Two linked firms which obtained at least £74,000 from buying consumer’s unsecured debts and promising to free them of debt have been shut down by the High Court.
Buy My Debt Limited (BMD) called itself a “debt purchase” firm which bought unsecured debts from consumers for £1 plus a fee of 10% of the amount of the debt, and an administration fee of £250 paid to The Trusted Partnership Limited, set up by the company .
Clients were told that selling their debt freed them from their repayment obligations to their lenders, with the liability transferred to BMD.
BMD claimed to then negotiate a settlement figure with the lender of an amount less than the fees paid by clients to The Trusted Partnership Limited.
But a subsequent investigation by the Insolvency Service found that the firm received at least £74,000 from clients, none of which went towards repayment of their debts.
It also transpired none of the debt sale agreements were approved by, or had been negotiated with lenders, which left consumers in a worse financial position having paid the fees while still under contractual obligation to repay the full debt.
The business model also contravened advice from the Office of Fair Trading that the sale of consumer debt required the express permission of the lender.
Colin Cronin, an investigation supervisor with The Insolvency Service, said: “In making the decision to wind-up these companies the High Court is sending a clear message that schemes which seek to deceive customers are not acceptable.”
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