Company selling accounts to Debt collector--although not in debt!

Hi...

Can anyone give any answer to the following?.

My neighbour has an account with a company called STUDIO..... she owes £600 BUT she is nt in debt with them and pays according to the contract.

Yesterday, she had a call from them and the woman told her that although she is not in debt etc etc, the company (STUDIO) have decided to sell many of their accounts to LOWELLS debt collecting agency, so that from now, her "debt" will be with them!

Now, my neighbour had no prior warning, did not have any letters saying she was in debt etc ( because she isn't).

My neighbour politely told her to fuck off and that she has no contract with Lowells and is not in breach of contract and is not in debt with STUDIO.

She is asking me to do the three letter process to Lowell----if and when Lowell's send her a letter.

Has anyone ever heard of this happening before?.... Surely it is illegal for a company to sell an account (which is not in debt) to a debt collecting company?.

Hi epsom

Well if it's not, then it should be. If your friend is up to date then surely they have to ASK permission rather than TELL? Unless there's a proviso in her original contract that says they can sell it on regardless i would say it constitutes a change in the contract that wsn't and isn't agreed to.

i'm sure someone will offer better advice, but it strikes me that if they want to change the terms then you are also in a position to re-negotiate the terms.
Tell them you will agree to the change in exchange for a payment of, say, £600?

That's just my opinion, i don't know enough to offer concrete advice and i have no experience in this.

Good luck

Cheers!

Hi iamani,

Thanks for advice.
It's a really strange one......I haven't heard of anything like that before.... but I like the idea of agreeing new terms in exchange for a payment!

Just had a look in law dictionaries & if i am correct They can use a deed of assignment to change creditors ,But they need a deed of novation = all parties must agree.
Maybe do a bit of research along those lines.
Or alternatively just make the same payments to Lowells .

If she is not bothered by a possible ccj ,tell them to go forth and multiply .

sorry can't be more help.

Hi Lopsum
Was your neighbour paying STUDIO by direct debit? if so she will need to keep an eye on her bank account as Lowells may take what is "owed" directly from her account.

In 2012 I had a small loan from a company based in my local area. I was making regular payments and was not in arrears. In Sept 2012 they called me to say that Money Shop had taken them over and wanted permission to transfer my details over to Money Shop. I refused as I didn't want anything to do with them. I was called 2 days later and had the same request which I refused. I was told that my account would be passed to a DCA, at which point they hung up.

In Oct 2012 £500 suddenly disappeared from my bank account. I soon found out it was Money Shop. The original company had passed my bank details over without my permission.
I contacted my bank to report an unauthorised transaction.I got the money back and a new card within 3 days.

I got a letter from Money Shop whingeing about "their" £500. I had also put in a Subject Access Request to the original company including verbatim transcripts of all phone calls. When I finally got the documents 9 months later guess what was missing? The specific parts of the phone calls where I refused them permission to pass my bank details on.

BTW Money Shop never followed through regarding the £500. Shame, as I was actually looking forward to any court proceeding when this would have all come out.

jss64 wrote:Hi Lopsum
Was your neighbour paying STUDIO by direct debit? if so she will need to keep an eye on her bank account as Lowells may take what is "owed" directly from her account.

In 2012 I had a small loan from a company based in my local area. I was making regular payments and was not in arrears. In Sept 2012 they called me to say that Money Shop had taken them over and wanted permission to transfer my details over to Money Shop. I refused as I didn't want anything to do with them. I was called 2 days later and had the same request which I refused. I was told that my account would be passed to a DCA, at which point they hung up.

In Oct 2012 £500 suddenly disappeared from my bank account. I soon found out it was Money Shop. The original company had passed my bank details over without my permission.
I contacted my bank to report an unauthorised transaction.I got the money back and a new card within 3 days.

I got a letter from Money Shop whingeing about "their" £500. I had also put in a Subject Access Request to the original company including verbatim transcripts of all phone calls. When I finally got the documents 9 months later guess what was missing? The specific parts of the phone calls where I refused them permission to pass my bank details on.

BTW Money Shop never followed through regarding the £500. Shame, as I was actually looking forward to any court proceeding when this would have all come out.

Hi jss64,

Im epsom, not lopsum...,

I'm not sure if she's paying by Direct Debit or not....if I had to guess, I would say she isn't....but I will ask her and tell her to watch cancel it if she is.
STUDIO have not been taken over. My friend was called and just told that the company had decided to sell many of their customers accounts to Lowells. A reason why was not given.
Many thanks for your reply.

Epsom is a race course and Lopsum is a Latin word.

