What is the DCA's stance on Statute Barred debts.....

[Celestine]

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http://www.csa-uk.com/media/editor/f...red%20debt.pdf

Statute Barred Debt... To collect or not to collect, that is the question?!


Lets set aside the issue of the proposed reduction to the limitation period for a moment and give a little focuson the actual collection of Statute Barred debt.
Thanks to my nemesis, the Consumer Action Group website, there is a lot of misinterpretation of statutebarred debt, what can and cant be done and the rights of the consumer and DCA.
And to make matters worse the Office of Fair Trading seem to have misinterpreted the law also...
If you are in the process of renewing or varying your Consumer Credit Licence you will be aware that part ofthe process is to complete a Credit Competency Plan (CCP1). Question 41 of the CCP1 form states:
Do you have systems in place to ensure that you do not collect statute barred debt?
You can imagine the kind of feedback I am receiving from members regarding this, a few even taking thestep not to touch statute barred accounts to avoid action by the OFT!
So, to set at ease those members, and to provide a clear picture on the misinterpretations, below is someimportant clarification:
The OFT have confirmed that the wording of this part of the CCP is inaccurate. The wording will beupdated when the CCP as a whole is revised and we will be updated on timings in due course.
Under the Limitation Act 1980, which applies to England and Wales, a debt is considered to be statutebarred when no payments have been made against it or where it has not been acknowledged* for six years.In Northern Ireland, statue barred debts are governed by the Limitation (Northern Ireland) Order 1989. InScotland, statute barred debts are governed by the Prescription and Limitation (Scotland) Act 1973 whichstates that the debt itself ceases to exist after five years providing that it has not been acknowledged andthat no relevant claim against it has been made by the creditor.
*For clarification purposes, acknowledgement is either acknowledgement made in writing or a paymentreceived against the debt. Once acknowledgement is received, this re-sets the limitation period.
Whilst the OFT accepts that the debt still exists, the OFT considers that it can be unfair to pursue the debt inthe circumstances set out in their Debt Collection Guidance (section 2.13 and 2.14a and b), and it is themethods in which the debt is attempted to be collected that can cause concern to the OFT.
In essence, providing you work within legislation and guidance, collection of statute barred accounts is alegitimate activity. However, if your debtor has stated that they will not be paying a debt because it is statutebarred, these accounts should be closed and your records updated appropriately. This will reduce thenumber of accounts that could be placed back out for collection or sale, which in turn could lead to complaintand create further issues for the industry in this area.
If you have any queries regarding this, please contact Claire Aynsley, Head of Membership & Compliance on0191 2718043 or claire@csa..com

[CleverClogs]

Re: What is the DCA's stance on Statute Barred debts.....

How does she excuse debt collectors claiming that debts are not SB when they plainly are, or phantom payments being made in an attempt to revive a debt that is already SB?

[bluebottle]

Re: What is the DCA's stance on Statute Barred debts.....

What you outline, CC, is a criminal matter, even though it falls, generally, under the jurisdiction of the OFT. It would, in my opinion, amount to Fraud by False Misrepresentation and potentially expose the company of a creditor and/or DCA, its management and the employees involved to prosecution. Perhaps, it might be prudent, in cases of SB debt, to send a formal letter warning the creditor and/or DCA concerned that their actions and attempts to revive SB debt could bring them into conflict with the Criminal Law. Sending them relevant extracts from the Fraud Act 2006 to reinforce a formal letter would be advisable. Whether they would heed the warning is another matter. However, once warned, they then have no excuse or defence if they continue to use deceitful means to attempt to collect or revive SB debt.

[gravytrain]

Re: What is the DCA's stance on Statute Barred debts.....

Yes I remember reading this.

It seems to fly in the face of consumer interests that the DCA should be encouraged to chase and trade accounts which are obviously statute barred. If an account has been assigned to a dca and has been on its books for six years with no payment it is obviously SB, this IMO should be its shelf life.

This article seem to say that even if SB, as long as the debtor has not recognized and reported the fact, it is ok to chase the debt and that it has a commercial value(albeit ,I should imagine bargain basement).

Is it fair for a DCA to pursue a debt, by implying the debt is enforceable when he knows damn well that it is not, effectively trading on the lack of knowledge of the debtor. Personally i don't think it is.

[FlamingParrot]

Re: What is the DCA's stance on Statute Barred debts.....

