Default Notice.. Very harsh I think. Not sure what to do next

[embo]

I have been issued with a default notice from the car finance company that I use.

 

Basically I could not afford to pay last months car payment and i rang them in plenty of time, many times to sort something out..

 

The first call asking if i could have a payment holiday was flatly refused.

The next one to see if i could get someone more helpful was also refused.

The third one a few days before my payment was due to go out was also unsuccesful, and the lad i spoke to advised me to cancel my direct debit so not to receive any bank charges (which i did) and to speak to my account manager (who was on holiday) to come to some arrangement.. he wrote an email to her whilst i was on the phone asking her to ring me with regards to this..

 

I did not receive a call.. So i tried each day to contact her and each day she was off sick.

 

Yesterday i managed to get hold of her and she stated that she was no longer my account manager, but did arrange for me to pay the missing payment off in 4 installments on top of my usual monthly payments.. which is fine..

 

However when i got home there was a letter from them - dated 4th July - issuing me with a default notice.

So i know the letter has crossed in the post with my phone call yesterday, but i am really annoyed that they didnt even try to call me to discuss it first, i got no help whatsoever for a long amount of time. (i mean your lucky to even get through to their credit control department - the answer phone asks you to leave a message - and they never call back)

 

Are they allowed to issue a default notice for one payment missed?

 

Any advise would be greatly received.

 

Many Thanks

[PGH7447]

Are they allowed to issue a default notice for one payment missed?

Dont think so but not 100% sure, sorry

[embo]

Does any one know the conditions in which you would normally recive a default? thanks

[AndyOrch]

Hi

 

Creditors are entitled to issue a Default Notice if you have missed one or more payments and this will stay on your credit file for six years from the date of issue.

Most personal loan and credit card agreements are regulated by the Consumer Credit Act 2006 and the creditor must issue a Default Notice before commencing legal action. The notice will normally carry with it threats of County Court Judgement or petitions for Bankruptcy.

 

 

The Default Notice must include:-

• Name and address of the creditor.
  
• Type of agreement and the breach thereof.
  
• Early settlement figure (for fixed sum).
  
• Steps to be taken by you to remedy the situation.
  
• What the creditor intends to do should you not comply with the agreement.
  

The creditor must allow you 7 days to comply with the default notice. Thereafter the creditor may issue a County Court Summons against you.

 

 

Some lenders may allow you to miss more than one payment its really at the discretion of the lender.

 

 

 

Regards

Andy;)

Edited July 10, 2008 by Andyorch

[robcag]

Most personal loan and credit card agreements are regulated by the Consumer Credit Act 2006 .....

 

Andy,

 

Most? What about the ones which were taken out before the 2006 CCA came in to force (1974 CCA)?

 

Cheers

Rob

[AndyOrch]

Hi Rob

 

They are covered by the Consumer Credit Act 1974;)

 

 

Regards

Andy

[robcag]

Hi Andy

 

Nit-picking maybe, and I suppose it's debatable, but IMHO, I would have thought that most credit card agreements would be regulated by the CCA 1974, rather than the CCA 2006.

 

Cheers

Rob

[AndyOrch]

Hi Rob

 

No I take your point, but in reply to your quiery that is the answer.It was rather an in general for new posters reading this thread.Its obvious ,i would have thought if you had taken any credit pre, then the ( 1974 ) act would cover them.

 

I trust that answers your concerns

 

 

Regards

Andy;)

[pt2537]

actually, the CCA 2006 is an amending act, it amends the 1974 Act not replaces it

 

An Act to amend the Consumer Credit Act 1974; to extend the ombudsman scheme under the Financial Services and Markets Act 2000 to cover licensees under the Consumer Credit Act 1974; and for connected purposes.

[ncf355]

Hi

 

Creditors are entitled to issue a Default Notice if you have missed one or more payments and this will stay on your credit file for six years from the date of issue.

Most personal loan and credit card agreements are regulated by the Consumer Credit Act 2006 and the creditor must issue a Default Notice before commencing legal action. The notice will normally carry with it threats of County Court Judgement or petitions for Bankruptcy.

 

 

The Default Notice must include:-

• Name and address of the creditor.
  
• Type of agreement and the breach thereof.
  
• Early settlement figure (for fixed sum).
  
• Steps to be taken by you to remedy the situation.
  
• What the creditor intends to do should you not comply with the agreement.
  

The creditor must allow you 7 days to comply with the default notice. Thereafter the creditor may issue a County Court Summons against you.

 

 

Some lenders may allow you to miss more than one payment its really at the discretion of the lender.

