Debts sold on for less than settlement offer

[PAWS]

Banks are cheating their shareholders rather than negotiate with debtors.
I am appealing to anyone out there who had a settlement offer rejected only to discover their debt was sold on.
I have two examples, with full paper trails proving that Santander turned down settlement offers of up to 50 pence in the pound but within a few months sold those debts to Arrow Global for 16.2 pence in the pound or probably less. In these cases Santander and Arrow Global both insisted they would accept nothing less than the total owed from the debtor.
If I held Santander shares I would want to know why they turned down at least 33.8 pence in the pound just because it was the debtor’s money and not Arrow Global’s.
These above referenced cases were only two out of one million accounts bought by Arrow in early 2013. The total ‘loss’ incurred dueto Santander’s determination to punish the debtors was almost Ł3000. That’s the loss on two accounts out of one million. As Santander was not the only bank having a ‘basement’ sale there must be many more debtors out there who had their offers rejected before the debt was sold on. Even if they did not or could not make an offer surely the Banks should give them a last chance to settle at a rate slightly above that offered to the debt collectors?
I know Santander is a Spanish Bank but I have a very strong feeling that many other UK banks, including those who wave their begging bowl at the taxpayer when they mess up are merrily involved in the same practice.
I am sick of people quoting Polonius with his infamous ‘neithera borrower nor a lender be,’ but let us not forget that Polonius was a fool. A bad debtor is not necessarily a bad person. Many, through no fault of their own have lost their jobs /income and their debts may include car loans and credit card balances not racked up by buying Gucci Handbags but School Uniforms and boiler repairs. The way the banks and I am afraid to say the moral majority treat debtors is a disgrace. The bankers (please feel free to apply rhyming slang!) approach to debt is one dimensional.There is only one punishment regardless of how many times you explain your situation or however hard you work to try and resolve the problem. You may not always wind up in court but you are harassed, bullied and let’s remember the branding on your credit file.
Please remember that I do not need any personal details. Just confirmation that your bank rejected your offer then sold on the debt. If you offered more than 16.2 pence in the pound the chances are you were cheated. Then I can confidently start to campaign! :director:
Many may say I am wasting my time but this is a disgraceful situation and I feel I have to do something. I will be posting this on ‘the other website’ because I need as many examples as possible.
Many Thanks.

[wales01man]

Re: Debts sold on for less than settlement offer

Sorry to say I think you might be chasing rainbows. Santander and and all the other banks will never change their system If you could offer 16% to them for a Million debts they may deal with you its a Business decision how much do you think it would cost them to chase and get the debts all paid even at 16% this is why the DCAs are in business to make money!

[PAWS]

Re: Debts sold on for less than settlement offer

Thanks Wales01man. You are a star for reading such a long ramble!
Oh I know it will be hard but many ‘comfy’ practices carriedout by the banks for many years have been challenged and stopped. Some as we have seen, have wound up costing the banks millions of pounds. Perhaps I am chasing rainbows but this is a disgraceful practice. The banks have never or will ever change their practices themselves. I will try whatever other means I can be it using the media or government lobbying to get someone to understand the effect this spiteful ‘dealing’ has on ordinary people, shareholders and perhaps even the taxpayers.
Say a person owes Ł5000. They do everything to repay the debt but simply cannot. They cannot sleep at night, are afraid to answer their phone or door and cannot afford to even heat their home. By some miracle they have the opportunity to offer the bank Ł2500 to clear the debt. The offer is refused and the bank sell it on to a bottom feeder for Ł500. The bottom feeder then ‘gets heavy’ for the full Ł5000. The bank has lost its shareholders Ł2000. Multiply that by the number of debts sold and the shareholders are not happy bunnies. We have seen greedy practices stamped out now let’s beat the lazy ones. As for the companies who feed on this misery; they can go to hell.

