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Credit Card Debt + Loan Debt

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BillHoney | 17:27 Thu 09th Apr 2009 | Law
8 Answers
My son had a credit card and a personal loan with a well known bank, he was made unemplyed for the first time in his working life, he notified the bank concerned of his unemploymet. Unfortunately he got behind on some of his payments, but did manage to work out a payment plan albeit reduced whilst he is unemployed. As his father I did offer to pay his debt to the bank to ease the pressure and the stress he was receiving, he contacted the bank and asked for a settlement figure to pay it all up. The bank advised that they could not offer a discount for settlement in full due to the amount that was owed. But some three weeks later my son received a letter from a credit management company saying they had purchased the debt from the bank and all payments were to be made to them in future. By mistake they did disclose that they had purchased the debt for a lot less than its true value but are requesting the full value. What I need to know is if this legal, how come they could sell to them at a lower price but not to my son if I was prepared to cover the payment. e.g debt 6000 owed, sold for 3000, request 6000, 3000 profit for credit agency. my other concern is the credit agreement was between my son and the bank not the credit agency and the bank.


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This situation is not uncommon and is likely to be legal.
It is very common for banks and other financial institutions to sell debts. This company would not have bought just your son's debt, but hundreds of thousands of pounds worth.
The will get their profit from your son.
It is entirely legal and the new company can enforce the debt in the usual manner.
Afraid it's right. These companies work for a profit.
I would be most surprised if they paid as much as half the face value of the debt. It may well be that the sale was already going through when you approached the bank.

It may well be possible to do a "full and final" settlement with the new owners for a part of the face value. I've known settlements of this kind for 40 - 50% of the value, but it depends on the circumstances & it is difficult to generalise. This has to be done carefully by you & not by the debtor (your son). You need advice on it - see your local CAB or contact CCCS.
Our story is a bit different to your son's but it highlights how ruthless these so called "debt collection" companies are.

If you read my posting under Law, dated 13/02/09, entitled "We Won", it will give you some idea of the tactics these companies take and how the legal profession, (in our case, the Judge), feels about them.

What they are doing is perfectly legal. However a month after our case was thrown out of court, they had the gall to demand that we send them our bank statements to them "by return"!!! You can guess what thoughts went winging their way when I opened that letter and to date, we've heard nothing from them. I did not send them.

My best advice would be to try to continue the payment plan with them and if you can help him out to reduce the balance upon which they charge interest that can only help.

Good Luck
This highlights the importance of seeking debt help quickly as the situation above is perfectly legal.

Unfortunately the increase in debt problems means many people are either trying to sort things themselves or wait many weeks for CAB or CCCS to pull their finger out, however it's often too late and once a debt collection or management agency has bought the debt then options are reduced.

Bear in mind that the collection agency have bought this debt have to make a profit on it - it is unlikely you will negotiate anything much lower than the initial value unless they believe you will go bankrupt and have no assets.

It may be that bankruptcy is the only and best option if you cannot repay the debt in full.

Again - for others in a similar position you must get help with your debts quickly. We are an independent debt solutions company who work on situations like this each day. We believe we are better placed to solve peoples debt problems because we start with a blank sheet of paper and work from there. Yes we charge a fee but it's not upfront and personally I think we work very hard for it because quite often peoples debt situations are very severe.

Our website has a lot of useful debt help and advice on a range of subjects.
DCM's post is advertising - you should ignore it, and all fee charging debt management companies. If you need advice go to CAB or CCCS - they are free & can do anything the fee chargers can do -and often much better. (This is a general statement - I do not have any knowledge of DCM's firm.)

DCM is wrong to say it is unlikely you can settle for anything much less than face value. It is quite often the case that full & final settlements are accepted for a lot less than face value, but it does depend on circumstances. In any case, normally firms that buy up debts in this way pay a small % of face value to do so, & can make a reasonable profit even if they accept a settlement of less than 50% of face value.
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