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Archive for the ‘International Debt News’ Category

CSA to be Consulted in OFT Guidance for Debt Collectors

Wednesday, May 11th, 2011

In the forthcoming update to the Office of Fair Trading (OFT) Guidance for Debt Collectors, which is expected in the latter part of the year, it has been announced that the Credit Services Association (CSA), who are the voice of the Debt Collection industry in the UK, will be consulted as a key stakeholder.

The CSA’s Code of practice, which was originally published in 2003, has had large parts of it’s content used as the basis for the new Guidance. It is expected that the new Guidance will have clearer instructions around data accuracy and a specific section dedicated to debt purchase according to CSA’s Head of Membership, Compliance and Educational Services, Claire Aynsley:

“It is vital that the consultation has insight from those in the collections and debt purchase sectors who have front line knowledge of collecting debts in often challenging conditions,” she says.

“Members of the CSA, and colleagues within the Debt Sale & Sellers Group (DBSG) will help ensure that any future Guidance is properly informed, so that best practice can be highlighted to the ultimate benefit of all parties.”

No win – No fee Debt Collection…. too good to be true??

Tuesday, April 12th, 2011

A recent e-news article from the UK Debt Collection Bureau explores the myth behind no win – no fee Debt Collection.

Whilst British Business remains in the grip of tight economic conditions, over the past couple of years, there has been a rise in the demand for Debt Collection Companies advertising themselves as operating a ‘No win – No fee’ policy when this clearly is not the case. As this practice continues to grow, so does the misinformation surrounding this ‘no win – no fee’ culture within the Debt Collection Industry.

The position of some is that as they seemingly pay nothing initially, the Debt Collection firm in question will work harder to recover the money and that there is nothing to be lost, only gained. The simple truth of the matter is very different and should be taken very seriously.

The ‘No win – no fee’ term is simply being used as a marketing slogan in the Debt Collection Industry to mask over a hidden ‘drip pricing’ structure and quite often companies that advertise themselves as ‘no win – no fee’, require a membership of joining fee which straightaway, is an immediate contradiction of their key selling point which should give a clear indication of what is to follow.

Often these companies will charge exorbitant commission rates, quite often as high as 50% (even higher in some instances) and will have hidden costs contained within their services. It is also common that these type of companies are fronts for firms of fee earning solicitors who will simply wish to matter to proceed to litigation so they can begin to apply their hourly fees (Average £250 per hour) as well as any other costs incurred therein. There have been instances where a debt has been collected and the actual amount that was owing in recovery fees was nearly 3 times what the actual debt was in the first place

Other ‘No win – no fee’ companies have ties with Debt Management and Insolvency firms looking for free, direct and easy lead generation as once details of a debtor are supplied, they will bombard them with details of ‘how to clear their debts with one easy payment’ which  involves the usual bankruptcy, liquidation or IVA/CVA option. This a far more financially lucrative option than actually attempting to collect the debt and will severely prejudice any of your attempts to recover what is owing to you.

With most ‘no win – no fee’ Debt Collection companies, it is simply a numbers game. It is a simple economic fact that a company cannot operate without cash flow so how can a Debt Collection firm work for ‘free’ or deliver the service they promise for ‘free’ without some sort of guarantee. Some Debt Collection firms actually have it written in their Terms & conditions that if they fail to collect then you will be liable for their costs.

No company can operate without cash flow so the question is, what will they actually do to recover your money? They cannot offer you any form of service by means of updating you etc and they will try to charge you where possible. More often than not, it is simply a numbers game. If you have a case with no merit then maybe this is a valid option for you but once again, you may be liable for an invoice in the event that they cannot collect it.

5 Facts to consider

Fact 1: Many Debt Collection Companies that advertise as ‘No Win – No fee’ will still require a joining fee or membership fee as they like to call it. 

Fact 2: No Bona fide Debt Collection Company operates any form of ‘Money Back guarantee’ scheme

Fact 3: Some ‘No win – No fee firms’ allegedly have ties to Debt Management & Insolvency Firms which will seriously prejudice the potential of successfully recovering your debt.

