Letter from debt collection agency - Cabot Financial

A friend has received a letter from the above company, in relation to a large unsecured debt owed to a financial institution. The debt is on hold until January 2011. By on hold I mean that no repayments are being made, or due to be made and interest is being applied so debt is increasing. Cabot wish to know when the debtor is going to start paying back both capital and interest. Currently they cannot, are on social welfare and only asset is their home in negative equity. The debt is owed. Debtor needs an end to this. What will Cabot do, are they lawyers, from their website they do not seem to be anything other than debt collectors who have a lawyer available. Do they now own the debt? What is the best way to deal with it. Write a letter stating that the debtor will not be able to repay the debt? And let them take it from there. What will Cabot do next?

Cabot are merely debt collectors. The usual caveats apply to them, i.e. they have no legal powers to enforce the debt. It is very unlikely they own the debt. They would be simply hire by the financial institution to put pressure on the debtor.

If Cabot get nowhere they will refer the file back to the financial institution for their next move. The debtors best move is to write to the financial institution setting out their side.

If the debt is with Cabot Financial then they have probably bought the debt. Cabot buy debts from AIB, BOI, GE Money, MBNA, Santandere and several other companies. Your friend should check with the original creditor to confirm that Cabot now own the debt. If a regular weekly or monthly payment is not agreed with Cabot then your friend will probably receive a letter from their inhouse solicitor threatening legal action. The letter from their solicitor will look like it comes from a different company (Belgard Solicitors), but if you check the address will be the same. Unfortunately Cabot will not stop chasing the debt untill your friend comes to an arrangement with them. If he cannot afford a payment then he should at least make a token payment untill his/her situation improves. €10 per month should do it.

Thanks for the interesting replies. If Cabot have bought the debt presumable they bought it at a discount, what discount would that be? If the debt has been purchased then there is no longer a relationship between the borrower and the financial institution? Will Cabot accept the payment of say 10Euro a month or will they go to get either an installment order or a judgement mortgage on the house. What would there next step be?

If they own the debt then there is no relationship any more between the debtor an the FI. Cabot may have only paid 10% for the debt.

They will obtain judgment and then get a JM and seek an installment order as per the usual procedures. I can't see them accepting €10 a month on their own. It would take a judge to make them.

Where are you getting the 10% from? We don't think they've bought the debt because their letter states 'they've been instructed' to pursue the debt.

10 to 25% would be the typical amount these guys pay for debts. That would be the standard. The FI gets quick money for a debt they may never get anything for.

So they are acting as a normal debt collector. All they will do is refer the case back once they get nowhere. They have no powers to sue in their own name.