[wales01man]

Re: Debts sold on for less than settlement offer

I would agree with you but I realise what an impossible task you would have getting things changed I hate the DCAs as much as anyone with their threats and hassling people The system stinks as does everything in the world of debt collections the DCAs Solicitors and Bailiffs involved in it care little for the person in debt never taking time and effort to find out why the debt hasn't been paid adding fees and charges to debts is no help at all when someone cannot pay for a GOOD reason.

[Guest]

Re: Debts sold on for less than settlement offer

This is a popular subject on these forums, however the logic is flawed.

If indeed the creditor sells the debt portfolio at 16% of its face value, it is because it has an equity or potential profit of the full amount.
If the debtor was widely able to buy at 16% then the equity value would be 16 % of that to the DCA.

Then of course there is the matter of debtors believing that they could just pay a reduced amount instead of the credit price, and the effect it would have on potential defaulters.

[PAWS]

Re: Debts sold on for less than settlement offer

Many, many thanksAndy for your input and all advice is greatly appreciated but I don’t quite follow you.
Perhaps I have pared down my point a bit too much but this is something I have been investigating for over a year and have managed to gather some very interesting information. At this stage I just wanted to ask ifanyone out there had a settlement offer refused and then discovered the debt had been sold on. It is not just about Santander but their case is of particular interest as it seems they managed to rid themselves of many of those infamous store to credit card accounts that had fallen into arrears.
At the 2013 Annual General Meeting Mr Emilio Botín stated that Santander registered attributable net profit of EURO 2.205 billion, a decline of 59% from the previous year. In an article in Credit Today (3 June 2013) Arrow Global is reported as purchasing these and other debts for an average of 4.5pence in the pound although Ian Drury claims that they paid an average of 16.2pence in the pound.
It is a well-known fact that lenders regularly have to writeoff ‘bad debts’. They do set aside a certain amount to cover such losses and they get tax relief when the debt is totally written off. No matter how much ‘ledger juggling’ goes on this ultimately leaves a hole in the coffers. Just look atwhat bad debts did to Lloyds in 2009.
On the last point you made:
Then of course thereis the matter of debtors believing that they could just pay a reduced amount instead of the credit price, and the effect it would have on potential defaulters.
I just wanted to say this;
No one wants a blanket ‘avoid paying what you owe’ loophole. That is wrong and would lead to chaos. This is about the one dimensional treatment of ‘long term’ bad debts and the regular refusal of many lenders to negotiate with their creditors with sound or viable reasoning.
I know there are unscrupulous and irresponsible borrowers out there and I do not agree with this nanny attitude where the lending rules should protect us from ourselves. If you borrow irresponsibly and then bury your head in the sand or run and hide you deserve all you get but it is unfair to treat all bad debtors the same.
People with good credit ratings do not go to loan sharks and not just because of extortionate interest rates – they borrow from reputable banks because they believe they will be treated with a certain amount of fairness and dignity. Then they discover that when they get into trouble their ‘custom’ is sold to the very vultures they were trying to avoid.
My nephew is a psychology graduate and he set up a website for people who feel suicidal and for friends and family of those who are left behind. Within a few weeks he had 500 regular contributors. Naturally all discussions are confidential but he did say that debt played a large part in a terrifyingly high number of cases. It is no exaggeration to say that websites such as this save lives and everyone who takes the time to read a comment and reply is a saint. I am not clever enough to offer practical advice but I am trying to do my own bit.

[meellis]

Re: Debts sold on for less than settlement offer

Even though I understand Andy's view I am totally with you PAWS, I felt for a long time it is all too easy for these institutions to write off debt and in some cases are encouraged to do so to lesson the tax burden. Sometimes I feel that finding a way to lessen the debt people have found themselves in would get the economy moving far quicker than helping the banks lend more, which they haven't seemed to have done even though they have received funding to help them. When they sell these debts on for far less they only find another way to get the money back so another honest customer becomes a victim through higher rates or increased charges, these institutions will only lose short term. In this country we have to start viewing people more as individuals as opposed to pigeonholing them. Not all debtors are irresponsible as is the fact that not all benefit claimants are scroungers, not all immigrants are here to rob the country and not all people who are of a different faith are terrorists.

