There are many debt purchasing companies in the UK. Some of these companies buy corporate debts and may also operate as credit control for businesses, insolvency practitioners and factoring companies.

Some debt purchasers, however, primarily focus on purchasing old or stale consumer credit debts from banks, credit card companies and other lending institutions. For example, you may have an old credit card from one of the major providers. If you fell into arrears at some stage, the credit card company may have given up chasing you for the balance and passed the debt to a debt collection agency or sold/assigned the debt to one of the debt purchasers.

An account may also be sold by a credit card company, not because they have given up chasing you, but because they are aware the agreement/debt is unenforceable. There can be many factors which make a debt unenforceable under the Consumer Credit Act 1974 and it is not limited only to issues relating to the credit agreement.

You should be notified if your debt is assigned, to advise you of the new owner of the debt. This is called a Notice of Assignment and is required under the Law of Property Act 1925 for such an assignment to be legal. The new owner may then chase you for the outstanding balance immediately or may decide to just ‘sit’ on the debt for some time. Although your debt will usually have been purchased for pennies in the pound, the debt purchasers generally request the full balance to settle the debt. If this is not forthcoming, then they may offer discounts typically of 20% – 50% and occasionally more.

If you decide to settle, bear in mind that any defaults and missed payments showing on your credit file will not be removed as a result of your payment. Sending a cheque to a creditor, marking it in full and final settlement is not legally binding. You must have something in writing from the creditor clearly agreeing that your payment is in full and final settlement of the debt, as otherwise, they can take your payment and then sell the remaining balance on to another company. To this end, it is better if you can make what is known as a 3rd party full and final settlement, where another person makes the payment for you. This is legally more robust.

Debt purchasing companies operating in the UK, who specialise in purchasing consumer credit debt, include the Cabot Credit Management Group Limited, (Cabot Financial (Europe) Limited) Cabot Financial (UK) Limited, MFS Portfolio Limited, Cabot Financial (Marlin) Limited, Marlin Group including Marlin, Marlin II Limited, ME II, Marlin V Limited, Arrow Global (Arrow Global Limited, Arrow Global (Guernsey) Limited, Capquest Investments Limited, Capquest Asset Management Limited, Lowell Portfolio, PRA Group (UK) Limited, Hoist Portfolio, Idem Capital Securities Limited, Intrum UK Finance Limited (formerly First Credit) Link Financial and others.

As you can see above, some of these companies operate under multiple trading names, and may have their own solicitors, Cabot for example own Mortimer Clarke Solicitors and Arrow Global own Drydens Fairfax Solicitors, but they may use external solicitors to enforce their claims. Most debt purchasers proudly assert that they will not charge you interest, as if to prove how reasonable they are. The reality is that they are not normally allowed to under the Deed of Assignment.

The Consumer Credit Act 1974 provides the debtor with statutory protections which, if either the original lender or the debt purchaser have not complied with its requirements, can lead to credit agreements being unenforceable and loss of entitlement to interest and penalty charges while in breach. We consider the Consumer Credit Act 1974 to be a shield for the debtor. Our view is that these companies have bought these debts speculatively and if they issue court proceedings, must prove to us and the court that they have the right to enforce under the Consumer Credit Act. If they cannot prove title, the debt cannot be enforced. Our success in defending such consumer credit claims is near 100%.

If one of these companies is in the process of taking you to court, there is help. These companies buy debt in bulk, sometimes thousands of individual debts at a time. They often take shortcuts when it comes to documentation and process and as a result, the claims can be successfully defended.

Debt purchasers often obtain default judgments in claims they issue speculatively online for many reasons. A key reason is that due to the age of the alleged debt the debtor has moved and they have served at an old address. If you have recently become aware of a County Court Judgment against you, these can often be set-aside, if certain conditions are met