Credit card debt sold to 3rd party & under debt management.
Discussion
Scenario:
Credit card payments become overwhelming, and the customer enters a debt management agreement.
Regular payments are maintained, however credit card company sells debt on to 3rd party company.
Debt management company re-arranges payments to 3rd party, and regular payments are maintained.
However - this 3rd party company has twice (over a 6 month period) sent letters out stating that the account is in arrears (but it isn't although of course the original debt is), but the nature of the letters are 'if you don't contact us about this, we may take action against you'.
Also - this 3rd party company has recorded the debt as "Default" on credit scores.
But...
There is also another CC debt (still maintained by the original [different to the above] CC company) which is also in a debt management agreement - but this is recorded as "up to date" in the credit records.
So my question is - can the 3rd party company maintain the debt as being in "default" even when regular payments are ongoing?
Is this normal practice?
Asking for a friend etc.
TIA.
Credit card payments become overwhelming, and the customer enters a debt management agreement.
Regular payments are maintained, however credit card company sells debt on to 3rd party company.
Debt management company re-arranges payments to 3rd party, and regular payments are maintained.
However - this 3rd party company has twice (over a 6 month period) sent letters out stating that the account is in arrears (but it isn't although of course the original debt is), but the nature of the letters are 'if you don't contact us about this, we may take action against you'.
Also - this 3rd party company has recorded the debt as "Default" on credit scores.
But...
There is also another CC debt (still maintained by the original [different to the above] CC company) which is also in a debt management agreement - but this is recorded as "up to date" in the credit records.
So my question is - can the 3rd party company maintain the debt as being in "default" even when regular payments are ongoing?
Is this normal practice?
Asking for a friend etc.
TIA.
From what I understand:
The credit card company are being negligent at best and idiots at worst for selling on the debt, especially given that the debtor is trying to repay some of the money regularly. Doing so it pointless and just creates hardship and removes the final shred of goodwill.
As far as I know, the debtor is legally within his rights to cease dealing with the 3rd party company, and insist on dealing with only the original lender. There is no obligation to deal with 3rd party companies, many of which are sharp parasites.
Finally, it appears that many banks and CC lenders are not too bothered about pursuing these kind of debts on unsecured lending. Depending upon the personality of the debtor, if he / she is prepared to just suffer the occasional letter through the post, which is ignored, then no further action materialises, and then upon 6 years passing, the debt is statute barred and they can apply to the credit reference agencies to have the debt struck off their record. As I say though, this is only what people have told me.
HTH
The credit card company are being negligent at best and idiots at worst for selling on the debt, especially given that the debtor is trying to repay some of the money regularly. Doing so it pointless and just creates hardship and removes the final shred of goodwill.
As far as I know, the debtor is legally within his rights to cease dealing with the 3rd party company, and insist on dealing with only the original lender. There is no obligation to deal with 3rd party companies, many of which are sharp parasites.
Finally, it appears that many banks and CC lenders are not too bothered about pursuing these kind of debts on unsecured lending. Depending upon the personality of the debtor, if he / she is prepared to just suffer the occasional letter through the post, which is ignored, then no further action materialises, and then upon 6 years passing, the debt is statute barred and they can apply to the credit reference agencies to have the debt struck off their record. As I say though, this is only what people have told me.
HTH
From what I remember of being in a similar position the letters are sent on a 6 monthly basis in order to protect the creditors interests, although the letters I received clearly stated this.
If the debt is genuinely overwhelming then get down to a debt management charity and get someone on your side - in a similar position I had interest ceased on all my debts, spent 3 years paying down the capital at a realistic rate, then eventually the charity negotiated a final settlement figure on my behalf when we inherited some cash.
As for the credit rating - if you've acquired unmanageable debt and are in a debt repayment program then your inability to borrow more should be the least of your worries!
If the debt is genuinely overwhelming then get down to a debt management charity and get someone on your side - in a similar position I had interest ceased on all my debts, spent 3 years paying down the capital at a realistic rate, then eventually the charity negotiated a final settlement figure on my behalf when we inherited some cash.
As for the credit rating - if you've acquired unmanageable debt and are in a debt repayment program then your inability to borrow more should be the least of your worries!
@Claudia Skies
What you say was exactly our understanding of the situation.
I did in fact think that Ray Luxury-Yacht's post had a 'freeman of the land' tone to it!
@oldcynic
Interest has been ceased on all the debts.
There are no worries about the credit record - nobody wants to borrow more money - it was just thought odd that the debt was flagged as being in default, despite regular ongoing payments.
A debt management company is already involved.
I think the biggest concern for my friend was the tone of the letters received form the 3rd party, and doing some research on said 3rd party shows them to have been a little underhanded in past years - however it would appear that in the past 2 - 3 years new legislation has been introduced in an effort to combat underhanded dealings.
What you say was exactly our understanding of the situation.
I did in fact think that Ray Luxury-Yacht's post had a 'freeman of the land' tone to it!
@oldcynic
Interest has been ceased on all the debts.
There are no worries about the credit record - nobody wants to borrow more money - it was just thought odd that the debt was flagged as being in default, despite regular ongoing payments.
A debt management company is already involved.
I think the biggest concern for my friend was the tone of the letters received form the 3rd party, and doing some research on said 3rd party shows them to have been a little underhanded in past years - however it would appear that in the past 2 - 3 years new legislation has been introduced in an effort to combat underhanded dealings.
A Default should be recorded when the contractual relationship between creditor and debtor has broken down. The Information Commissioner deems this to be after three months of failed contractual payments.
So it is the creditor that has failed to record the default that is in error.
You may think this is a good thing but it actually isn't. This is because the default record will drop off the CRA's records after six years, whereas an account recorded as being in arrears won't. He should check exactly what the credit record says, and watch that they don't record a default several years after the actual event.
I had a bank record an account as delinquent for over 8 years and I only eventually got it removed with the assistance of the Information Commissioner.
So it is the creditor that has failed to record the default that is in error.
You may think this is a good thing but it actually isn't. This is because the default record will drop off the CRA's records after six years, whereas an account recorded as being in arrears won't. He should check exactly what the credit record says, and watch that they don't record a default several years after the actual event.
I had a bank record an account as delinquent for over 8 years and I only eventually got it removed with the assistance of the Information Commissioner.
Same happened here with me. mBnA sold on my debt. Dates of payment from management company crossed due dates by maybe a day or so every couple of months. However, none of this was particularly any more detrimental than the pile of crap that I was already in.
It took 7 years but I'm now debt free ( paid off very penny owed) and my credit rating is bang up there near perfect again.
It took 7 years but I'm now debt free ( paid off very penny owed) and my credit rating is bang up there near perfect again.
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