There is hardly any point in having a Statute of Limitations if DCAs are still legally allowed to chase (and even sue) for SBd debts! Most people wouldn't even have heard about SBd, certainly not those who don't use these forums. If they remember having had the account, they'll think they are still liable for it and, if they receive court papers, they would admit the debt and get a CCJ even years after a debt is SBd, and they'll be none the wiser. :rant:

Last year I read the CAB Guidance Notes for dealing with debt and there was no mention of SBd. I have also seen a CCCS rep post on MSE that they would be glad to help set up a repayment plan for a SBd debt because the debt still exists, at least in England and Wales! :scared:

[bluebottle]

Re: What is the DCA's stance on Statute Barred debts.....

Yes I remember reading this.

It seems to fly in the face of consumer interests that the DCA should be encouraged to chase and trade accounts which are obviously statute barred. If an account has been assigned to a dca and has been on its books for six years with no payment it is obviously SB, this IMO should be its shelf life.
Totally agree with you, GT. Once the six years is up, if the law states it cannot be enforced, that is it. End of story.
This article seem to say that even if SB, as long as the debtor has not recognized and reported the fact, it is ok to chase the debt and that it has a commercial value(albeit ,I should imagine bargain basement)
If the creditor and a DCA want to waste money chasing a debt the law says they can no longer enforce, that is their perogative.
Is it fair for a DCA to pursue a debt, by implying the debt is enforceable when he knows damn well that it is not, effectively trading on the lack of knowledge of the debtor. Personally i don't think it is.
What you describe is a clear breach of OFT Debt Collection Guidelines (exploiting the lack of knowledge of the debtor) and Fraud by False Misrepresentation (implying a debt is enforceable when it is not). Misrepresentation of the law is an element in the offence of Fraud by False Misrepresentation. Both creditors and DCAs need to be acutely aware of this. I suspect they are, but rely on debtors not being legally savvy.

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[MaryBurns]

Re: What is the DCA's stance on Statute Barred debts.....

I have only question after reading this entire post how does she excuse debt collectors claiming that debts are not SB ????

[CleverClogs]

Re: What is the DCA's stance on Statute Barred debts.....

I have only question after reading this entire post how does she excuse debt collectors claiming that debts are not SB ????

Would she really wish to castigate members of her tin-pot "professional" association?

She seems to think that any acknowledgement of an alleged debt would restart the limitation period, even if the debt had already become statute barred.

[gravytrain]

Re: What is the DCA's stance on Statute Barred debts.....

I have only question after reading this entire post how does she excuse debt collectors claiming that debts are not SB ????

I don;t think she is saying that, what she is saying is that debt coolectors are justified in collecting statute barred debts as long as the debtor has not advised them that they aware of the fact.

This is not meant as a moral pronouncement, it is an industry guidance. The intention is to reduce the number of debts that are sold on to other companies that are noncollectable. This would give a false value to any investment portfolio.

It does however give an incite into the mind set of DCA's , in that they do not care about the spirit of the law, just about what they can get away with.

[CD36]

Re: What is the DCA's stance on Statute Barred debts.....

A couple of points I'm not clear about on this:
If a DCA knows a debt is SB and the debtor has advised of this, why do they continue to attempt collection? Surely anyone that's aware a debt is SB is very unlikely to agree to payment, regardless of how many letters they receive?
Also, if the DCA attempts to sue, surely they would have to provide falsified evidence to the court regardless of the case being defended or not?

[Celestine]

Re: What is the DCA's stance on Statute Barred debts.....

Ignorance is the main source of income for DCA's.

Often that same ignorance extends as far as Court proceedings. You'd be amazed how many people will simply pay up when they receive a Statutory Demand or a N1 Court Pack demanding payment.

There is no regulatory system to prevent such abuses at present, so the DCA's will push it all the way. After all, against a Litigant in Person, it will cost them nowt to withdraw a claim if the DCA realises its getting to be too much like hard work.

That's why forums such as ours and many others are a vital way of spreading the word.

[CD36]

Re: What is the DCA's stance on Statute Barred debts.....

This is true, but surely they would have to prove evidence to the court of either acknowledgement or payment? Or if undefended, does a judge just automatically allow a default judgement without requiring proof from the claimant?

[Celestine]

Re: What is the DCA's stance on Statute Barred debts.....

If undefended, they get a default judgment.......and that is what most often happens.

[gravytrain]

Re: What is the DCA's stance on Statute Barred debts.....

Unfortunately the court will seldom raise an action off its own initiative.
If the defendant does not raise the fact that the agreement is statute barred then the court will enforce the agreement(at least in England and Wales).
I am unsure abut the case in Scotland where the legislation is different as indeed is the judicial process.

[CD36]

Re: What is the DCA's stance on Statute Barred debts.....

That's disconcerting. I have SB debts at address's that I left over 10 years ago, but it would appear that a DCA could still send papers there and I would know nothing of it.