UK Bitcoin Debt Collection

[tuckertz1992]

Hey Guys,

I'm looking to set-up a debt collection group to chase creditors that have 'defaulted' on Bitcoin Loans.

Please let me know your idea's and Questions? Could really do with an opinion from other people before I get any balls rolling.

Many Thanks!

[Teka]

There are a few problems with this idea:
      
       -Bitcoins give you a lot of anonymity
       -Most of the scammers don't provide the lenders with real information.
       -I'm pretty sure you need a license in order to collect debt.

[tuckertz1992]

There are a few problems with this idea:
      
       -Bitcoins gives you a lot of anonymity
       -Most of the scammers don't provide the lenders with real information.
       -I'm pretty sure you need a license in order to collect debt.

Thanks for your Response,

I know that some of the sites that offer BTC loans do ask for personal information such as Proof of Address / Income etc - Maybe this is something that they can pass onto us when they pass the collection onto us?

I know in the UK, Bitcoins are classed as Property, whether or not they are virtual (Like WoW gold) - So this is something that could be collected with all the correct steps being taken first.

The license is not an issue (I dont want to give much away) but this is something I have looked into

[empoweoqwj]

God, it had to be the UK didn't it - king of the scummy debt collector - invading bitcoin land

Your yarn about a bitcoin debt collection service sounds as legit as 5-legged horse.

Where are all these bitcoin loans people have defaulted on? You probably don't want to give too much away ........ since you are going to be running a legit company why not publish your details, limited company right?  

Scum - your avatar says it all

[tuckertz1992]

God, it had to be the UK didn't it - king of the scummy debt collector - invading bitcoin land

Your yarn about a bitcoin debt collection service sounds as legit as 5-legged horse.

Where are all these bitcoin loans people have defaulted on? You probably don't want to give too much away ........ since you are going to be running a legit company why not publish your details, limited company right?  

Scum - your avatar says it all

Keyboard Warrior!

Whats my chuffing Avater got to do with it? And as this topic said, this was to discuss the 'Idea' of setting something up - Didnt say Its been set up or anything like that

[Inedible]

The shoot first, ask questions later attitude is annoying.

Why not give OP an opportunity to address your concerns before shooting him down?

OP - will you be licensed or acting under a license of some sort? Do you even need to be licensed?

What steps do you take to ensure a default is real/valid before chasing down the debtor?

[tuckertz1992]

The shoot first, ask questions later attitude is annoying.

Why not give OP an opportunity to address your concerns before shooting him down?

OP - will you be licensed or acting under a license of some sort? Do you even need to be licensed?

What steps do you take to ensure a default is real/valid before chasing down the debtor?

Thanks for the kind words above.

In regards to licensing, 'We' would not need a license to collect this debt as we would chase the defaulter and then continue with legal action. The legal action would cover any licensing requirements. If the court ruled that we would have to collect the debt (IE They didnt issue an Attachment to Earnings or a CCJ etc) then we would have to look into outsourcing the actual physical collection activities to registered and licensed firms.

We would look at only working with lenders that have been able to provide and verify all this information before we started to chase. For example, I've used BTCJam before and they require ID to increase your site 'Credit File'. This information would then be checked with other providers in the UK (There are specialist company that are able to confirm the identity of people by using details such as the Electoral Role etc). If we are then able to confirm that there's a 80% chance that the documents submitted are legit etc etc, then we would start to pursue the debt.

Hope this makes some kind of sense!

[Inedible]

If the court ruled that we would have to collect the debt (IE They didnt issue an Attachment to Earnings or a CCJ etc) then we would have to look into outsourcing the actual physical collection activities to registered and licensed firms.

Will you only be going after court approved debt?

We would look at only working with lenders that have been able to provide and verify all this information before we started to chase.

Does this mean this service will only be available to big organisations or will User654321 be able to use it too?

If we are then able to confirm that there's a 80% chance that the documents submitted are legit etc etc, then we would start to pursue the debt.

80% seems a low bar on proof if you ask me but if you're only after court approved debt I guess that actual percentage will be much higher.

