Debts show twice over !

[Andy2]

On my credit file I have two debts that show twice over - once with the original lender and then once again with a debt collection agency. In both instances the debt collection agency has added a £1 to the total figure (I have rounded the figures up).

So one entry has the original debt = £3,000 shows against original lender
Another entry has this assigned to a debt collection agency = £3000 + £1 = £3,001 shows against debt collection agency

total debts = £6,001 (!)

This happens again with another debt for £7,000, so I have the original entry for £7,000 with the original lender plus one entry for the same debt (plus £1) with the debt collection agency - total debts = £14,001 !

The effect of this has been to "add" £10,002 to the amount the report says I have "borrowed" PLUS add 2 more "accounts" to my list of accounts.

As if being in debt isn't bad enough I now have this to contend with. The agency in question is Max Recovery.

Has anyone had any dealings with this company and why are my debts being doubled on my credit file. I really hope there is logical reason for this.

[Adam Davies]

Hi Andy2
Storm is an expert in this field and hopefully will reply to your question later,must say I,ve not come accross this unless its a fairly new thing.
regards


Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[Andy2]

What worries me the most is the section that shows how many accounts I have and what my total borrowings are. As I say the effect of this action has been to bump up the number of accounts by two PLUS bump up the amount owed by £10,002. It looks like the reason they have added a £1 to each account is so that they can put another entry for each debt into my credit file.

[Storm]

This is common practice throughout the credit and debt sale industry.

A number of the larger debt purchasers are now starting to supply data to the Credit Reference Agencies.

When debt is sold the original creditor gives a final status and balance. The new creditor in this case the debt collection company then gives a starting balance and reports until the debt is collected.

I would suggest that the +£1 is because this is normally what the debt is sold for - to maximise the tax / right off to original lender.

The reason for this practice is to allow future credit providers to calculate indebtedness.

If the original lender stopped reporting when the debt was sold the assumption would be a debtor was no longer making payments but in reality these payments are still being made but to the debt collection company.

[Storm]

Re your last post creditors don't use the CRA's calculation of indebtedness.

Its a bit like the creditscore they give you - it only an indication of a possible score measured against the UK population.

You might get an excellent score through the CRA and then get declined by prime lenders.

[Andy2]

Thanks Storm - that makes a lot of sense. As I say my biggest worry is the "indebt" figure which is now £10,000 more than it should be. To make things even more complicated I have another debt with a debt management company but this does not show twice on the credit report - instead the name of the finance company has been replaced by the name of the debt management company. I must say I think this way is fairer as it "just" shows one debt and who it is now payable to.

[MelanieGiles]

Storm

Are you saying that it is common practice for debts to be sold for £1! I knew that the sale margins were low - thought anything up to 10% was generally accepted - but that is ridiculous, and if so I am in the wrong profession!!!

What happens when the assignment companies receive their dividend from the Trustee or Supervisor. Is there then some sharing of the spoils based upon a success fee?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Adam Davies]

Thats a good point Melanie,if debts are sold for a pound,even upto 10%, then surely the debt collection company will always vote in favour of an IVA because they are going to make a huge profit on their purchase, even at a 25p dividend.

regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[Andy2]

I know for a fact that my debts were not sold for a £1 in either case. It is more to do with creating a different entry with a different figure on the credit file - the lowest denomination is a £1. I think Storm is referring to cases - very common in the business world - where the company/trader is bought for a £1 BECAUSE it comes with so many problems. I remember last year the company MFI was bought for a £1 because it had so many problems that the new owner had to inherit. It's not the same as buying the rights to pursue a £7000 debt for a £1. At the end of the day the new "owners" of my debt have the right to pursue the FULL amount and so there is no way they acquired it on the cheap.

[Storm]

It depends on sale relationship. It is in the interests of the original lender to get a minimal amount ie £1 for the debt so they can max there right off figure / tax benefit on day one.

Depending on the commercial agreement they are then due a further payment only as the debt is collected.

Currently worked debt is selling for between 4p - 10p in the £.

The debt companies break even at 20p in £ across the book. The reason they push for higher returns in the £ is because a % of that book with deliver nothing.

Andy2 the debt collection co is entitled to register an entry for the debt and report its performance they do not need to add £1 or any number to report.It makes no difference at all to the way the data is veiwed by a scorecard.

[go_4_broke]

Evening all

I had a discussion with someone about this a while ago, which basically fits in with what storm is saying.

When these creditors sell off these debts for £1 or next to nothing they are effectively writing it off, and have no further interest in it.

However they can't be seen to do this overtly, because that would give people the impression they are being let off.

However the sold debts come with fairly hefty restrictions on what kind of collection activity can be undertaken - the purchaser can't just start firing off CCJ's for example, as soon as the bought debt hits the desk. The originator has to protect their reputation (to some extent anyway).

So the purchasers likelihood of any return hinges on good payouts in the odd IVA or bankruptcy to outweigh the volume that go nowhere.

Once the debt is sold in this way it's original value loses relevance and the buyer has little or no expectation of recovering it. It simply acts as a licence to extract whatever can be realistically obtained.

-Best


Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[MAY2006]

Andy
This happened to me and it was Barclaycard and Max Recovery, I rang Barclaycard and spoke to them about it quoting my old BC account number. They were extremely helpful and the following month this was removed.
The funny thing was this only showed on one Equifax not Experian.
Ring your original creditor up and get them to remove it, or write to the CRA enclosing proof that incorrect information is being held about you.
My advise on Max recovery don't waste a phone call your breath or a stamp on them, they are extremely unhelpful.

[Andy2]

Yes - one of the entries is for Barclaycard ! I have only checked Experian and the original Barclaycard debt is there and then the same debt with Max recovery (the same figure with a £1 added on). The thing is I am so ashamed about my debts that I daren't even ring Barclaycard about it. I mean my credit standing is ruined already - but whilst I stand up and be counted for the debts that I have incurred, I don't really like seeing them "doubled" on my credit report. I mean if everyone of my 7 creditors did that I would "look" as though I owe twice the amount I do.

[MAY2006]

Andy, check Equifax also and then ring Barclaycard up, honestly they were very helpful.
I know exactly what you mean, I don't mind the information showing as long as its correct, I was so p****d off that I did'nt even think about the fact that I would have to speak to someone I owed money to something I avoided doing completely pre-IVA!!

[Andy2]

I must admit I would prefer for it to look right, I owe the money, granted, but doubling it and adding a pound does not seem fair as it makes it look as though I have been completely reckless. True I will not be applying for any credit but the fact that my credit file says I have "x" number of accounts and £10,002 more "headline" debt than I do is just plain nasty. Nothing is going to repair my credit rating anytime but this is just pulling it the other way.