The Statute Barred Debts Scam
of the Law Mean Rich Pickings for the Debt Spivs
The Statute Barred
Debt Scam is just one example of how debt purchasing companies make
a tidy bit of money because the law is so woolly about what is allowed
and what is not. When a legal point is so fuzzy that lawyers may argue
about it for hours it means that this is an area which has rich pickings
for the debt spivs. They can interpret the law in the way which favours
their own activities and leave the areas of doubt in the minds of their
victims to be dealt with by the usual fear, uncertainty and ignorance
of the law which are the debt spiv's trusted allies.
What Is A Statute
A Statute Barred
Debt is a debt which cannot be recovered by a creditor through legal
action because the time limit imposed by the various limitations regulations
has been exceeded. In England and Wales this is six years; in Scotland
this is five years. Clearly a debt cannot purposefully go on forever
and ever, and so some kind of time frame has had to be imposed and case
law suggested that the current limitations laws would eventually be
applied to this. In England and Wales this is also what is alluded to
when a debt is cleared from one's credit record after six years.
A debt is considered Statute Barred if the creditor
has not contacted the debtor about the account for a period of six years
(five in Scotland) and no further action has been taken.
However, a Statute
Barred debt may be made the subject of a CCJ under certain conditions
and this will alter its status accordingly. There are plenty of grey
areas where debt spivs and their wily lawyers can and will put a legal
spanner in the works rather than doing nothing.
There is a lot of uncertainty about Statute Barred debt
in the minds of the public, and the debt spivs rely on this to turn
a nice profit.
To quote from the
excellent Debtquestions site, with a Statute Barred debt,
is not able to take any legal action against the debtor in order to
recover the debt. It is considered unfair if a creditor or debt collector
misleads the debtor into believing the debt is still legally recoverable.
It is also considered an unfair practice if the creditor or debt collector
press for payment after the debtor has stated they will not be paying
the money owed. This could amount to harassment contrary to Section
40(1) of the Administration of Justice Act 1970.
But as we know,
DCAs do not always follow the law. Some are ignorant of it, and many
knowingly break it. The following is how a debt purchasing company would
make use of such debts within the mechanism of the existing debt purchasing
How Do Debt Purchasers
Profit From Statute Barred Debts?
Here is a scenario
of how a debt purchasing company will make a great deal of money for
doing very little, by the crafty use of Statute Barred debts.
Statute Barred debts
will be worth very little on the open market. Certainly they will be
much less than the usual 10p in the pound which delinquent debtor accounts
are usually sold for once the original lender has written it off and
collected on the insurance and the tax loss. (Selling on the data relating
to debts which thus no longer exist is a matter all to itself; suffice
it to say that the ICO considers this an unfair practice.)
Statute Barred debts
would usually be peddled for about 3p in the pound. Such dealings will
be kept very "hush hush" because they are so dodgy. But that
doesn't seem to stop the debt spivs from doing it, from what we see
in the consumer forums.
So let us take a
scenario where a thousand delinquent accounts are known to be over 6
years old. Their value has been considerably reduced because of their
age. But some money can still be squeezed out of them on the Statute
Barred market. And if there's money to be made - any
money - then the debt spivs will be there!
Let's say that these
thousand delinquent and aged accounts average a debt of £2,000
each. That makes the original value of the accounts £2 million.
But because they are Statute Barred debts they can be only sold on to
a DCA for 3 pence in the pound, so the debt purchasing company coughs
up £60,000 for them, and the firm who sold them (perhaps a bank,
but more likely another DCA or debt purchaser after all this time) will
be glad because they've managed to ditch the rubbish they have on their
books and are also £60,000 richer.
The DCA or debt
purchasing company who deals in Statute Barred debts will be of the
grubbiest sort, but that hasn't stopped them before. Now comes the master
The DCA who has
purchased the Statute Barred debts now has a commodity with a face value
of £2 million as long as the right victims can be found.