[wales01man]

Re: Debts sold on for less than settlement offer

Too right we as a society place people into categories and expect that those in one are all the same.
Even at my age I still stereotype people until I know about them its the biggest problem we have the survival of the fittest comes to mind .

Everyone wants a perfect world like the OP wanting debtors to get the debt reduced to a fraction of whats owing Great idea but many would or could not pay ,
We could compile a wish list on LB saying how we what every problem brought on here to change to reducing debts eliminate court cases getting rid of Bailiffs and DCAs PROBLEM they are here to stay and they all have the same mission To Make Money
Change? a great thought but that's all it ever will be sorry to say

[Guest]

Re: Debts sold on for less than settlement offer

However it does not change the mechanics involved, for better or worse DCA's exist, they have to make a profit, if they buy a debt portfolio the total purchase must, overall, be profitable.
This means that the ones where they do not collect anything on have to be made up for by the ones where they collect full payment. The calculation of the cost per unit is not really representative of the business model.

The purchase price to the DCA would be worked out on the profitability of thousands of accounts, you cannot base any sensible analysis of this on looking at a single customers account.

The mistake is that we tend to look at this in personal terms (of course) but they do not, the purchase decision is a pragmatic one based on the amount of profit to be made form the goods purchased, the same as any other transaction, and in common with other sales the creditor has to maintain the value of its goods , if it started devaluing them by accepting small F and F payments as a matter of course the portfolio would have little value at all.

[FlamingParrot]

Re: Debts sold on for less than settlement offer

It is not just about Santander but their case is of particular interest as it seems they managed to rid themselves of many of those infamous store to credit card accounts that had fallen into arrears.

Perhaps that had something to do with this case: Santander V Mayhew which hit Santander where it hurt$ the mo$t: with co$t$ against the of around Ł50k. :bounce::bounce::bounce:

Despite it being just a County Court case and not setting legal precedent as such, they'd rather be on the $afe $ide and sell those debts, especially since the case is quite well known and let's face it, many people who had those cards may well have decided not to pay anymore after hearing about this judgment, which was all over the net at the time. :director: Ms Mayhew may well have been happy to be paying Santander every month, but others who've heard about the case could well have decided to stop making payments after that, and challenge Santander to take them to court. :incourt:

At the 2013 Annual General Meeting Mr Emilio Botín stated that Santander registered attributable net profit of EURO 2.205 billion, a decline of 59% from the previous year.

My heart bleeds... msl: msl:

Reminds me of the time when I used to work for a financial in$titution, and they used to send "broadcast" emails to everyone in the company, saying things like their profits had dropped from Ł4bn to *just* Ł3bn, as a result the would cut back this, that and the other. Unbelievable! :mad2::mad2::mad2:

My nephew is a psychology graduate and he set up a website for people who feel suicidal and for friends and family of those who are left behind. Within a few weeks he had 500 regular contributors. Naturally all discussions are confidential but he did say that debt played a large part in a terrifyingly high number of cases. It is no exaggeration to say that websites such as this save lives and everyone who takes the time to read a comment and reply is a saint. I am not clever enough to offer practical advice but I am trying to do my own bit.

Indeed, the terrible threats issued by creditors (not just DCAs, but often the banks themselves) can be very intimidating for people who are not fully aware of what the creditors can and can't do. It's amazing how many people still thing they can just send bailiffs round your house to take away your belongings, not knowing that they'd need to go to court at least twice: once to obtain a CCJ, then back to apply for a warrant.