[tuckertz1992]

If the court ruled that we would have to collect the debt (IE They didnt issue an Attachment to Earnings or a CCJ etc) then we would have to look into outsourcing the actual physical collection activities to registered and licensed firms.

Will you only be going after court approved debt?

Thats the thing, some of the debts may not end up in court after we have chased them for a while, Court would only be for those that make no communication back with us - But yet we were able to confirm the identity and location.

We would look at only working with lenders that have been able to provide and verify all this information before we started to chase.

Does this mean this service will only be available to big organisations or will User654321 be able to use it too?

Only if they were able to confirm that they completed some Verification steps before hand. Theres nothing much that we can go on by just using a Forum Name. This is something that would need to be looked at more deeply. I would hope this is something we could sort out.

If we are then able to confirm that there's a 80% chance that the documents submitted are legit etc etc, then we would start to pursue the debt.

80% seems a low bar on proof if you ask me but if you're only after court approved debt I guess that actual percentage will be much higher.

Initally, we will only be looking for (From Lenders like BTCJam etc) Name, Address, Loan Details. They would then be contacted and sent some reminders, if they then didnt pay or didnt make an arrangement to pay, then we would look at getting this passed to the courts for action.

[Inedible]

Sounds like it could be a very useful service.

My only worry is it could very negatively affect the world perception of Bitcoin if handled badly.

"Virtual currency sees rise of vicious debt collection" would be the last thing we need for the community.

The market for Bitcoin debt in the UK will be quite small so I can't see you making a living pursuing just Bitcoin debt but if your service does well then it could add stability to the UK Bitcoin market which can only be a good thing.

Good luck with the venture - I hope you do well and represent us in a good light

[tuckertz1992]

Thanks for the support!

Appreciate your comments and suggestions, will keep you updated.

[Vladimir]

Debt collectors in UK are toothless tigers. They can do only two things:
1. send 1000 letters.
2. sue.

[threeip]

Start with Trendon and get back to us?

[Inedible]

Start with Trendon and get back to us?

Trendon doesn't live in the UK so it would be a really difficult place to start.

[threeip]

Start with Trendon and get back to us?

Trendon doesn't live in the UK so it would be a really difficult place to start.

Pics?

[Inedible]

Start with Trendon and get back to us?

Trendon doesn't live in the UK so it would be a really difficult place to start.

Pics?

He now flies above international waters to avoid being in any jurisdiction:

[threeip]

/thread 

[BitCoinUser123]

In regards to licensing, 'We' would not need a license to collect this debt as we would chase the defaulter and then continue with legal action.

The Office of Fair Trading disagrees.

You are likely to need a consumer credit licence if  you:

• lend money that is not for a first charge mortgage
• allow your customers time to pay for goods and/or services that they buy from you (including hire purchase)
• hire or lease out goods and/or services for more than three months
• introduce buyers to someone else who will lend them money
• help people with debt problems
• adjust a consumer's existing debts
• consolidate debts on behalf of a customer
• give debt advice
• collect debts arising from consumer credit or hire agreements where you are not the creditor
• carry out administration duties in relation to a credit or hire agreement
• provide information about a consumer's credit rating
• offer to repair someone's credit rating
• act as a credit reference agency

.

The Consumer Credit Act 1974 Also disagrees.

Businesses needing a licence.

(1)Subject to this section, a licence is required to carry on a consumer credit business or [F1a consumer hire business or an ancillary credit business] .
(2)A local authority does not need a licence to carry on a business.
(3)A body corporate empowered by a public general Act naming it to carry on a business does not need a licence to do so.

The Consumer Credit Act 1974 stipulates that debt collectors fall under the "ancillary credit business"
Types of Ancillary Credit Businesses

Types of ancillary credit business.

(1)An ancillary credit business is any business so far as it comprises or relates to—
(a)credit brokerage,
(b)debt-adjusting,
(c)debt-counselling,
(d)debt-collecting,
(da)debt administration,
(db)the provision of credit information services, or
(e)the operation of a credit reference agency.

This is already way too long, so I am jumping to section 7.

(7)Subject to section 146(6), debt-collecting is the taking of steps to procure payment of debts due under consumer credit agreements or consumer hire agreements.