The DCA will then
send letters out to the names and addresses associated with the Statute
Barred debts. The letter says that the DCA are collecting the debt on
behalf of the bank, or whoever the original lender was. But, out of
goodwill, they are willing to accept only half the original account
value in each case. If only 10 percent respond by paying up half the
money then the DCA will have made £100,000. Let's say that the
cost of sending a thousand letters was £3,000 including posting,
envelopes, staff costs and overheads. Add the £60,000 for the
cost of buying all this nonsense in the first place. That's a nice profit
of £37,000 for doing very little.
Turn this into an
industry by doing this kind of thing every month and you have Statute
Barred profits on an industrial scale. Trebles and writs all round!
But Get The Right
Suckers List ...
It is known that
DCAs will send out mass mailings to people speculatively (and without
knowing with any certainty that the recipients of these letters have
any connection with the specific debts with which they are confronted).
Stories of these abound, and the debts in question may or may not be
more than 6 years old. It is not beyond the bounds of the imagination
that the debt purchasing industry will have built special "suckers
lists" much in the same way that other conmen have - the kind of
circular that is sent out to people telling them that they have won
the lottery and that they must simply pay £25 administration fee
in order to secure the money into their accounts (even though they may
not even play the lottery). There are more of these scams around than
What if a suckers
list was developed of people who habitually fell for the speculative
debt scam? Such a list, when used in connection with a bulk-buy of Statute
Barred debts, could make a fortune for the debt purchasing companies.
Such a list would
not be cheap. Compiled, perhaps, over many years, it would be worth
quite a sum if the people on it had sufficient "sucker value".
So let's say a list
of 2,000 people was complied in this way (a ratio of 2:1). If 25 percent
of people responded positively by paying half the original value of
the account, the amount raised would be £500,000. The profits
for the DCA would be over £400,000 each time an exercise like
that was pulled off.
Statute Barred Debts Are
barred debts are the most obviously unenforceable type of debt there
is, on the grounds of their age (over 6 years old in England and Wales;
over 5 years old in Scotland).
There are services
which will check if you have debts which may be unenforceable, but most
of them have gained a bad reputation by charging up-front fees of £295
and similar figures and then following up with very little which can
be described as work.
We suggest you undertake
this work yourself (see the home page). It isn't difficult but it can
take a lot of time!
Debt Collectors Who Use
The Statute Barred Debt Scam
Because this is
an area of activity which is actually illegal it is
not surprising that there is no definitive data on which DCAs or debt
purchasing companies actually specialise in the statute barred debts
However, one indicator
of which DCAs operate statute barred debt the most is by looking on
a prominent search engine and seeing the incidence of mentions of the
term "statute barred" in close proximity to the name of a
DCA or debt purchasing company.
In Google the search
operator would be:
barred" + "Name of DCA"
the name of the company in place of the "Name of DCA" search
string. This brings up the approximate number of web pages where these
two terms exist on the same page.
doing this with any of the firms listed to the left, and you'll get
a pretty good indication of which of these little tykes doesn't mind
breaking the law to turn an extra bob or thousand.
just in case m'learned friends at Sue Grabbit & Runne are reaching
for their quills at the present moment, it is only fair to mention that
the results this method brings forth would be produced by a search engine
(in this case Google) and not by this website or its authors. So fire
your writs in their direction and see what happens!
Internet is such a wonderful thing!
Relief From Debt Collectors' Letters and Phone Calls
from tearing into the never-never world of a so-called debt consolidation
loan (which, in our humble opinion, only makes matters worse two or
three years down the road) is a debt
management programme. There are many different types and our experts
will be able to give independent advice to ensure that you get the best
one for your own circumstances. This is the only way to permanently
stop those phone calls, letters and threats from debt spivs. Debt management
plans include the ever popular Individual Voluntary Arrangement (IVA)
which can write off most of your total unsecured debt.
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