Advice: Debts are rarely forgotten

Ian Kay, head of debt recovery at CLS, takes a look at the issue of forgotten debts. While you may think they’ve disappeared, they can sometimes sneak up on you when you least expect it.

It’s not unusual to lose track of old bills in a time where changing banks, mobile phone and energy companies is commonplace.

You can be forgiven for thinking that if you disputed a bill many years ago and the company were left “looking into it”, that they’d simply decided to write off any debt.

Unfortunately, that’s rarely the case. These debts don’t simply disappear, but instead are stored as ‘aged debts’ in the relevant company’s computer systems. They’re often sold off several years later, and bought in bulk by debt purchasing and collection companies looking to recover maximum profits by pursuing those forgotten bills.

But this is nothing new; these companies have been around since before the recession. Rightly or wrongly service providers such as banks and mobile phone companies have seen the sale of these debts as an easy source of revenue in difficult times.

Curtis Law Solicitors recently represented a client who, because of a long forgotten about account, faced losing their home and career. They were previously a customer of a a well known UK company and always made sure to pay their bills on time.

When the contract came to an end, they received a bill that was several thousands of pounds higher than usual. It appeared that this higher bill was a result of activity by a third party who had not been authorised to use the account and quite understandably the client refused to pay until the bill was revised.

They expected to be contacted in due course once the complaint was looked into but they never heard from the company again.

Fast forward several years and the client had long since forgotten about the account and the complaint. Out of the blue, through good or bad fortune, they received a known as a Statutory Demand through their door. The document was the first step to bankruptcy, sent to recover the ‘debt’ that had been packaged and sold to a debt purchase company.

The client later discovered the company had been trying to contact them at their old address, however this was of little comfort when they faced the possibility of a bankruptcy petition being issued against them in less than a month.

Given the previous dispute, the client sought to resolve the matter themselves. They made the debt company aware of the issue but feeling threatened offered to pay a minor sum to simply get rid of the ‘debt’. Sadly no agreement was reached and the client was presented with a petition to be made bankrupt.

Unable to source adequate legal assistance the client had to defend themselves at the hearing and due to procedural errors brought by the innocent ignorance of the client, they were adjudged bankrupt.

The client thereafter appointed CLS. We made an immediate application for annulment on the grounds that the client had not been permitted to present their case and that the ‘debt’ had been disputed.

We provided appropriate advice and appointed a barrister to represent the client at the hearing. The court found that the debt purchase company has not sufficiently proven their entitlement to the debt and therefore not only annulled the bankruptcy, but struck out the petition.

It’s extremely uncommon for a bankruptcy to be annulled, and we hope that this case further emphasises that if you’re ever facing being made bankrupt due to long forgotten disputed debts, that all is not necessarily lost.

The key is to deal with these matters as soon as possible and if you genuinely do owe money, then arrange payments before matters get out of hand. Don’t let these debts sneak up on you, seek legal advice as soon as possible and no doubt it’ll end up cheaper to resolve the matters at hand. Ian Kay Head of Debt Recovery