Using Debt Collection Agency for unpaid rent

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    #31
    Originally posted by Rodent1 View Post
    There are far easier and more sensible solutions to the problems that plague these boards on a daily basis.

    I explain to my T wha will happen ...if you dont pay on time that's fine, but it wil become very expensive very quickly and here's why and how ........
    This BEFORE they sign any AST...

    The Rodent
    Hi Rodent, this is very savvy. Do you have this in writing that you could you share?

    Comment


      #32
      Originally posted by Rodent1 View Post
      If T is a bit more reticent to pay his dues, then hand over to DC (with T picking up collection fees)
      What is the legal basis for T paying the DC's fees?

      Comment


        #33
        Hi Lawcruncher,

        I think so long as it is in the contract then you could pursue the debt recovery costs. I may be wrong in this one, no doubt someone will be along shortly to give us some satute law.

        Jax

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          #34
          Have you considered using a trace company to trace any debtor and then getting a solicitor to send out a letter before action? Usually works, if you know the address of the debtor, obviously bypass the trace company and go straight to the letter before action.

          A letter from a solicitor is going to be more effective than a letter from a DCA, in my opinion.

          Comment


            #35
            Originally posted by Findermonkey View Post
            Have you considered using a trace company to trace any debtor and then getting a solicitor to send out a letter before action? Usually works, if you know the address of the debtor, obviously bypass the trace company and go straight to the letter before action.

            A letter from a solicitor is going to be more effective than a letter from a DCA, in my opinion.
            Know any good tracing companies? (and good solicitors for that matter)

            Comment


              #36
              Originally posted by Lawcruncher View Post
              What is the legal basis for T paying the DC's fees?
              If proceedure is clearly set out in AST and a LBA sent with time frame naming DC agency and fees (15% + any extra cost T decides to drum up) then this leaves T liable, if T is not informed informed before hand fees CANNOT be charged, not a legal bod so cannot quote chapter and verse on it, but taken advice from licensed DC agent, have also had it confirmed by several others.

              Perhaps one of the legal eagles can confirm relevant statute ?

              The Rodent
              A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
              W.Churchill

              Comment


                #37
                ummm, what does LBA stand for? also, can you shed any light re post #12

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                  #38
                  LBA =letter before action.
                  I offer no guarantee that anything I say is correct. wysiwyg

                  Comment


                    #39
                    ahhh. Thanks!

                    Comment


                      #40
                      Originally posted by sparkie View Post
                      Hi Rodent, this is very savvy. Do you have this in writing that you could you share?

                      I do not use DC as a alone solution to debt management it is a small cog in a well oiled machine. My management system is built to attempt to deal with most problems and steps and measures are in place automatically b4 T even enters the prop.

                      Search some of my early threads for details like:
                      1. Proper and detailed referencing (not "just" a credit search , which is about as much use as txts on a bull on it's own) we need to know outgoings as well as income to verify that both T & G are in a financial position to perform their financial duties as such)
                      2. Having a very good file of background info on T(copy of Passport D/L as photo ID, next of kin details, car reg no, Ni no, alt addresses, contacts etc) if they dissappear i want to be able to find them!
                      3. Late payment fees, interest on o/s amounts, admin fees lots of things to deter late/ non payment.
                      4. A clear and "in place" system to deal with this problem wich is actioned promtly - so T clear that their priority payment is rent not pub etc.

                      It is rare that I need to go to far with these steps but they are there if/when i need them.
                      My general approach if sit starts to get out of control is to send LBA warning of impending action(DC) with associated costs detailed....then in same letter, offer to remove ALL extra costs on proviso a mutually agreed (and signed)payment plan is sumbitted immediately, also detailing that failure to adhere to plan will result in immediate involvement of DC and removal of cost discount.
                      Also at this point, as it is clear that they cannot afford to live at the prop i negotiate a fairly swift exit from the property in order to allow them to find somewhere they CAN afford, and extricate themselves and me from a financially undesirable situation. I do not charge them relet fees regardless of where we are with ast in this situation. I need them out fresh T and rent in ..and they need to be living somewhere they can afford.
                      Usually have them out "having surrendered the prop" within a week or 2 , a mth at most.
                      In several situations i have earned respect from T for being efficient and prompt with action by "forcefully" pulling their head out of the sand over rent problems early! and have moved them to cheaper props within my portfolio and they are still T of mine as i write ...and very good one's at that!

