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Discussion Starter #1
Sorry this is just a general query out of curiosity to understand the overall process.

If you return your car which was on PCP after doing a VT and finance company sends you a list of charges that you dispute and after back and forth exchanges via emails, letters, phone calls, matter remains unresolved. Then why is the next stage to pass on the matter to debt collection agency?

I mean if car finance company genuinely believes that charges they’ve levied are legitimate, then if customer is asking them to start legal proceedings, why are they instead doing to debt collection agency?

I am curious to know this because your contract is not with any debt collection agency and you are not obliged to engage in any communication with them. They will try to threaten & intimidate you by sending harassing letters, emails, text, phone calls, voicemails, etc.

However, the fact remains that your contract is not with a debt collection agency. And you’re obliged to answer their calls or respond to their letters. If you’ve denied the debt, shouldn’t the matter end up in court straight away?

You can simply write them that their implied rights of access to the property have been revoked and any further letters or phone calls received will be classed as harassment.

Why does a car finance company not take you to court directly despite asking them to start legal proceedings? Why does a debt collection agency come into picture?

I have had fair amount of success dealing with debt collection agencies and have not paid any parking penalties.

Debt collection agency (at least in case of parking ticket disputes) try to harass you for up to a year through letters, phone calls, emails, text, automated voicemail, etc and then in most cases eventually give up. So far I haven’t been taken to court yet having dealt with nuisance of debt collection agencies.

However, want to understand the process as to why car finance company is passing on alleged debt of disputed damage charges (which has been denied in writing by customer) to a debt collection agency rather than straight away starting legal proceedings? 😊

Anyone?
 

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Not sure about the UK law in this respect, but the amount that the financing company would get back from you doesn’t justify legal proceedings for them, so they sell it.

in many countries, it is perfectly legal to sell “debt claims”. Financing company asks a debt collector to pay upfront, say, 50% of the claim and leave the rest matter in the debt collector’s hands to collect the cash from the victim.

Financing companies, in this way, collect at least some amounts back without incurring large legal costs and risk losing the lawsuit.

Debt collectors will harass people, some pay for peace of mind and from being scared of being taken to court. Some, like you, don’t pay. Overall, the financing company loses less cash, debt collectors turn a profit and some people are left emotionally destroyed. Modern day capitalism.

I highly recommend the 4-part series “Ascent of money” with Nial Ferguson made by Channel4 (you can find it on youtube); his book is brilliant as well, clears wrong beliefs we have about money. Also recommend “Debt - the first 5000 years” book by David Graeber.
 

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They do it because it’s cost effective, end of.

Debt collection is highly regulated, there should be no harassment or intimidation involved, just persistence.

If it gets that far, then clearly things have failed on a communication front. It’s not the end even if the debt collection agency gives up, your credit file will likely be in tatters, and the debt can be packaged and sold again.

If you genuinely think it’s wrong, then you can start proceedings against the finance company yourself, it’s not difficult or expensive.

But what you probably shouldn’t do is let it escalate to the debt collection agency stage, as damage is already done.
 

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Discussion Starter #4
Not sure about the UK law in this respect, but the amount that the financing company would get back from you doesn’t justify legal proceedings for them, so they sell it.

in many countries, it is perfectly legal to sell “debt claims”. Financing company asks a debt collector to pay upfront, say, 50% of the claim and leave the rest matter in the debt collector’s hands to collect the cash from the victim.

Financing companies, in this way, collect at least some amounts back without incurring large legal costs and risk losing the lawsuit.

Debt collectors will harass people, some pay for peace of mind and from being scared of being taken to court. Some, like you, don’t pay. Overall, the financing company loses less cash, debt collectors turn a profit and some people are left emotionally destroyed. Modern day capitalism.

I highly recommend the 4-part series “Ascent of money” with Nial Ferguson made by Channel4 (you can find it on youtube); his book is brilliant as well, clears wrong beliefs we have about money. Also recommend “Debt - the first 5000 years” book by David Graeber.
Great, thanks for the insights. I will watch the YouTube video & also try to read the book.

I successfully dealt with dealt collection agencies when disputing the parking tickets. They stopped chasing after sending few letters, making phone calls & sending texts and leaving automated voicemails.