It wouldn't occur to most people that they could defend a claim, even when they've used the card, etc. It's not a matter of right or wrong, the law is there for a reason. If banks whose core business is to lend money, who have access to unlimited re$ource$ and employ thousands of people, can't get something as basic as a credit agreement, right, then they deserve to be $tung like Santander was! :high5::high5::high5:

[PAWS]

Re: Debts sold on for less than settlement offer

Many thanks for all the comments. We all want a perfect world but I would settle for a fairer one. I know that it is wrong for people to assume they can ‘get away’ with paying a low F & F. This is about getting a bit of fair treatment for those in genuine dire straits who have been on a low repayment plan for years. When you read the hell some of these people are going through then you realise they are not trying to get away with anything –they just want a bit of peace and would sell their very soul to achieve that. If it wasn’t for people like you and sites like this many more people would be falling apart so whenever you contributors have a bad day remember that a comment you make on here could make all the difference to a person’s life and pat yourself on the back.
They have already gone through the battle to get the original creditor to accept a reduced payment –have proved that is all they can afford - and finally stop threatening them and then bam –they are back to square one with a new and more aggressive creditor who has little or no respect for the rules or laws governing the treatment of debtors. If the banks have the manpower to employ people to call and harass a debtor day in day out then surely they have the time to offer the specific customers who I have highlighted before an opportunity to get rid of the debt once and for all. OK, that might be asking too much but in cases where a customer offers 50% and the offer is rejected only to read about the DCA bragging to the industry that the bank sold the debt to him for 16.2% or less –that is wrong. Worse still the bank has told the debtor that they would never accept anything less than 100% of the balance!!!!! They sell it for as little as 4.5% to a DCA who then tells the customer they cannot settle for less than 95%.
I am not naďve and know that all these financial institutions must make a profit to survive but there are certain circumstances where that is not a good enough reason to resort to this sort of practice.
Flaming Parrot is quite right –the two examples I have seen were store turned to credit card and as I mentioned earlier I believe many of them were. Very, very fishy!

[Guest]

Re: Debts sold on for less than settlement offer

Yes it does seem wrong indeed.

However it is the way it works is unfortunately the only way it can under the current system.
You would have to remove the DCA companies completely from the equation for there to be any change, once there is an industry which depends on the fact that people get into debt, the rest is just economics.

[FlamingParrot]

Re: Debts sold on for less than settlement offer

Flaming Parrot is quite right –the two examples I have seen were store turned to credit card and as I mentioned earlier I believe many of them were. Very, very fishy!

Virtually all debts (except mine, it seems), get sold on at some point. They tend to be sold in 'job lots' so the debt purchaser doesn't know the details of each one of them, some may even be statute barred when they're sold. They can still take you to court regardless, and I do wonder how many people have got judgment for debts that they shouldn't have had to pay in the first place, due to either head-in-sand syndrome (not opening post, etc.), having moved and not receiving court papers, or ignorance of the law. They'd either get a CCJ by default or admit the claim, not knowing it could be defended.

The reason I say mine don't get sold is that I have yet to receive any NoAs for any of my credit cards, defaulted Jan 2010! :tinysmile_kiss_t4: :tape2: :tape: One defaulted later did get sold rather quickly, despite being a much smaller balance, there's just no logic to it. :confused2: :noidea:

I didn't have a storecard turned credit card but I know someone who has one, with a balance just over Ł10k, defaulted 2 years ago, still not sold. :ohwell:

[Mr $quandaŁot]

Re: Debts sold on for less than settlement offer

If everyone thought that nothing could be done then nothing was ever achieved!

I'm not sure why DCAs bother people so much nowadays. Most mobile phones let you block their numbers. You could get Truecall etc. if you have a landline. Yes, it does cost a bit but might be worth it.

Or do what I used to do (have said this before): have fun with them. I would never answer DCAs security questions but instead would start asking them some personal questions about their marital status, number of kids, sexuality, religion etc. Many of them soon hang up!

[Mr $quandaŁot]

Re: Debts sold on for less than settlement offer

Yes, it's me Mr $quandaŁot who defaulted on M&S store to mastercard!