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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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I used a debt management firm to deal with two creditors, both

Resolved Question:

I used a debt management firm to deal with two creditors, both involving credit card debt. I paid them every month by standing order and understood they would, for a fee, set up regular payments and ultimately build up a fund to make final settlement offers and clear my debts. In late 2012 the firm led me to believe both debts had been settled at reduced amounts. I received no written confirmation though. A year later both creditors contacted me to say they were still owed the full amounts. It appears the monthly payments were made only sporadically and several final settlement agreements were broken. Despite many phone calls and a letter the debt conpany has neither paid my creditors or refunded the money to me. I now discover they no longer have a licence to practise and are in administration. Do I have legal recourse to recover my money, about £9,000? Should the money be in a ringfenced client account separate from their own finances? If the money has vanished has a fraud been committed? Thank you
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts :

Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.

Alex Watts :

What is their name please?

Customer:

Debt Connect Limited, of Manchester

Alex Watts :

Ideally you should have used Step Change who are a charity and provide a free debt management service

Alex Watts :

I see they are not in administration they have simply dissolved.

Alex Watts :

This means they decided to strike the company off, which is different from going into administration

Alex Watts :

What you should do is write to your creditors, set out what has happened, show the payments being made to Debt Connect and see if the creditors would honour this.

Alex Watts :

If not then sadly you will need to pay direct and I would suggest going to step change

Alex Watts :

http://www.stepchange.org/

Alex Watts :

Potentially you could sue the Directors for mis-handling funds personally but this could be an expensive process

Alex Watts :

So in the first instance, contact Step Change

Alex Watts :

Then contact the creditors and show you have made payments

Alex Watts :

Then the creditors may be able to reduce the sums you actually paid accordingly.

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

thank you. I am in contact with my creditors but while sympathetic, they want their money. I have records of payments to debt connect from my bank, do I have a case in the small claims court? Thanks

Alex Watts :

You do but it would be a case against the Directors personally. The small claims limit is £10,000

Alex Watts :

If this answers your question please do take a moment to rate my answer.

Alex Watts :

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Alex Watts :

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