Trying to understand how debt collection works in case of disputed car damages where customer has categorically denied the debt. Hoping if someone who has gone to the later stages of debt collection or even court can share their experiences.
 

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Discussion Starter #5
They do it because it’s cost effective, end of.

Debt collection is highly regulated, there should be no harassment or intimidation involved, just persistence.

If it gets that far, then clearly things have failed on a communication front. It’s not the end even if the debt collection agency gives up, your credit file will likely be in tatters, and the debt can be packaged and sold again.

If you genuinely think it’s wrong, then you can start proceedings against the finance company yourself, it’s not difficult or expensive.

But what you probably shouldn’t do is let it escalate to the debt collection agency stage, as damage is already done.
Why will credit file be in tatters? Doesn’t ICO guidelines clearly state that finance companies shouldn’t put a default for car damage charges or fees, etc?

I mean if customer has paid all the monthly payments regularly without delay every month and dispute is over damage charges, how does that end up on a credit file?

Not sure if anyone has specific link to Information Commissioner’s Office guidelines on what should and should not be reported as default in credit file?

I read somewhere on online forums not sure if on this forum that ICO guidelines clearly state that car damage charges are not something that should be reported as default. Not sure if someone can confirm this and share specific link to ICO guidelines?
 

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Was the alleged damage not pointed out by their agent when they collected the car after the PCP was ended under the VT arrangements? They usually ask the customer to sign their form where the damage is marked down and frequently an indication of cost penalty is given. Any disagreement can also be written on that same form as a disputed entry. And most people take pics and video of the area under question for later dispute arbitration. Do you feel able to share a bit of detail about the disputed facts?
 

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I mean if customer has paid all the monthly payments regularly without delay every month and dispute is over damage charges, how does that end up on a credit file?
If it’s not a ‘debt’ then why are collection agencies involved?

Whilst it won’t be the finance company that can leave a note on your credit file, the debt collection agencies could, as it’s their debt owed now.

They could pursue through the courts if you don’t pay, and you risk having a CCJ recorded as well?

I’d get on the front foot, I don’t think ignoring the debt collectors and hoping they go away sounds the least stressful option.
 

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Discussion Starter #8 (Edited)
Was the alleged damage not pointed out by their agent when they collected the car after the PCP was ended under the VT arrangements? They usually ask the customer to sign their form where the damage is marked down and frequently an indication of cost penalty is given. Any disagreement can also be written on that same form as a disputed entry. And most people take pics and video of the area under question for later dispute arbitration. Do you feel able to share a bit of detail about the disputed facts?
Due to COVID-19 social distancing restrictions, I only handed the keys to the inspector and was inside the house. Inspector carried out the inspection for around 30 mins. Then he knocked on the door & tried to get me to sign something digitally on his iPad. I refused to sign anything. He did not explain any of the charges. I did not even know what charges had been applied. So I told him unless I get to see the report and read it I am not going to sign anything.

When I refused to sign, he just sat in the car saying that he will email me the report shortly.

So I went inside the house again. 5 mins later I received an email with a pdf attached in it. While I was reading the report, I noticed that inspector had already left and his colleague drove my car.

When inspection appointment was booked, I was not told collection will happen on same day as inspection due to COVID-19 restrictions there were change in procedures. I was told after inspection they will have the car collected within 2 days or if any further delays they will let me know in advance before sending someone.

So I believed a report will be shared with me first and then I get a chance to read it and decide the next steps including cancellation of vehicle return by paying nominal fees for collection cancellation.

Because the inspector left with car without me anticipating it while I was still going through the report on the phone inside the house, I did not get a chance to stop him and cancel the collection process altogether as I was not told car was being collected same day.

Charges were same typical charges most of us see as damages like alloy wheels, small scratches & dents not visible to the eyes.
 

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Discussion Starter #9
If it’s not a ‘debt’ then why are collection agencies involved?

Whilst it won’t be the finance company that can leave a note on your credit file, the debt collection agencies could, as it’s their debt owed now.

They could pursue through the courts if you don’t pay, and you risk having a CCJ recorded as well?

