter went through uni during COVID and the guarantee agreement was signed remotely and not executed as a deed, so would, in my view, be unenforceable.

That said, if you are so sure your daughter will clear the debt when her next loan comes in why don't you make a payment to control the situation and then she can pay you back when she has her loan payment?

Oh and tell her not to decide to fail to meet her rent obligations without talking to you first as if my daughter had done that to me, I would be refusing to act as her guarantor in future.

 

sourcrates

If the debtor, in this case your Daughter, doesn`t pay what they owe, then the creditor will come after the guarantor, you, which is why they have engaged this DCA to contact you.

The DCA have added the £300 as that is their fee for collection of the debt, and they want you to pay it.

It won`t have been sold, do they refer to "their client" in the letters? sometimes debts are assigned on a collection only basis, sometimes the creditor pays the fee to the DCA out of what you pay them, on other occasions the DCA charges the debtor.

Now these fee`s are 100% unenforceable in court, fee`s cannot be added to debts unless the original agreement allows them to do so, most do not, and £300 would be deemed excessive anyway.

How much does it cost to send a letter? not £300 quid.

What they have essentially sent you is an invoice, which you can choose to pay in full if you wish, or you can just pay the original debt, or, you can ignore them completely, as the DCA do not own the debt, so they have no remedy against you if you don`t pay it.

If the original creditor takes you to court you can argue the case there, its up to you how to deal with it, there silly timescales are pure fantasy, the DCA will run through their standard letters with you, that can take 3/6 months.
If you don`t engage with them, they simply return the debt to the creditor.

Then, under civil procedure rules, the creditor has 6 years in which to take legal action, a letter before action is a prelude to this, its a statutory form that allows an agreement to be made without the need to resort to a claim, it has a 30 day return window.

So you see, there timescales are meaningless, nothing will happen with this till at least October/November if at all.

saajan_12

misterbarlow said:

My daughter recently completed her first year at Uni where she stayed at a halls, and I had to co sign her contract as guarantor.
She met her boyfriend who lives and works locally soon into the course and when she finished year1 they decided to flat share together in year 2, and they went staright ahead and rented from June, and she is staying there for the summer.

Unknown to myself she used everything she had to sort out this flat and left halls owing a few weeks rent to the halls of residence company.
They have made no effort to contact me about this as her guarantor.

...

I spoke to my daughter, she says she spent up securing the flat and told the housing she could make small token payments over the summer and would then settle the balance in Sept when she had her next student loan payment, but they did not respond and have obv declined this and without contacting me as guarantor, have just gone straight to DCA.

SHE made no effort to contact you about this as her guarantor. The underlying fault here is on the daughter who failed to make her contractual rent payments AND didn't tell you, the person who would end up being liable. With the LL its just a contractual relationship and if they contractually didn't have to notify you then you can't really blame them (for the notification part at least) whereas you were doing a favour for the daughter who's actions could harm you. 

misterbarlow said:

The first I knew of it was a few days ago when I had a email from a DCA saying they now have this debt and have wacked on £300 in charges, and demanding full payment from myself within 7 days as I am liable as guarantor.

..
She has also had the DCA email and again just told me she intends to pay it in full in a few weeks when she gets her student loan through mid Sept, we advised them of this but they are refusing to accept this and continue moaning about full payment asap from myself or me agreeing to pay £200pm, or they will start procedings against me which could affect my credit etc.

I contacted the housing company, but they said they cannot help me now as the debt is with them, and I must only deal with the DCA, so i'm assuming they have sold this debt on, but my assumption is I co signed the contract with the housing company for the rent not the DCA, if the housing wanted the chase me and make me liable that would be fair enough, but they have removed themselves from the equation and passed the debt on, and I have signed nothing to say I will pay this DCA, so surely only my daughter is liable if they have sold on the debt?? 

Does guarantor liabilty transfer if a debt is sold on??

Yes - they step into the original creditor's shoes. Daughter didn't sign anythign with the DCA either, but there's nothing special about a guarantor or debtor, one of you still has to pay and what difference does it make who receives it (as long as the amount is the same)> 

Regardless, who owns the debt doesn't affect the fees they can charge, which is actual interest / costs of recovery, not random fees (unless the fee was in the original contract and it wasn't an AST which bans such fees). There will be some fees that jump up once it gets to court, so worth keeping an eye. I would 
a) contact them to say you will pay the full amount of the rent immediately if they agree to cancel any fees. Could be a good way to negotiate getting rid of the fees without the hassle of court. 
b) If they refuse, then send the amount anyway, with a letter saying you believe the debt is repaid in full, and if they insist on pursuing they would unncessarily incur court costs. 
In either case, agree with daughter that she'll repay you when the student loan money comes in. 

c) If you can't / don't want to do that then ignore and wait for her to pay off in Sept. However keep an eye and if you get any "letter before action" or court claim then act immediately. 

Your credit doesn't get affected until there's a court claim in their favour and you fail to pay the resulting CCJ within 30 days. So as long as you keep an eye on mail (keep them appraised of address changes) and act immediately if those processes start, then theres no negaitve impact. 

misterbarlow

I contacted the landlord company and offered to pay them myself direct to avoid these fees but they refused and said I can only deal with the DCA now and would not take it from me. 
It was always going to get paid in Sept. My daughter told the LL this, but seems they would not wait.
I have told the DCA that wether they say they cant wait a few weeks or not I dont care, they will have to wait until next month and like it, as she doesnt have it until next month.
I would have paid the LL myself now to avoid the fees but as they refuse and they are going on anyway then my daughter can sort it next month and learn a lesson from it.
They are yet to reply..

Thanks all..