 

 

 

Regards

Andy;)

 

 

 

Hi,

 

 

its 14 days to comply now

 

Regards

 

NcF

[pt2537]

Quite right Ncf,

 

infact the Consumer Credit (Enforcement, Default and Termination Notices)

Regulations 1983 (SI 1983/1561) state

 

3

A specification of:--

 

(a) the provision of the agreement alleged to have been breached; and

 

(b) the nature of the alleged breach of the agreement, specifying clearly the matters complained of; and either

 

© if the breach is capable of remedy, what action is required to remedy it and the date, being a date [not less than

fourteen days] after the date of service of the notice, before which that action is to be taken; or

 

(d) if the breach is not capable of remedy, the sum (if any) required to be paid as compensation for the breach and

the date, being a date [not less than fourteen days] after the date of service of the notice, before which it is to be paid.

 

and in the notes at the bottom of the section it states

 

NOTES

Amendment

 

Para 3: in sub-paras ©, (d) words "not less than fourteen days" in square brackets substituted by SI 2006/3094, regs 2, 3.

Date in force: 19 December 2006: see SI 2006/3094, reg 1.

 

 

the most basic of mistakes me thinks

[AndyOrch]

Well spotted caggers I thought Robcag would have been the first to see it:confused: and that information was taken from a very well known website that we advise other posters to use with reference to DMPs check it out

 

 

 

Regards

Andy:)

[AndyOrch]

And in addition as to not confuse any posters and maintain good information

 

A new amendment has been made in case of failure to give notice of sums in arrears in CCA 1974. Section 11 CCA 2006inserts a new section - 86D - that sets out the consequences for a creditor or owner if he fails to give a notice as required by sections 86B or 86C.

If the creditor or owner fails to provide a notice of sums in arrears when required to do so, then during the period of his failure to provide the notice (i.e. from the date that it was required to be given until the end of the day on which it is eventually provided), he is not entitled to enforce the agreement. In addition,

The debtor or hirer is not liable to pay any interest that relates to the period of the creditor or owner’s failure,

Notice of default sums

Section 12 of CCA 2006 applies to situations where a debtor or hirer under a regulated agreement incurs a default sum.

A creditor or owner must give the debtor or hirer a notice in the specified form when a default sum becomes payable as a consequence of a breach of the agreement. For example, you hire a car for the duration of your holiday. There will often be a penalty sum payable if you incur a fine from using the car. The car-hire company might say this is to cover, for example, administration charges. Either way, certain sums are payable if you breach the agreement. Where this applies, the creditor must provide notice to the debtor, of the amount they must pay. This only applies where the default sum exceeds a specified amount.

Additionally, a creditor may only require a debtor to pay interest (in connection with a default sum) 28 days after the day the notice was given to the debtor. So if the creditor fails to give notice to the debtor then he can not enforce the agreement until notice is given.

“Default sum”

The term ‘default sum’ has been redefined in s.18 CCA 2006.“Default sum” now means: a sum payable by a debtor or hirer in connection with his breach of a regulated agreement (e.g. a charge imposed for late payment of an installment due under the agreement or a fee imposed for exceeding a credit limit on a credit card). A default sum does not include sums that, as a consequence of a breach of the agreement, become payable earlier than they otherwise would have done. Nor does it include interest.

Interest on default sums

Section 13 has been amended so that a creditor or owner may only require simple interest to be paid in respect of default sums payable by the debtor or hirer. This includes sums payable under noncommercial or small agreements.

Minimum 14 days after Default notices

The new minimum period after which a creditor or owner may take action (in respect of the agreement after having issued a default notice) is now 14 days. It used to be only 7 days. Section 14 CCA 2006amends section 88 of the 1974 Act to create this extension.

Additionally, under s87, a creditor or owner must give the debtor or hirer a default notice in the prescribed form if he wishes to:

- terminate the agreement;

- demand earlier payment of a sum;

- recover possession of any goods or land;

- treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred; or to

- enforce any security

Section 88 is also amended to allow the Secretary of State to prescribe information in the default notice to include any matters relating to the agreement (e.g. information about whether the agreement includes a term providing for the charging of post-judgment interest).

Regards

Andy;)

[pt2537]

well, thats good Andy, but S11 of the 2006 Act doesnt come into force til 1st October 2008 according to Halsburys

[pt2537]

nor does s13 or 14(1)

13 1 Oct 2008 (SI 2007/3300) 14(1)1 Oct 2006 (SI 2006/1508) (2)16 Jun 2006 (SI 2006/1508) (3)1 Oct 2008 (SI 2007/3300)

Edited July 12, 2008 by pt2537

[mberman]

Very confused!

 

I have a default notice which was issued after 19th Dec 2006 and has only given me 13 days to remedy the default. I also have a trial window of mid October 2008. Does it mean that the new law take effect for me as you say it does not come into force untill the 1st Oct 2008!