                      The challenge is to keep amicable communication channels open through out and get situation sorted before;
                      a. the debt is too large for T to service and head goes into the sand.
                      b. it gets to serving legal action as this, sure as eggs is eggs, will instantly cut all amicable comms instantly and make sure T debt is 2/3 months worth of rent bigger !

                      It is a system that has served me well over the years, as i have posted many times i have never been to court and hopefully will never need to.

                      Is every bit of it legally enforceable ? honestly dont know ! but so far have never had anyone challenge it, i cant see why it shouldn't be !

                      The Rodent
                      A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
                      W.Churchill

                      Comment


                        #41
                        Thank you Rodent for taking the time to write and share. Its very much appreciated and valued. You should write a book. (I'm not kidding).

                        Is there a way to contact you off-site? I have a couple of questions that may be appropriate 0ff-forum.

                        Comment


                          #42
                          Just "private message" me (click on "Rodent1" above)


                          The Rodent
                          A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
                          W.Churchill

                          Comment


                            #43
                            Further to the above:

                            A long, but interesting thread on use of DC
                            http://www.landlordzone.co.uk/forums/showthread.php?t=7553&highlight=bonkers
                            A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
                            W.Churchill

                            Comment


                              #44
                              Originally posted by Rodent1 View Post
                              Redex, in short your post was irresponsible, to say the least, as you clearly have NO IDEA what you are talking about.
                              So I am not the only one to have spotted this...
                              'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

                              Comment


                                #45
                                Originally posted by Rodent1 View Post
                                It is a system that has served me well over the years
                                You certainly seem to have an efficient management system in place and appear to deal with your tenant's firmly, but fairly. I am sure that if you come across as a no nonsense person this has to help - psychology has to play its part. However, I fear there is danger in believing that because a system has worked, and worked well, that it must be based on sound legal principles, although to be fair you concede that that may not be the case. Without you telling us what is in your agreements and what exactly it is you say to your defaulting tenants it is impossible to comment further.

                                I am only interested in the narrow point of whether a landlord can recover the fees of a DCA.

                                We can first of all say with certainty that if the terms of the tenancy are silent about costs associated with the recovery of rent that the only costs a landlord can recover are those allowed by the court.

                                If the terms say that legal costs may be recovered then there has to be some doubt that that includes the fees of a DCA.

                                But suppose the terms say that all costs may be recovered or specifically refer to the fees of a DCA?

                                First of all I think we can say that the costs must be reasonable and reasonably incurred.

                                Secondly, the term is an agreement for indemnity. Nothing is due until the costs are incurred. If the DCA is engaged on the basis that their fee is a percentage of what they recover or is only payable on the basis that they recover something, no fee is payable until something has been recovered. Accordingly no fee is payable at the time the DCA makes its demand for the oustanding rent. Since no fee is payable it cannot be demanded at the time the rent is demanded. Indeed, it cannot be payable or demanded until all or some of the rent has been paid. If and when it is paid, the fee immediately beomes payable by the landlord to the DCA. The DCA cannot recover the fee from the tenant since they have no contract with the tenant. Once the fee has been paid, the indemnity kicks in. If the tenant declines to pay, there is then a debt that the landlord can instruct the DCA to recover, though he cannot yet instruct the DCA to recover their fee for collecting that debt.

                                It follows from all this that a clued up tenant faced with a demand from a DCA will enquire as to the basis on which the DCA get their fee. If he discovers that it is on a "no win, no fee" basis, he will not pay, because simply by paying he will owe more.

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