NEW DEVELOPMENT AS BANKS USE MORE DEBT MANAGEMENT COMPANIES.

 

There has been an interesting development since the 1st January in that the banks (Barclays, HSBC, LloydsTSB and RBS/Natwest) in particular have begun to dump personal guarantee cases to external debt management. This is good news for a number of reasons:-

1. It is a reflection of the fact that they are struggling with the workload of personal guarantee claims. They are probably overloaded with cases generally, as most bank departments and their subsidiary debt management and solicitor firms also deal with normal consumer credit act agreement defaults (eg loans, credit cards and overdrafts), and these are probably being passed to the debt management companies as well.

2. It actually reflects good banking practice- old uncollected debt is both a burden on their balance sheet and resources, so they have to make decisions at some time as to what to do with this. A reason why we say buying time is something that works in your favour.

3. It is unclear as yet if the debt management companies are for the most part acting as agents for the banks or whether they have actually bought the debt from the banks. In either case, with regard to personal guarantee claims this creates a further barrier to them collecting- this is because defaulted personal loans, overdrafts and credit cards have a set process as they effectively have proof of debt- not so necessarily with PGs.

4- If they have purchased the debt, then it starts to be a home run for the personal guarantee holder- they rarely have all the documentation to hand and when they try and get them off the bank, the banks are notoriously bad at providing the necessary information to them (as they can be to us), often citing the fact that the debt management company have bought the debt and it is there issue now.

For more information on Personal Guarantees and what we can do to help go to personal-guarantee.com