Debt collection advice

[smeejeff]

I have a small business renting TV and white goods to consumers, I currently have more customers than I care for who just stop paying, I have tried talking them to offer reduced payment plans, debt collection agency, civil recovery, to with get them to pay or recover my goods, nothing seems to work, there a lot of advice out there for people who don't want to pay are afforded so much protection , look for a cost effective method to pay their rent or return there goods , any advice would be welcome

[R0b]

I'm going to state the obvious here and ask if your business has the necessary FCA permissions? Since April 2014, all hire agreements entered into with consumers are regulated agreements unless there is an exemption that applies (there are 3, none of which would seem to apply here).

If the answer to the above is going to be no, then I think you are going to be scuppered because any hirer would have a number of defences against a claim you make including the fact that you weren't authorised to enter into the hire agreement (which by the way is a criminal offence) and presumably you never handed out the requisite documentation.

What ultimately is your end goal (bearing in mind what I have said above)?

[smeejeff]

Thanks Rob , I am a registered company with an FRN number with Limited Permission as per FCA advice, I registered with the ICO I keep everything Legal , there are are agreements in place with all my customers, my ultimate goal is to try and recover my goods or money owed, I want to keep everything Legal but I cannot afford to take the losses with people making one payment and then making of with the goods
Regards
Jeff

[R0b]

If the agreements are regulated consumer credit agreements then you will need to serve a default notice because you can take any action to recover the goods or the remaining debt balance. Default notices need to be in a prescribed form and if you don't comply and recover the goods and/or debt then you could be in trouble for non-compliance.

Following that, you can then send a letter before action and if after no reply, commence legal proceedings for the recovery of the goods or in lieu of those goods, the remaining balance left under the agreement. A quick and easy way could be to make an application to the court for an order that the goods be returned, and if the debtor doesn't comply, he or she will be in contempt of court.

Of course if the agreements are not regulated agreements then you can skip the above and go straight to sending a letter before action and then issuing legal proceedings.

If you don't want to go through the hassle of legal proceedings and spending time and money on recovering goods you could sell those debts on to debt purchasers. Companies like Lowell Financial and Cabot purchase debts but they are usually sold for pennies in the pound. However, if you can demonstrate that your bad debts have a good chance of success you may be able to negotiate a better price for them. Bear in mind, however, debt purchasers are like any other business, they operate to maximise profits so don't expect to be paid the full debt value if you went down this route.

I should say, if you've got a lot of bad debtors, I would be concerned about your choice of customers or maybe your credit control and policies are not up to scratch. For example, have you carried out sufficient due diligence before contracting with these people e.g. credit checks? What about asking for an upfront payment which is a % of the value of the goods in question. Other considerations are the payment method such as setting up direct debit rather than taking weekly cash.

Unfortunately, consumers are more savvy these days and threats of debt collectors tend not to have the same effect as they may have done in previous times, probably down to the fact that consumers are more aware of their rights and what debt collectors can and can't do.

[smeejeff]

Thank you Rob, as there is no final ownership these are not covered buy the consumer credit, also I pretty much done all that you have suggested including tightening up my checks, although haven't sold any debts, I try to help the people who happen on hard times because of the universal credit six week gap, or just a change in circumstance. Its the ones that make just a few payment then move. seem to have full intention of stealing the items that I cant seem to stop. although I am refusing a lot more customers now after our Checks.
Thank you for your time on this I do appreciate your replies
Regards
Jeff

[R0b]

Unless I've missed some legislative update along the way, the fact that there is no final ownership does not mean that the contracts are not covered by the Consumer Credit Act 1974. Article 60N of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001/544 defines a regulated consumer hire agreement as:

an agreement entered into on or after 1st April 2014, any consumer hire agreement which is not an exempt agreement

and a "consumer hire agreement" is defined as:

an agreement between a person (“the owner”) and an individual or relevant recipient of credit (“the hirer”) for the bailment or, in Scotland, the hiring, of goods to the hirer which—
(a) is not a hire-purchase agreement, and
(b) is capable of subsisting for more than three months

So unless you have some form of exemption (which if you did you would know what it is) then it would seem that you are entering into regulated agreements.

That aside, your choice of customers might on low income is suggests the risks. There could be many reasons why they aren't paying you back whether it's lack of income, they consider other priorities above your payments or some other reason.

Not sure if there's anything out there but have you considered an electronic disabling device? There are equivalent devices for cars that allow you to shut off the car remotely and I wonder if there is something out there for other electronic goods that could be something you might want to invest if not too expensive.

Otherwise, going to court is generally the option people tend to take.

[smeejeff]

Thank you for your time I will look into all your suggestions
Thank you

[smeejeff]

Hi Rob, Just one more question and that you for all your advice, is there a point when people have absconded with my good and haven't paid for a long period, or if they have never paid and not returned the goods,at the end of the agreement, would my goods at any point be deemed as stolen or would the my customers always be protected by the consumer credit act. as it stands at the moment I cannot use Civil Recovery or go to the Police?