When Should I Start Paying?

MattyW1121

I've been reading this forum for months as I start my own self managed DMPs to handle my credit card and loan debts. The key seems to be to wait until a debt defaults and then set up a payment plan asap to avoid any chance of CCJs.

Vanquis defaulted on my credit file last month and I received a letter from Lowels saying they'd bought the debt, so I logged into their website and set up a payment plan. All very simple.

HSBC credit card is now showing on my experian credit file as having defaulted last month, but I haven't received a letter from them saying they've defaulted me. The only letters I've received is one from HSBC saying that Moorcroft are going to be handline it from now on, and a letter from Moorcroft saying they are now acting as collection agent. So, I'm a bit confused as to when to make an arrangement to start paying.

According to experian the HSBC debt has defaulted, but HSBC haven't written to say it's defaulted, and they haven't sold the debt on.

From reading several threads my understanding is it's unlikely HSBC would start any legal action themselves, but would Moorcroft potentially start legal action on their behalf? Or does legal action only really become a possibility once the debt is actually sold on?

I'd be really appreciative of some advice here. I was expecting it to go:

1) Default shows on credit file
2) Bank sends letter confirming default
3) Debt is sold to someone else
4) I then agree to start making payments

Is that the normal run of things?

I'm just a bit confused here as apparently the debt has defaulted (last month), but neither HSBC or Moorcroft have written to tell me it's actually defaulted - the most recent letter from Moorcroft today simply says they are now administering the account.

sourcrates

Although a lender should send you a default notice in the post, that doesn`t always happen, are you certain it wasn`t in the letter advising of Moorcroft`s involvement, that`s what usually happens.

Moorcroft manage debts on behalf of the big banks, they don`t own the debt, so cannot start legal action, but as its defaulted, and they are now managing it, then you are good to go.

MattyW1121

Thanks that's very helpful. If Moorcroft are only managing the debt and can't start legal action themselves, then is it best to wait for the lender to sell the debt on to someone else before I start making payments? My understanding is, that way I'd be more likely to get a good settlement offer?

sourcrates

You can do that yes, if you have a plan then go with it.

booandboo

How do we know the difference between Moorcroft and those companies slick them just managing the debt and who the companies are who are actually sold the debt?

ManyWays

The wording on the letters and emails is usually clear if you know what you are looking for.

If it says they are collecting of behalf of the lender, or the lender is their client, then, like Moorcroft, this is usually from a debt collector who is "helping" the lender, not one who has bought the debt. 

If it refers to the debt being purchased, or assigned, then the debt collector has now taken the place of the lender as the creditor for the debt.

You can also look at your credit record, if the debt now shows under the debt collectors name, then they have bought the debt and are now the creditor. The likes of Moorcroft never show on your credit report as they are the agent of the lender, not the creditor themselves. But in the early days, this often isnt clear as the credit record may not have been updated.

If you arent sure, ask here!

booandboo

Thankyou thats really helpful 

RAS

If a debt is sold, it's not uncommon for it to disappear from your credit record for a month or two or be set to £0 before reappearing in the name of the new creditor.

Primary creditor sell batches of 1000s of debts and debt collectors buy 1000s. If one processes the transaction faster than the other, your credit record can look odd in the short-term. And it can take a couple of months for the new creditor to tell you how to pay.

Creditors are supposed to write and tell you the debt is assigned or sold, so do keep an eye open if the debt is listed as defaulted. Once a week or so, open the letters and file by creditor. 

Once debts default, you need to be rigorous about this, as there are some that need acknowledgement within 14 days. 

sourcrates

Just to set out the legal basis for this, there are two types of assignment for debts.

A Legal assignment: transfers (sells) the entire debt, and the right to enforce it, and requires written notice to be sent to the debtor.

Equitable assignment: transfers only the benefit of the debt, without the right to enforce it, does not require notice from the creditor, the collection company can operate within certain boundaries, but can require cooperation from the original creditor.

RhiBi

ManyWays said:

The wording on the letters and emails is usually clear if you know what you are looking for.

If it says they are collecting of behalf of the lender, or the lender is their client, then, like Moorcroft, this is usually from a debt collector who is "helping" the lender, not one who has bought the debt. 

If it refers to the debt being purchased, or assigned, then the debt collector has now taken the place of the lender as the creditor for the debt.

You can also look at your credit record, if the debt now shows under the debt collectors name, then they have bought the debt and are now the creditor. The likes of Moorcroft never show on your credit report as they are the agent of the lender, not the creditor themselves. But in the early days, this often isnt clear as the credit record may not have been updated.

If you arent sure, ask here!

Thanks for that explanation as I too was confused about this.  I presume that for the debtor, it is more beneficial for a debt to be sold on as that makes it more likely to request a CCA or make a F&F offer further down the line.  Is that correct?

Rob5342

RhiBi said:

ManyWays said:

The wording on the letters and emails is usually clear if you know what you are looking for.

If it says they are collecting of behalf of the lender, or the lender is their client, then, like Moorcroft, this is usually from a debt collector who is "helping" the lender, not one who has bought the debt. 

If it refers to the debt being purchased, or assigned, then the debt collector has now taken the place of the lender as the creditor for the debt.

You can also look at your credit record, if the debt now shows under the debt collectors name, then they have bought the debt and are now the creditor. The likes of Moorcroft never show on your credit report as they are the agent of the lender, not the creditor themselves. But in the early days, this often isnt clear as the credit record may not have been updated.

If you arent sure, ask here!

Thanks for that explanation as I too was confused about this.  I presume that for the debtor, it is more beneficial for a debt to be sold on as that makes it more likely to request a CCA or make a F&F offer further down the line.  Is that correct?

Yes it is. Creditors normally have to go back to whoever they bought the debt from to obtain the cca, so its less likely to be found once it has been sold on. Purchasers buy debts for 10 or 15% of their value as an investment so even a settlement of 20% would net them a nice profit. They'd normally want to squeeze more out of you then that but you can normally get a significant discount if you play your cards right.

That's one of the reasons that we advise defaulting before staying a dmp, as it makes it more likely the debt will be sold on.