Fact 4: The commission rates charged by ‘No win – No fee’ firms will be far higher than other means.

Fact 5: Most ‘No win – No fee’ operate excessive drip pricing structures and minimal transparency in relation to what is actually being done.

As the old saying goes ”if something is too good to be true then it probably is”. You may think you have nothing to lose by using a ‘No win – No fee’ debt collection company, you will probably lose more than you thought!

Banks Asset Recovery May be Delayed by Consumer Debt

Wednesday, March 30th, 2011

Fitch Ratings says it expects that elevated levels of consumer debt may prolong the recovery of the asset quality of South Africa’s major banks.

Earlier the ratings agency had said the due to the high levels of consumer debt and a difficult operating environment there had been an increase in the amount of consumers who had been applying for a debt review as part of the National Credit Act’s debt review process.

It is estimated by Fitch Ratings that the value of the debt review exposures of the four major South African banks was 21 billion rand during 2010. It was also estimated that 200,000 debt review applications had been received by December 31st 2010 and that there was approximately 7000-8000 new applicants each month.

Due to unforeseen delays the banks have seen their attempts to begin debt recovery of the debt review exposures hampered.

Daniel De Bie, a director in irch’s financial institutions teams said “To minimise the impact of these delays certain banks have proactively used loan restructuring and in certain instances have sought to terminate the debt review process.”

“However, a recent high court ruling on credit providors’ right to terminate the debt review process and a moratorium until the end of June 2011 may further delay banks’ debt collection efforts and negatively effect collateral values.”

Fitch said it believed that the asset quality indicators of the four major South African banks would remain at elevated levels due to the delays.

Bailiffs Required for Coventry

Tuesday, January 4th, 2011

Those trying to dodge paying outstanding traffic debts in Coventry should be aware as Coventry City Council is on the hunt for bailiff firms to hunt down the non-payers.

A tender has been opened inviting bailiff companies to vie for one of three openings to collect revenues and parking enforcement over a period of three years. Those bidders who are successful will be required in pursuance of road traffic debts arising from non-payment of parking penalty charge notices and bus lane enforcement penalty charge notices issued under either the Road Traffic Act 1991, Traffic Management Act 2004 or Transport Act 2000.

The contract is said to be worth £3.75million with tendered bids to start in January 2011.

HMRC plots £1bn debt recovery contract

Wednesday, December 8th, 2010

HM Revenue & Customs (HMRC) is planning to launch a major tender for the provision of debt recovery services that will have the capacity to accommodate debt placements to the tune of £1bn per year.

HMRC’s commercial directorate has revealed a prior information notice – a forerunner to a full tender – to provide potential bidders with information on its plans to seek debt collection-type matters. Full details are sketchy but the body is presently undertaking a “gathering exercise… to identify the types of services that may be required”. The provisional plan is to split the contract into lots for debt collection agency services and allied debt collection services. Bidders for the latter will need to comply with a performance specification to enhance debt recovery rates through more effective use of available data, analytical tools or market knowledge.

Significantly, there is potential for further pan-Government opportunities. Successful bidders could be allowed to work for other Central Government departments, executive agencies and non-departmental public bodies. This would open the door to work with scores of organisations, including Acas, the Health and Safety Executive and the Serious Fraud Office.

Last month, it was reported that HMRC’s bad debts stood at £6.4bn, which is a 40 per cent leap on 2009

Debt collection firm files for Chapter 7 bankruptcy

Tuesday, September 21st, 2010

A company that used to specialize in collecting delinquent debt has sought protection from creditors for itself.

The ironic bankruptcy case struck Hudson and Keyse LLC of Painesville, Ohio, which has been open for more than two decades.

The company, which filed for Chapter 7 protection at the U.S. Bankruptcy Court’s Northern District of Ohio, owes more than $63 million to more than 200 creditors, and reported assets of about $288,000, according to Crain’s Cleveland Business. The company effectively closed and fired its 40 employees on September 1. It has downsized from about 150 since 2008.