 

 

 

Also I found this while I was searching the net! It just seems one minute I think oh they cannot enforce the agreement with a dodgy Default Notice then I read somewhere That they can still enforce if the cca is enforceable and also I read that they can re issue a new Default notice!

 

Is it possible for someone to clarify the position as this is driving me insane and also for people in a similar position.

 

 

Here is what I Found:

 

Accurate Default Notices are vital

Introduction

Businesses engaged in lending or hiring regulated by the Consumer Credit Act 1974 should be aware of a recent Court of Appeal case highlighting the potential pitfalls of creditors failing to ensure that their documentation complies with the regulations.

In the vast majority of cases, before a lender or hirer can take action against a debtor or borrower, a default notice has to be served. The default notice has to comply with the Act and the relevant regulations (Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1993). If a default notice in the proper form is not served, the action cannot proceed.

In this case*, the defendant hired a photocopier but failed to pay a quarterly instalment of its rent. The plaintiff served a default notice which substantially overstated the arrears which were then due. Despite this, the judge at first instance held that the default notice was valid and entered judgement for the plaintiff.

 

Correct procedures must be adhered to

On appeal, Lord Justice Kennedy held that the Act was enacted to protect consumers, most of whom were likely to be individuals. When contracting with a financial organisation, a consumer was bound to be at a disadvantage. The contract was likely to be in standard form and complex. His Lordship said that if it was said that a consumer had broken the terms of the agreement, the consumer needed to know precisely what had been done wrong and what was needed to put matters right. The lender has the ability and resources to do this and, if it does not do so accurately, it is only right that it should not take the next step. Under s88(1) of the Act there is a requirement that the lender should 'specify' not only the nature of the breach, but also what action is required to remedy it. In the context of this case, that meant specifying with reasonable accuracy what sum the hirer had to pay to remedy the breach.

The Court went on to say that an error that could be described as minimal might be overlooked, but the substantial inaccuracy in this case rendered the default notice ineffective, so the appeal should be allowed.

Tens, if not hundreds, of thousands of default notices are issued every day. This case illustrates how vitally important it is that any default notice is correct in form, as well as in substance. It is likely that the Court would take the same view with regard to the form and contents of regulated agreements.

*Case reference

Woodchester Lease Management Services Ltd v Swain & Co NLD 14 July 1998.

==============================

(Consumer

A notice under the Consumer Credit Act specifying an amount of arrears, and claiming default, had to specify the arrears accurately otherwise the customer would not properly know what to do to remedy the default. The notice was invalid.)

 

================================

 

 

 

38. Notwithstanding the above, it is also drawn to the courts attention that no default notice required by s87 (1) Consumer Credit act 1974 has been attached to the particulars of claim

39. It is neither admitted or denied that any Default Notice in the prescribed format was ever received and the Defendant puts the Claimant to strict proof that said document in the prescribed format was delivered to the defendant

40. Notwithstanding point 39, I put the claimant to strict proof that any default notice sent to me was valid. I note that to be valid, a default notice needs to be accurate in terms of both the scope and nature of breach and include an accurate figure required to remedy any such breach. The prescribed format for such document is laid down in Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) and Amendment regulations the Consumer Credit (Enforcement, Default and Termination Notices) (Amendment) Regulations 2004 (SI 2004/3237)

41. Failure of a default notice to be accurate not only invalidates the default notice (Woodchester Lease Management Services Ltd v Swain and Co - [2001] GCCR 2255) but is a unlawful rescission of contract which would not only prevent the court enforcing any alleged debt, but give me a counter claim for damages Kpohraror v Woolwich Building Society [1996] 4 All ER 119

NOTES

Amendment

Para 3: in sub-paras ©, (d) words "not less than fourteen days" in square brackets substituted by SI 2006/3094, regs 2, 3.

Date in force: 19 December 2006: see SI 2006/3094, reg 1.

Para 6: words "not less than fourteen days" in square brackets substituted by SI 2006/3094, regs 2, 3.

Date in force: 19 December 2006: see SI 2006/3094, reg 1.

 

taken from Consumer Credit (Enforcement, Default and Termination Notices)

Regulations 1983 (SI 1983/1561) prior to that dates above it was only 7 days

 

EXPLANATORY MEMORANDUM TO

THE CONSUMER CREDIT (ENFORCEMENT, DEFAULT & TERMINATION NOTICES) (AMENDMENT) REGULATIONS 2006

2006 No. 3094

1. This explanatory memorandum has been prepared by the Department of Trade and Industry and is laid before Parliament by Command of Her Majesty.