Hi epsom,
I think your friend may just be confused by a bit of business language.
In business accounting, the amount owed would be classed as a debt (so if the loan was £600 and £200 already paid back, the debt would be £400) which falls due at a future date.  
So if she has an agreement to pay so-much per month or per quarter, and Lowells intend to collect on that basis, she won't be any worse off.
I have no idea who STUDIO is but if they're a small company, maybe they simply decided they would benefit from the cash flow that comes with giving (or rather selling, the business word is 'factoring') the collection of money owed to a third party.
The only point to make is that without her consent they can't vary the agreed payment timetable.  But of course if she offered to pay the whole remaining amount right now, I'm sure they wouldn't turn down the offer.

Hi, it all comes down to contract. Your friend has to read the small print, unfortunately . If it isn't in the contract, that they can sell, your debt to a third party without your friends consent. Then a new contract has to be negotiated with the new company, who has paid the original debt off for you. Keep records of everything. Hope that helps.

Lansdowne wrote:Hi epsom,
I think your friend may just be confused by a bit of business language.
In business accounting, the amount owed would be classed as a debt (so if the loan was £600 and £200 already paid back, the debt would be £400) which falls due at a future date.  
So if she has an agreement to pay so-much per month or per quarter, and Lowells intend to collect on that basis, she won't be any worse off.
I have no idea who STUDIO is but if they're a small company, maybe they simply decided they would benefit from the cash flow that comes with giving (or rather selling, the business word is 'factoring') the collection of money owed to a third party.
The only point to make is that without her consent they can't vary the agreed payment timetable.  But of course if she offered to pay the whole remaining amount right now, I'm sure they wouldn't turn down the offer.

Hi,

It wasn't a loan, it was for items like electrical items etc.

They can say what they want to--the point is that she has no contract with anyone else.... least of all a DEBT COLLECTOR!
If STUDIO arbitrarily decide to sell 1000s of their client's accounts to a debt collectors--even when they are not in debt--then tough!
It's the PRINCIPLE.

Lowell's are a debt collectors--and she is not in debt, did not agree to her debt being passed on to anyone else.
I shall do what I have done with all my own debts---the three letter process.
I have been successful in having ALL of my debts written off... and this includes with banks, dept stores etc.

quite right , once sold debt is satisfied . Its the DCAs gamble.

by fozbod "it all comes down to contract."

This is correct.

If there was nothing in the contract to say the creditor can sell the debt then a breach of the contract has occurred because selling the debt was not a condition in the contract that both parties agreed to.

As we know, for a contract to be valid there must be full disclosure, a meeting of the minds, there should be no surprises in a contract. A right to sell clause is an important condition in a contract and if its not there then that is fraud.

Fraud vitiates all contracts and there is no statute of limitation on fraud. Fraud is a statutory crime (putting statute law and common law aside for a moment.)

The comment about 'factoring' is also correct, its a common business practice to factor out debts. What happens is a 'factoring' company will approach a manufacture or merchant and offer to collect payment for goods and services for a fee. For it not be debt collecting, it would occur before the debtor falls into arrears.

So, before you, the debtor, fall behind, they are simply the receiver and administrator of the debt. However, if you fall behind, then they are the debt collector.

I do not know what happens if you fall behind and whether or not the debt actually transfers to the debt collector, via assignment or what as this depends on the contract between the factoring company and the merchant or trader whatever.

However, If they come knocking, then, as i see it,  you would need to establish in what role are they knocking, the factoring company or as the debt collector. This is where requesting proof of claim is vital. It helps you establish who you are dealing with and their bona fides.

If they come knocking as the 'factoring' company then you have no contract with them unless they can prove otherwise by providing you with a copy of the contract you have with the creditor showing such a clause. If they come knocking as the debt collector then request a copy of the deed of assignment and other documents as described in the goodf manual.

In law, (dunno what the Property Act says in the UK says)  they have to produce the DOA in order to prove they can provide you with good discharge. (careful when saying this as you may be admitting to the debt, perhaps refer to "the DOA as per Section xx of the Property Law Act)

By making them disclose how they come to have the debt, ie by factoring or assignment, you will know if the debt has been extinguished or not. This is because if the debt has been assigned, correctly then the terms and conditions of the assignment would require the creditor to surrender all rights, title and interest in the debt. No debt collector wants a creditor coming back and saying "I'm having that money you just collected."

Because the debt collector has PAID for the debt then by doing that they have also, whether they intended to or not, paid out the debt for you and the debt is now extinguished.

That Phone call was probably being recorded.
They were hoping your friend would say,

"Errr well I supp0ose thats OK"

And that would have been that, Contract exchange agreed.

Hey,

I would agree that once the debt is sold, then if it is not specifically stated that this could happen in the contract then the debt is paid.

If 'STUDIO' (I am presuming it is a catalogue service) want to sell a liability then why did they not offer it to your friend (who was not in default) first at the reduced rate that they sold it at?.

Pure speculation but, maybe 'STUDIO' have shares in 'LOWELLS'. This would seem like an easy way to make more money, with the added bonus of the people who are not in default potentially blindly pay the new entity facilitating the 'acknowledgement of debt'.