The Consumer Credit Act 2006 specifies that debt collectors do not fall under the new exceptions, except in certain cases where the collector has legal rights of audience in court (Barrister / Solicitor / Legal Professional) and is conducting business related to "contentious business" or an already undertaken legal action.

I am very sure that you could get away with certain of these activities - but I am equally certain that they are specifically prohibited by the 1974 Act.

The legal action would cover any licensing requirements. If the court ruled that we would have to collect the debt (IE They didnt issue an Attachment to Earnings or a CCJ etc) then we would have to look into outsourcing the actual physical collection activities to registered and licensed firms.

As above, this isn't how it's meant to work.  You don't legally get to harass people for a while, then start a legal action, then outsource debt collection if the court doesn't issue a judgement / wage garnishment order.

I'm not taking any position as to whether or not this is a good idea - I'm just pointing out that you need a license to undertake the described activities in relation to a debt for which you aren't the creditor (and you don't meet one of the 2006 Act exceptions).  Otherwise you face investigation by the Office of Fair Trading, penalties under the Consumer Credit Acts, and possible harassment charges under the Protection from Harassment Act 1997 depending on your specific conduct.

There's the strong possibility that your mark isn't going to know about the legal rights available to him/her, or might be all kinds of dodgy as far as the original loan, tax avoidance and other matters.  In that case, you might be able to get away with doing whatever you want to do without having the full weight of the law behind you. But there is very little room for debate as to whether the law currently requires you to have a licence.  What you're proposing falls very clearly under the requirements listed for licencing.  if you're doing debt collection prior to initiation of a court case and you aren't the creditor, you need a licence. 

What's more, the lending companies or individuals themselves may need to be licenced, particularly if the loans are denominated in £ rather than BTC (and for recovery purposes they would likely need to be).  It's debatable what the court's position on BTC-denominated debts will even be, but the Consumer Credit Acts set out licencing and reporting requirements for business engaged in the business of lending.  So if you got yourself into trouble in this process you could also get your clients into trouble for simply being in the business of lending.  More info here.

This could eventually work, and it might eventually be called for.  But unless you know something big that I do not, you may have to substantially adjust your proposed business model.  And my guess is that at the moment there isn't a large enough UK-only BTC debt market to support it.  Then again, if your lawyers believe that you can get away with doing it, go to town.  But if you're doing this in the absence of good legal advice, I'd strongly suggest you seek some before you take any further steps to make this happen.

[franky1]

bitcoinuser123 is pretty detailed and on the right track and in short....

to legally class the debt recovery in court as a debt from a loan, the original lender needs a consumer credit licence. otherwise the only thing that can be considered in court is theft.

which is much harder to prove unless the bitcoins were hacked using the original private key to send the coins to a destination that was never intended.

which makes winning a debt recovery claim in court extremely hard..

now getting back to just the debt recovery agencies requirements.
the debt recovery departments do need licences particularly each employee that investigates and/or comes into contact with a lendee, needs an SIA licence aswell as following the guidelines of the OFT.

the end result in england is that as vladimer says

They can do only two things:
1. send 1000 letters.
2. sue.

where they have to first categorically confirm the person they have traced is the actual debtor (which can easily be denied by just stating in the first 'soft letter' "my identity was cloned")

if there was a method to still prove the traced person is the debtor, there would be a long process of communications which need to be given specific gaps between communications to not be deemed as harassment. and finally after many months of warning letters. a court date would be set.

.. after seeing all the time and costs involved here is the solution.

dont give money to strangers that you can't meet up with and slap with a wet fish if they dont repay... much more effective solution.

it is also noted that btcjam does not have such licences which alone makes any debt created on the service, inable to be reimbursed through any court system.

and now many people are seeing why these so called exchanges and loan sites are so amateurish and frustrating, leading to them getting shut down so easily by regulators., by not even bothering to get licences to help protect their customers.

[tuckertz1992]

Thanks for all the information and help you guys have suggested, this is still something that I will look into following your guidance.

One question, BTC in the UK is classed as Property and not a Currency (Legally) from what I've read around. Therefore, surely this isn't covered by the Consumer Credit License?

Apologies for, Maybe, a Dum Question!