2. Description

2.1. The Consumer Credit (Enforcement, Default and Termination Notices)(Amendment) Regulations 2006 (“the 2006 Regulations”) are intended to update the Consumer Credit (Enforcement, Default & Termination Notices) Regulations 1983 (“the 1983 Regulations”) to bring them into line with changes made by the Consumer Credit Act 2006 (“the 2006 Act”) that came into force on 1 October 2006.

2.2. At the moment lenders must give consumers at least seven days to respond to a default notice. The amendment increases this to fourteen days, although lenders can allow a longer time period if they wish.

3. Matters of special interest to the Joint Committee on Statutory Instruments

3.1. None

4. Legislative Background

4.1. Section 88 of the 1974 Act provides for the sending of default notices and allows regulations to be made specifying the form and content of these notices. The 1983 Regulations prescribe the form and content of these notices, including a minimum time within which a consumer should respond.

4.2. The 2006 Act amended the ‘74 Act to increase the seven day period to fourteen days and consequential changes are necessary to other pieces of legislation that state this time frame.

5. Extent

5.1. These Regulations extend to Northern Ireland. The responsibility for consumer credit regulation is transferred to Northern Ireland under the devolved settlement. However, as the Northern Ireland Assembly is currently suspended, it was agreed that the provisions of the 2006 Act would also apply to Northern Ireland

6. European Convention on Human Rights

6.1. As the instrument is subject to negative resolution procedure and does not amend primary legislation, no statement is required.

1

7. Policy background

7.1. The Consumer Credit White Paper of 2003 set out the Government Agenda for change in the consumer credit market. Various pieces of secondary legislation, standardising the way APR (Annual Percentage Rates) is calculated, the provision of key information on a product up front and the simplification of early settlement rules came into force in 2004.

7.2. The Consumer Credit Act 2006 continued the aim of enhancing consumer redress, improving the regulation of consumer credit businesses and ensuring that regulation is appropriate.

7.3. One perceived problem was that the minimum period of time that a consumer had to respond to a default notice was too short at 7 days. There was not enough time for a consumer to work out what is required and respond within such a short timeframe. As a result the 2006 Act increased the minimum period from 7 to 14 days. This came into effect through Commencement Order 2006 No. 1508 (C.52) on 1 October 2006.

7.4. This Statutory Instrument brings the 1983 regulations into line with the 2006 Act and needs to come into force as soon as possible as the amendment should have been made at the time of the Commencement Order. It will come into force on 19 December 2006.

8. Impact

8.1. Any impact was considered as part of the regulatory impact assessment for the Consumer Credit Bill published in November 2004. Default notices are discussed in sections 10, 44 and 47 of the impact assessment. As businesses already incur costs in respect of defaulters, the impact assessment concluded that a 14-day rather than a 7-day minimum period would not impose additional costs.

9. Contact

9.1. Amanda Eden at the Department of Trade and Industry Tel: 0207 215 2165 or e-mail: [email protected]

2

was increased to 14 days on the 1 Octobor 2006 under the new CCA 2006

 

1 October 2006 (CCD)

Extension of period for consumers to respond to default notices, from 7 to 14 days (section 14(1))

 

14 Default notices

(1) In subsections (2) and (3) of section 88 of the 1974 Act (contents and effect of default notice) for “seven” wherever occurring substitute “14”.

(2) In subsection (4) of that section after “it” insert “and any other prescribed matters relating to the agreement”.

(3) After that subsection insert—

“(4A) The default notice must also include a copy of the current default information sheet under section 86A.”

 

 

Regards

 

Mberman

[mberman]

Hi Guys,

Just had email confirmation from someone at the

Consumer Credit Act implementation team

Department for Business, Enterprise and Regulatory Reform

Bay 428

1 Victoria Street

London SW1H 0ET

020 7215 0145

The change in s14(1) of the Consumer Credit Act 2006 (increasing from 7 to 14 days the minimum period for response to a default notice) was implemented from 1 October 2006 in SI 2006/1508 - the Consumer Credit Act 2006 (Commencement No 1) Order 2006. The change applies to all default notices served on or after that date, irrespective of when the agreement was made and when the breach occurred - Schedule 3 para 10 of the Consumer Credit Act 2006. If a default notice does not allow 14 days, it is not in compliance with s88 and so the creditor cannot take the steps in s87.

The fact that the change to SI 1983/1561 post-dated 1 October 2006 does not matter. The date must be not less than 14 days (by virtue of s88) - but SI 1983/1561 (pre-amendment) required the date to be "no less than seven days" - and 14 days is not less than seven. So SI 2006/3094 - the Consumer Credit (Enforcement, Default and Termination Notices) (Amendment) Regulations 2006 - was merely clarificatory.