Hudson and Keyse has been in financial trouble since 2008, thanks to “inappropriate management,” according to CEO Mark Finston. The company owes the most – about $60 million – to Vion Holdings of Atlanta, and the majority of its creditors are vendors. Also counted among those it owes money are several employees due thousands in back wages.

The industry news source Inside Accounts Receivable Management said the company was paying creditors as much as twice the market price for the debt it purchased and attempted to recoup.

Utilities get debt collection option

Friday, September 17th, 2010

Regulators have given Texas utilities a payment-recovery option when electric users sign up with new providers and abandon their old power debts.

The Texas Public Utility Commission on Wednesday approved a so-called switch-hold rule, which takes effect June 1.

Customers who are behind on their payments cannot just refuse to set up payment plans and then switch to another provider.

The Dallas Morning News reported Thursday that utilities must provide electricity to low-income customers during very hot or cold weather and to people who rely on electronic medical devices to survive. Companies must also offer deferred payment plans in some circumstances.

In return, the companies asked for the ability to place a switch-hold on customers who do not pay.

“I think we’ve struck a great balance,” said Donna Nelson, the PUC commissioner who worked on the rule. “People who are trying to do the right thing aren’t harmed or penalized.”

PUC Chairman Barry Smitherman says all customers have to do is pay off the bill before they switch to another provider.

“The normal, average person understands that and doesn’t have a problem with it,” said Smitherman.

Ronnie Lowe, director of the Lancaster Outreach Center, praised the new rule.

Lowe deals with people who he says switch electricity providers often to avoid bills, then ask the charity for help. Another trick is putting the electricity bill in a child’s name, which can create a blot on a child’s credit report before he can even get his own credit card, according to Lowe.

“One of the things that we’re trying to do is promote self-sufficiency,” said Lowe. “We really want people to understand that the bill is their bill, and they’re responsible for it.”

Lowe, a member of TXU Energy’s Low Income Advisory Board, says the utility gives the Dallas-area outreach center about $60,000 a year to pay utility bills for the needy.

Some advocates question whether the PUC can bar electric companies from signing up customers dropped by other providers.

“We’re going to explore legal avenues to rein in what we see as an abuse of their power,” AARP spokesman Tim Morstad told the Fort Worth Star-Telegram.

Facebook postings can damage users in legal, financial arenas

Wednesday, September 8th, 2010

Comments and pictures parents post on Facebook can come back to haunt them during custody battles, debt-collection efforts and job applications.

A compromising Facebook post “is like a smoking gun in that you can’t destroy it,” said attorney Shawn Kenney, the law department team leader at Thrush Law Group.

Kenney said he’s seen custody cases hinge on arguments of parental incompetence stemming from Facebook posts. He recalled a case in which a father posted a picture of himself proudly displaying a 3-foot acrylic bong. In another case, Kenney said a mother wrote about how she’d been out with her girlfriends “getting trashed for the third time this week.”

“When people put information on Facebook it may not be in their best interest and does come back to haunt them in ongoing litigation involving custody,” Kenney said, adding he’s also seen a mother call her young boy “my pimp” and a father post a picture of himself baring tattoos while posed with a butcher knife, joking that he was a killer.

Divorce attorney Robbie Lewis, who owns the Law Offices of Robert G. Lewis, P.C., has also seen Facebook rear its often-ugly head in custody battles.

“The whole face of discovery in divorce has really changed over the last few years,” Lewis said. “I can’t tell you how many times clients have found out about extramarital affairs through looking through their spouses’ telephones in the middle of the night, or checking their spouses’ e-mail or Facebook accounts.”

Lewis said in the past, clients would hire private investigators to dig up dirt on spouses. Now the evidence can be found with a few mouse clicks.

“People put silly things on Facebook accounts – pictures of themselves or other people in bars doing inappropriate things” that end up presented at trial, Lewis said.

Attorney Grady Wade, who, along with his work in other legal fields, defends clients in debt collection cases and sometimes collects debt for creditors, said while he doesn’t personally use Facebook to investigate debtors, anything people post publicly on Facebook is fair game.

