Selling on debts
Discussion
Legally any debt can be sold at any time by any creditor. It is simply an assignment of the creditor's rights and subject to usual contract. The only real restriction is if there is a condition in the agreement between the creditor and debtor preventing such an assignment (which is more often found in larger negotiated commercial agreements). Certain types of debt will require more formality - like mortgage assignments. (The whole controversy in the US with BoA/Countrywide is that residential mortgages were not assigned properly. Borrowers have tried to walk away from their debt because of this - but without any success I think. BoA have paid huge fines.)
Technically it doesn't matter if the debt is disputed. The new owner has no more or less rights or obligation to prove the debt and collect.
Practically consumer debt almost never has restrictions preventing assignment. This is needed so the lenders can refinance and get the debt off their balance sheet if needed. The whole CDO issue of the GFC.
OFT issues guidelines about selling consumer debt - especially for debt collection purposes as opposed to refinancing. I don't know if the old or new creditors rights are affected if these are not followed.
Practically the debt collector still has to prove the debt if you dispute it. Obviously they don't necessarily have access to the original agreement or the circumstances being disputed. So typically only non-disputed debts are sold, or if you dispute it then it goes back to the original creditor.
Questionable debts, like private parking 'fines' (numerous threads), can be sold on many times to many collection firms. They just try it on and hope to find a sucker.
BUT if you are contacted by a collector on a bogus debt don't just ignore it. Respond with a positive statement that it is disputed and you won't be paying. Some advice on PH says you can just ignore it and it goes away. I don't agree - but it is a matter of opinion.
Technically it doesn't matter if the debt is disputed. The new owner has no more or less rights or obligation to prove the debt and collect.
Practically consumer debt almost never has restrictions preventing assignment. This is needed so the lenders can refinance and get the debt off their balance sheet if needed. The whole CDO issue of the GFC.
OFT issues guidelines about selling consumer debt - especially for debt collection purposes as opposed to refinancing. I don't know if the old or new creditors rights are affected if these are not followed.
Practically the debt collector still has to prove the debt if you dispute it. Obviously they don't necessarily have access to the original agreement or the circumstances being disputed. So typically only non-disputed debts are sold, or if you dispute it then it goes back to the original creditor.
Questionable debts, like private parking 'fines' (numerous threads), can be sold on many times to many collection firms. They just try it on and hope to find a sucker.
BUT if you are contacted by a collector on a bogus debt don't just ignore it. Respond with a positive statement that it is disputed and you won't be paying. Some advice on PH says you can just ignore it and it goes away. I don't agree - but it is a matter of opinion.
Jimmyarm said:
I was thinking more along the lines of the debtor paying someone to take it on, given what is paid by the DCA's when they buy debts there is a potential profit somewhere along the lines.
The only profit would be for the new debtor to settle the debt for less than you paid them. Very high risk.Anyway, to answer the question a debt can be assigned to someone else but the creditor would need to agree to it.
Jimmyarm said:
Out of curiosity, say I was the debtor, could I sell my debt to a third party and legally transfer it ?
Jimmyarm said:
PurpleMoonlight said:
Huh!
Who is going to pay you to take on your debt?
I was thinking more along the lines of the debtor paying someone to take it on, given what is paid by the DCA's when they buy debts there is a potential profit somewhere along the lines.Who is going to pay you to take on your debt?
Jimmyarm said:
You don't have to receive money to sell something .
While that is technically true, there has to be consideration and it has to flow in a particular direction. Clue: if the consideration is money, it flows away from the buyer and toward the seller.In any event, a debit is the property of the creditor. It is an asset, a thing, that belongs to the bank or finance company.
So even if we accept that the debtor paying someone else has somehow sold the debt to someone who takes it on (and who presumably then either charges the debtor more than the original creditor, or defaults on the debt) we have to get around the problem that the debt is someone else's asset, i.e., not the debtor's.
Jimmyarm said:
Breadvan72 said:
Top tip: paying someone to do something isn't selling. It's what we call "buying". HTH.
What a useful observation.I would classify it as selling, you don't have to receive money to sell something .
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