Question

I have received a letter from a debt collection company claiming I owe them £1,827.74 for a credit card I defaulted on in January this year. My circumstances have not improved since then I was wondering if they might legally be required to accept my offer of £5 per week, which they are refusing point blank and insisting on a minimum of £50 per month?

Answer

Well first of all they are unlikely to be entitled to be chasing the debt in the first place as it is unlikely that they have taken a ‘legal assignment’ of the debt from the original creditor. When you originally entered into the credit agreement the ‘contract’ was between yourself and the credit card company, and at no point would there ever have been mention of a specific debt collection company.

In contract law, the only people with a legal right to claim are those who are privy to the original agreement unless there is an ‘assignment’ clause incorporated into the terms and conditions. It must be said that the assignment clause itself is not a rare event, but what is extremely unlikely is that a ‘legal assignment’ of the debt has actually occurred - as debts are usually either bought up in bulk by the debt collection agencies, or they are simply requested to try and recover monies owing for a commission perhaps.

Action

1. Record everything and remember that all dealings should be in writing and if possible, sent recorded delivery.
2. You should first request a copy of the legal assignment. I strongly suspect that this will get this specific debt collection agency off your back. Remember that the answer above is valid should the original creditor pass the debt over to a second debt collection agency.
3. Negotiate with the original creditor only. If you are genuinely only able to afford £5 per week then this should be accepted by them. If they refuse, or if they simply suggest that the debt has been passed on to a debt collection agency then you can either: a) cease all negotiations until you receive official court papers or b) send them £5 per week as per your offer.

Resources

• Letter to Debt Collection Agency - Request copy of legally assigned agreement.
• Letter to Original Creditor - Offer of Pro-Rata Payment.
• OFT Budget Planner - Send this with your pro-rata payment offer.