STORAGE DEBT, ‘CASH IN THE HAND OR DEAD WEIGHT’

Self-storage didn’t start in the UK until the 1980s. However, since then has seen substantial growth with average growth rates of around 25-30% pa and a total market estimated to be worth £280 m in 2005. Indeed self-storage is considered one of the fastest growing businesses in the UK.

As self-storage grows more and more firms understand that a lien as protection against bad debt is a myth.

'Self-storage is estimated to be worth £280m in 2005'

Self-Storage firms are waking up to the fact that selling goods at auction can be an expensive and time consuming exercise. This is very common with goods that are worth next to nothing as is common. Not only can sale through auction be expensive but also a regulatory minefield. If the self-storage firm is not careful they will be liable to prosecution for unlawfully interfering with the debtors goods.

The sale and disposal of goods is regulated by the Torts (Interference with Goods) Act 1977 (the Act). In situations where the debtor fails to pay for storage charges their goods may be sold providing:
 1. the outstanding balance is at least 3 months old; and
 2. the goods in storage are owned by the debtor; and
 3. statutory notice of sale is sent by recorded delivery or registered post; and
 4. sufficient particulars of the goods in store and the address of where they are held is given; and
 5. statement of the date on or after the sale is proposed is given; and
 6. specification of the amount that is payable by the debtor in respect of the goods and which became due before the giving of the notice is given; and
 7. the outstanding balance is not subject to dispute.

'Firms can be liable for prosecution if they unlawfully interfere with debtors goods'

One of the biggest problems is ensuring the debtor owns the goods. The easiest solution is to incorporate a term in the terms and conditions stating that the customer/debtor undertakes that they are the owner of the goods, and that they will indemnify the self-storage firm against any third party claims for title.

The proposed date of sale after giving Statutory Notice of the same must be such that it gives the debtor reasonable opportunity of taking delivery of the goods. In the circumstances 21 or 28 days from the date of notice is considered reasonable.

Against this background firms such as Safe Depot and Super Storage have introduced alternative debt collection practices that focus on collecting bad debt. Debt Collection Agents with expertise in self-storage manage bad debt to the point where they arrange removal of the debtors goods from storage once the account has been settled. In essence a fully serviced bad debt management agent inclusive of all regulatory requirements including query management.

For expert advice on storage bad debt management contact Carlo Pegna on 01992 890391 or e-mail carlo.pegna@mastercollections.co.uk.

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© 2007 Master Collections Ltd