Topic: UK Bitcoin Debt Collection (Read 3148 times)

I think this has been said, but is is worth repeating. When you lend someone money over the internet, you do not truly know their identity. This is true even if you collect what you think is identity information from your borrower.

As a result of this many people probably end up providing fake identity information/proof which will result in many cases of the person who the lender thinks is borrowing the money actually receiving no benefit from the loan in any way (nor consenting or even being aware of the loan before hand). This will put any potential debt collector in a very difficult ethical position.

As far as I know, It is counted as IP and not a currency. Therefore collecting any "debt" would be bordering harrasment.

What if you are in a Debt Management Plan or IVA for example and cant afford any payments apart from what you are legally bound to pay, I dont think there would be any way to enforce collecting a bitcoin loan in the eyes of the law.

Thats not to say that when it does become a counted currency, which hopefully it will that you wouldnt be able to chase it. But I dont think anyone is even obliged to pay it once you have loaned it out.

We are working with some other investors who have been scammed on BTCJam and other lending platform to have a bounty based debt collector program to work against members who are abusing the platform and ruining it for everyone. 

This post needs to be reignited as there is an increased numbers of scammers who are taking advantage of investors on the platforms.

Check reddit post for "debt collector" http://www.reddit.com/r/Bitcoin/comments/2pztdb/any_reliable_debt_collectors_based_out_of_us_and/

Why didn't you start your own thread? This one is over a year old...

If you do get this set up tell me.

We have been scammed and or defaulted on payments from people in the uk for our development services and SEO services.

Though since I'm an American and know its pointless to even try to go after then in court It would cost me an arm and leg to do so.

If this is cost effective id love to know more.

hmmm sounds fun i dont like people that owe money unless theres a very very good reason which usualy with bitcoin there isnt.
most bitcoin scams and debts are owed by retards that got lucky and scammed someone, not because there life took a downward spiral

im always up for knocking on a few doors and scaring the crap out of people

There has been a tremendous increase in debt collector harassment complaints. Every year, lots of consumers are being pressured and harassed by these collectors. The CFPB has started watching debt collection companies. The bureau does have the mandate to do so, as they are non-bank financial agencies. Read more: Debt Collectors.

Could an arbitration clause in lending contracts be a good option to avoid having to go through debt collection? This service below was suggested by a btcjam user. Have no experience with it so no idea if it actually is legit or works. As I understand, the decision is followed up by law enforcement directly not a debt collection agency. It also works in many countries, with fits BTC global transactions model.

Would be great to hear what you guys think about this. I think the biggest impact of btc will be fair and global micro-p2p lending.

http://www.judge.me/
(...)
How is a judge.me decision enforced?

After the judge.me arbitrator has decided the case ("rendered his award"), both parties are bound to make each other whole again. Statistically, 96% of the arbitration awards are honored, meaning the losing party makes a payment or delivers goods or services to the prevailing party as ordered by the arbitrator within the set time limits (most commonly 30 days).

However, in the 4% of awards that are not honored, the prevailing party must seek to enforce the award by asking a court where the losing party has assets to turn the arbitration award into a court judgment, upon which the judge can then issue a fieri facias ("fi fa" in short), which is an order to the local sheriff to seize enough property of the losing party to make the prevailing party whole again, as well as to (typically) cover the court costs incurred by the entire process of enforcement. (This is why 96% of losing parties pay immediately: Not complying will most likely only incur more court expense for them and cause embarrassment from a forced property seizure.)
(...)
These two processes of recognition and enforcement of arbitration awards are possible in all jurisdictions of the 146 countries that signed the 1958 UN Convention of New York.

Sounds like a good ole Rocky/Bruno service. Hey! At least you save on post stamps

I can't tell you that for sure - a lot depends.  I mean, if you are lending anything other than cash (or something with a readily convertible cash value) then you are creating a bailee / bailor relationship as another poster pointed out.  In that relationship, the responsibility is normally that the item is going to be returned to you in substantially the same condition, or with some changes.  An example is when you hand over your fur coat to the cleaning shop, and then they hand it back to you cleaned and with new buttons or whatnot).