I’d get on the front foot, I don’t think ignoring the debt collectors and hoping they go away sounds the least stressful option.
I read somewhere on the forum that ICO guidelines state car damage charges & other fees should not be recorded as default on the credit file. It breaches their data protection guidelines.

I am going to call ICO tomorrow.

I am trying to also find the original poster of this comment regarding ICO and confirm on this.

Having checked my credit report just now, damage charges are showing under loans. So likely chance this is being considered as debt. But I need to confirm this with ICO.

Also are the car finance companies allowed to sell the debt to collection agencies while Financial Ombudsman is still reviewing the case? I mean with Ombudsman there is at-least 2 months waiting time at the moment to get a case officer assigned.
 

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Well immediately is within 2 days...

Lots of people have been stung on this sort of thing. You can pay various companies to do a pre-inspection and bring a car up to BVRLA standards. You could have taken your own photos in advance.

Does your agreement say they will apply BVRLA standards? Did you ask for a copy from the agency? Do they use BCRLA as the dispute mechanism? Fair Wear and Tear | BVRLA
They should explain the damage / itemise charges to you. They normally record these with pictures for future disputes, but aren't guaranteed to.
Carefully document the broken handover process. Go through their official dispute process - don't play email ping pong. Record everything.

The question on credit reference record is whether this is a charge (so paying for a service or penelty) or a debt (they have calculated you owe them money as your vehicle has lost more value by being dented).
ICO guidance is here where it says a default shouldn't be recorded if it's all charges: http://www.scoronline.co.uk/sites/default/files/high_level_prinicples_document_final.pdf
Your agreement should say if this is a charge or increased debt.

Best of luck, but unless you have evidence of something not being right, it could be a long and expensive process with no guarantee of success.
 

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Because 9 times out of 10, the "debt collector" is either literally another department of theirs, or a company they own.

It's an intimidation tactic to prey on the weak.
 

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Discussion Starter #12
Because 9 times out of 10, the "debt collector" is either literally another department of theirs, or a company they own.

It's an intimidation tactic to prey on the weak.
Yes I had parking tickets in the past which were passed on to debt collection. Debt collection agency wasted their time and my time for 1 year by sending letters, making phone calls (number blocked), leaving automated voicemail, text messages. I denied the debt & stopped communicating with them. After 1 year they got tired and gave up. Car Finance company may be using same dirty scare tactics but in this case because they may try to blackmail over putting default notice on credit report that’s why a little bit hesitant to drag this further. They’ve already sold the car and possibly made at least £5000 profit on the car. So paying around £1000 in damage charges sounds ridiculous to me as they’ve not incurred any loss but actually made a huge profit selling the car immediately.
 

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Discussion Starter #13
Well immediately is within 2 days...

Lots of people have been stung on this sort of thing. You can pay various companies to do a pre-inspection and bring a car up to BVRLA standards. You could have taken your own photos in advance.

Does your agreement say they will apply BVRLA standards? Did you ask for a copy from the agency? Do they use BCRLA as the dispute mechanism? Fair Wear and Tear | BVRLA
They should explain the damage / itemise charges to you. They normally record these with pictures for future disputes, but aren't guaranteed to.
Carefully document the broken handover process. Go through their official dispute process - don't play email ping pong. Record everything.

The question on credit reference record is whether this is a charge (so paying for a service or penelty) or a debt (they have calculated you owe them money as your vehicle has lost more value by being dented).
ICO guidance is here where it says a default shouldn't be recorded if it's all charges: http://www.scoronline.co.uk/sites/default/files/high_level_prinicples_document_final.pdf
Your agreement should say if this is a charge or increased debt.

Best of luck, but unless you have evidence of something not being right, it could be a long and expensive process with no guarantee of success.
Thanks for the link. Spoke with Information Commissioner’s Office and even Financial Ombudsman. Was told that even though ICO doesn’t get involved in any financial disputes, if a firm has deliberately put inaccurate information on credit report, ICO can ask firm to remove inaccurate information. For this a formal complaint has to be logged with ICO if the firm refuses to cooperate. Even Financial Ombudsman said the same that following a complaint made to them, if Ombudsman finds firm has acted wrongly by not following ICO guidelines then it can ask the firm to make corrections to credit report.
 
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