What exactly can a DCA charge for Collection of a debt from a Consumer?

[andrew1]

Hi, I wonder if someone can advise me of exactly what a DCA can charge by way of collection costs when collecting debt?

I acknowledge:

1) Litigation costs of agent solicitors used

2) any Court Costs

3) any third party expenses, bailiffs etc but

Can they charge the debtor any other admin for letters, telephone calls etc and/or Interest charges for their collection costs before any enforcement action or costs are added or does that cost go to the Original Creditor as the DCA's fee for successful collection of the debt?

I'd just like to understand the scope a DCA has for adding costs to a debt and where the guidelines are or legislation is which provides guidance for consumers as to what to accept as legitimate charges.

Thanks

A1

[ironman]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

Only a court can award any costs if a claim is successful in court

A DCA cannot add any collection costs to any debt unless there is a contractual clause in the original agreement/contract with the origibal creditor. 99,9999% of the time there is no such clause. If the DCA is only collecting on behalf of the original creditor and does not own the debt, you simply tell the DCA to bod off and deal with the original creditor

[andrew1]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

Thank you very much ironman, that answers the first part of this equation then. A Dca cannot add any costs of their own without there being any contractural clause with the Original Creditor. So how about these clauses then? How would you deem these terms in the Original Contract in relation to your answer now?

"As well as the charges previously mentioned in Clauses D,F,K,N(3)P & T (irrelevant for this exercise)
You must pay the following:

1) All reasonable costs and expenses we have to pay or decide to charge as a result of any Term or Legal Charge being broken.

2) All other reasonable costs and expenses we have to pay or decide to charge in connection with this Agreement or Legal Charge

The costs and expenses mentioned in this clause include:

a) any costs of expenses we pay in legal proceedings (whether or not you are involved in the proceedings)

b) any other costs we pay, including debt-counselling, collection agency, asset management and valuation fees and

c) any of our own administrative expenses. (We may recover these expenses by charging you a fee which we reasonably estimate to be the cost to us of doing the work for which we are charging the fee)

M. You will be sent a notice of any costs, expenses and charges you must pay under Clauses D,F,L,K, N(3) P & T,. We have a right to amend these costs and expenses to reflect and change in the costs incurred by us in carrying out the work. We will provide you with at least 28 days notice in any change in the level of such costs before they take effect. We will add our Costs, Expenses and Charges to your account as soon as we have to pay them or decide to charge them. You should pay them at that date. If you do not we will charge interest on then under clause B (2) (That’s the interest calculations)


There are certain phrases which I find a little be s.140 about them such as " or we decide to charge them"

Tell me what you think now?

Thanks..

A1

[Amethyst]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

HFC got told off by the OFT for their solicitors firms adding a standard 16.4% ' collection charge ' to debts pre court action.

They had only this term in their contracts


and were told that there was no contractual term allowing for this standard 16.4% charge.

Might assist to read the HFC documents, ( http://legalbeagles.info/wp-content/...uirements6.pdf ) It might not, just seems to me to help with this question.

[andrew1]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

Thank you, that is most helpful.

Now let's move the goal-post a little....

The original creditor is permitted to collect it's own debt and we should not be asked to pay for any additional costs apart from any 'reasonable' disbursements attached to that process.

The Original Creditor has a Credit Control department which attempts to do that.

They then set-up a department and call it their legal department similar to what we have been reading about re Wonga et al...., it is not a firm, it is just a 'department' they employ a solicitor to work in there under a contract of employment with the Original Creditor, (so an employee) and continue to write to the debtor in the name attributed to this new 'department', but this time they begin charging and accruing 'legal fees' on the debtors account charged at external solicitors rates.

They are obviously not a DCA or a 'firm' of solicitors, just a 'department' of solicitors.

Now return to the original question and question whether or not the Debtor is being charged collection costs?

Yes or No?

[andrew1]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

Anyone fancy making a comment on the above post?

[ironman]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

They can only charge if there is a contractual clause allowing them to. If the debt is still in house then the debt is still live as it has not been terminated. In that case any collection charges you agreed to when signing the original contract will apply as to collection charges. If it is then a third party company after the account has been terminated, then no they cannot add collection charges unless expressly stated that a third party can in the original contract.

Without clarity i cannot say for certain but on the whole i will say, no, they cannot charge outsourced legal fees etc

[andrew1]

Re: What exactly can a DCA charge for Collection of a debt from a Consumer?

Thanks ironman, this is a slightly odd scenario. Not that in-house solicitors are an oddity,but it's the manner in which this particular in-house solicitors was set-up.

We saw in the Wonga set-ups that 'dummy' firms were set-up, i.e. headed notepaper with a 'legal' sounding name, but altogether they were no different than the one I'm speaking of albeit there could be no confusion over the name and who they represented.

In my scenario, a 'department' was formed within the finance company - they didn't call it the canteen, they didn't call it the accounts department, they didn't call it the sales department. This department they decided to call their 'legal' department, basically no different from any of the aforesaid departments staffed by PAYE employees.

Now in post 3 above I listed out the terms and conditions relating to legal costs or collection costs, many of those terms I'd find Unfair and unbalanced as they refer to 'If we decide to charge them' and 'reasonable charges' - what's 'reasonable to them isn't reasonable to the suckers who have to pay them like £250 for a default charge.

I also question the fact they have charged hourly 'legal fees' once the account was passed across the desk to another person who refers to him/her self as 'solicitor' or refers to his/her employer as 'their client'.

All the time these people are under an employment contract with the finance company I cannot see how they can refer to themselves as a 'solicitor' acting for our client like this.

I have seen in-house solicitor set-ups and they are all registered and separate names, but this crowd is a 'department'.

I can accept if they use Counsel, they charge, I can accept if they use outside firms to litigate they can charge, but this is not - it's a department like Green & Co for NatWest, a name on a piece of paper...the accounts do not get terminated like credit cards, these are mortgages and loans so it's repossession and this department repossess.

Does that make sense?

A1