“If they put stuff up there, it’s pretty much for public use,” Wade said. “If they don’t make the page private, then it’s for public use and they don’t have any expectation of privacy.”

The Fair Debt Collection Practices Act, which prohibits abusive behavior and restricts the methods collectors can use to locate debtors, doesn’t prohibit using social networking sites.

Wade said third-party debt collectors aren’t allowed to publicly shame debtors. For instance, a collector couldn’t become a friend of a debtor under a false pretense and then post something on his wall about him owing money.

The restrictions don’t apply to the creditors themselves, Wade said, adding that he’d advise clients to record any contact with a third-party collector.

Tucsonans applying for jobs at the University of Arizona, the region’s second-largest employer, had best clean up their Facebook profiles.

UA human-resources manager Chris Wolf said managers dig up whatever information they can to vet job prospects, and Facebook is within limits.

“If a candidate regularly references violent behavior, then that may be a red flag,” Wolf said. “It’s more likely that a hiring manager will discover that someone references topics such as their political views – irrelevant when it comes to determining whether they can perform well, yet it may create an unintended bias.”

No matter the context, Kenney said people should stop thinking of Facebook posts as semi-private announcements to close friends. He recalls a mentor’s advice from decades ago, advising him to be careful about what he put in writing and says it applies to social networking sites:

“Never put anything on there you wouldn’t want on a billboard on the highway,” he said

IRA man and convicted garda set up debt collection agency

Monday, September 6th, 2010

A MEMBER of the IRA gang responsible for the death of Detective Garda Jerry McCabe has set up a debt collection agency with an ex-garda who was jailed for leaking intelligence to the IRA.

John Quinn, 43, who served six years in jail for conspiracy to commit the robbery in Adare, Co Limerick, is listed as a director of Global Debt Collection Agency, which was registered in May last year. His co-director is Denis Kelly, 47, who is a former garda.

Quinn was described as a “gopher” and “messenger boy” in the IRA’s 1996 post office robbery, in which Det Gda McCabe was gunned down and his colleague Ben O’Sullivan was seriously injured.

Kelly, meanwhile, was jailed for five years in 1992 after he was found guilty of tipping off the IRA about impending garda raids on arms dumps.

The ex-garda and the convicted IRA robber are registered on company documents, which give the address of the firm as Faha in Limerick.

Garda sources say they have received no complaints about the business. But the involvement of two convicts in recovering debts from cash-strapped businesses highlights the lack of regulation in the booming debt-collection sector.

Consumer and legal groups have repeatedly warned about the need to monitor the plethora of new debt recovery agencies that have mushroomed during the recession. The Law Reform Commission recommended the regulation of debt collection agencies earlier this year while the Free Legal Advice Centres have also called for urgent monitoring.

Justice Minister Dermot Ahern is understood to be examining ways of regulating the industry.

Kelly and Quinn are among a number of former prisoners to have joined the debt collection business. Martin Foley, a one-time henchman of Martin Cahill who has survived several assassination attempts, was one of the first in the business with Viper Debt Recovery and Repossession Services.

In a separate case, the garda’s organised crime unit is investigating the involvement of criminals in debt collecting in the Dublin area. Five men were arrested in Dublin last month for allegedly aggressive debt collection.

Quinn was described in court as the “messenger” or “gopher” for the IRA gang behind the botched robbery in 1996. Quinn was charged with the unlawful possession of ammunition and with conspiring to commit a robbery. He eventually pleaded guilty to the conspiracy charge and was sentenced to six years in jail. During his sentencing hearing, the court heard that Quinn was a carpenter who worked for his father’s construction firm, and had no previous convictions. He claimed to “deeply regret” the killing of the detective.

During his trial, gardai said that Quinn repeatedly claimed he was a “dead man” and would be found in south Armagh with a bag over his head. He allegedly told gardai off the record: “I’m a dead man. I’m looking at 30 years, ye know that. What if this got sanctioned from above? Where do I stand? I know it got the nod from above. I was told I’d be found in south Armagh with a bag over my head.”