The US FinCEN has classified Bitcoin as a value transfer system, and classed businesses dealing with them as money transmitters.  That may be viewed as persuasive here in the UK, but it's certainly not binding.  I think the biggest thing to recognize is that the treatment of bitcoin is changing rapidly, and that if you are viewing it as money and describing yourself as a debt collector... You are, in the eyes of the law, a debt collector.

The law is in many cases less technical and more broad than many people think it is.  If you owe a debt of carrots to someone and that someone hires a third party to hit you in the kneecaps and demand the repayment of that debt, would you honestly expect a magistrate to agree that this was not a "debt collection" activity as described in the above legislation?

If you're going to put yourself forward as collecting debts, you are in all likelihood going to be viewed as collecting debts.  Even if you are really "reclaiming borrowed property", you are holding yourself out as a debt collector.  In the same breath you are then claiming that debt collection rules do not apply to you.  You may also be subject to the requirements imposed on bailees / bailors or repossession people or whatnot.  But if it is your aim to avoid falling within the scope of existing legislation regarding debt collections, you should definitely refer to yourself as something else.  Don't rely on the technical definition of the property in question, particularly when that definition may be subject to short-term change.

As above, there's a difference between what you might be able to "get away with" and what you are in fact permitted to do.  I agree that bitcoin isn't currency, but neither is a traveller's cheque.  However the subject of the trade (in most cases) is the "value" underlying either the bitcoins or any financial instrument.  So it wouldn't take a huge stretch to say "True, bitcoins are property, but they are property generally used to to stand in for or facilitate trade of currency.  Thus they are either cash or for our purposes a readily-negotiated monetary instrument.  Mr. Debt Collector holds himself to be reclaiming the value rather than the coins, as he is willing to take settlement in USD or GBP also.  Thus, irrespective of the substance of the original agreement, he should fall within the scope of the Consumer Credit Act."  It could go any number of ways, that's just an example.

This is totally empty conjecture, and I am in no way saying that it WILL go this way.  I'm just saying that you can't ignore the law when you are doing one thing (transferring value / exchanging money) in a new way enabled by technology or whatever.  The view of the common law hasn't caught up yet, but the bigger this thing gets the faster it will want to catch up.

No wonder a license will be needed!

No. You do not need a debt collector for that it would be a bailiff. A debt collector in England is either a company that writes 1000 letters and making 1000 nuisance calls or someone going round shooting kneecaps.

And yea even if you get a judgement in your favor in some circumstances the debtor will only have to pay you like 1£ a month till the end of days.

Even if you successfully sue a debtor, don't you still have to collect the debt if you can't get an attachment to earnings?

I am not against a responsible debt collection agency. However, I do not think there is one in UK and based on what OP said, he appears to me as utterly clueless about the practicalities. I doubt very much that he is capable of forming a "responsible debt collection agency".

It just so happened that I know rather very well both Data Protection Act and Consumer Credit Act here in UK and witnessed way to many times how numerous debt collectors and banks trying to scare poor people into submission using all kinds of lies and underhand or borderline criminal tactics. I have also seen many times how rather simple methods and proper advise turn the tables in favor of people quite quickly and keep scammy debt collectors at bay.

If you hold a legitimate debt in England or Wales. A debt collector in a wrong way to approach the problem. Just sue the debtor or write it off.

I think what OP means is that he himself doesn't need the license but the people/companies he outsources the actual collection to will. Whether that's legally sound or not I don't know.

Hi Vladimir - May I ask why you'd be against a responsible debt collection agency? I believe you're a businessman yourself. If you had a legitimate debt, wouldn't you want it collected?

Guys, if anyone in UK ever get hounded by these clowns get in touch with me and I'll show you how to deal with them. IANAL

P.S. There are two groups of people I generally dislike, banksters and debt collectors. Fortunately consumer protection laws in UK are rather very protective of consumers. It is not going to be too difficult dealing with them. Consumer Credit, Data Protection and Protection From Harassment Acts are here for a reason and to large degree intended by the Parliament to protect the public from the cowboys like OP.

P.P.S. Actually, anyone who would be pursued for some debts by OP and the likes or banks and their debt collectors shall go to  http://www.consumeractiongroup.co.uk/ . You can find there all the information you need to deal with them DIY style and get very decent free advise and information there.

Why is free an option, isn't that the same as no?

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!

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

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.