Four other IRA men, Pearse McAuley, Kevin Walsh, Michael O’Neill and Jeremiah Sheehy, pleaded guilty to the manslaughter of Det Gda McCabe.

Former garda Kelly, who is originally from Cullen, Mallow, in north Co Cork, was stationed in Henry Street garda station in Limerick city centre during the 1990s when he was caught passing information to the IRA. At the time, gardai suspected that the IRA was getting tip-offs about impending raids on arms dumps.

Kelly was caught taking notes from a confidential fax ordering a swoop on three IRA arms dumps. Detectives then followed him to a phone box where he telephoned his IRA contact to pass on the details. Kelly was later released after serving three years of a five-year sentence.

Student loan debt collectors?

Friday, August 27th, 2010

Students may soon be confronted by debt collectors on their doorsteps.

A source inside the Ministry of Social Development has told The Wellingtonian the Government is considering using private debt collectors for collecting outstanding student loans.

Revenue Minister Peter Dunne has denied the claim, saying it would only apply to students living overseas.

The Government has engaged consultant company Burleigh Evatt to research private debt collection practices, and has also discussed creating a student finance company to manage the collection of student loans.

Last year in the Student Loan Annual Report, the Government recorded 30 per cent of student loans as an expense, given that they were unlikely to be repaid.

The Wellingtonian requested more information from several government ministers and departments about how the changes to student loans collection would work, but they proved extraordinarily evasive.

Questions about the proposal were sent as Official Information Act requests to Tertiary Education Minister Steven Joyce, Finance Minister Bill English, Social Welfare Minister Paula Bennett, the Treasury and the Inland Revenue Department.

All acknowledged receipt of the request except Ms Bennett’s office.

Mr English’s office informed us its request was being transferred to Mr Joyce and this was followed by the Inland Revenue Department transferring its request to both Mr Joyce’s and Ms Bennett’s offices.

The Treasury transferred the request to Ms Bennett and Education Minister Anne Tolley’s offices, neither of which acknowledged the request.Each time the request was transferred The Wellingtonian was told there would be another 20-day wait for a response.

When the 20 days to respond had expired, the only response we received from the Government was yet another transfer. Mr Joyce transferred the request at the last minute to Ms Bennett’s office.

Initially, when The Wellingtonian told Mr English’s office that we would be running a story on student loans, the office denied any talks about privatisation had taken place. Later that day Mr English’s spokesman demanded the right to comment before we published.

When we subsequently offered Mr English the chance to comment last Friday he declined and referred us to Ms Bennett. She also declined to comment, saying her office had never received the Official Information Act request. On Monday she then passed us on to Revenue Minister Peter Dunne.

Mr Dunne provided a brief written response to our inquiries about administration of the student loans on Tuesday.

“The Government aims to improve services,” he said. “Part of that includes the efficient administration of student loans and ensuring that all loan borrowers repay their loans in a timely manner.”

Mr Dunne denied the Government was planning to create a private student loan company, but said private debt collection practices might be used to collect from overseas borrowers.

“Regularity of payments tends to slip especially when borrowers move overseas,” he said.

“To improve the efficiency, officials have been investigating a number of options, including the possibility of private debt collecting.”

WHAT HASN’T BEEN CONFIRMED

These are the questions which have still not received full answers:

  • What is the share structure of the proposed student finance company?Will it be state-owned, privately-owned or a mixture of both?
  • How will the shares be issued?Will they be offered to the public?
  • Has a preferred owner been established? If so who? Or would ownership be split between banks?
  • Would the student finance company be empowered to deduct money directly from an employee’s pay or would the Inland Revenue Department still collect it?
  • When is the proposed student finance company expected to take over student loan collections?

Additional questions were also sent to Ms Bennett’s office last Friday. They were:

  • Will the payment exemption for low-income earners continue?
  • Will the company have the same power to impose late payment penalties and penalty interest as the Inland Revenue Department?
  • Will the company be able to seize property or other assets?
  • Will the company be able to restrain the travel of people with student loan debts?
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