CCA Request - Complete Defence?

[stoic2008]

I would like to get any opinions on the idea that if a creditor does not comply fully and properly with a CCA request then this on its own should be a complete defence against the contract.

 

Section 77/78 states that a creditor must provide within 12 working days:

 

1. Copy of CCA

2. Any documents mentioned in it

3. A signed statement of account

 

The penalty for not doing this is that they cannot enforce (any part) of the contract.

 

So if the creditor has either partially complied or not complied with the request, then they cannot enforce (i.e. take advantage of) the contract until they have properly complied.

 

Then if they do comply at a later stage, they must return the account to the state that it was in prior to their default. This means that:

 

1. no interest can be charged

2. no payments can be overdue

3. any default notices withdrawn

4. Credit reference agency records must be amended

etc.

 

Have I understood this correctly?

[IdaInFife]

Fist part yes, second no as the CCA agreement was there all along

 

 

ida x

[stoic2008]

I may be wrong and will be happy if someone can correct me on this, but I think there is some confusion about the meaning of the word "enforce".

 

I believe this means "to bring into force". As in "to use a clause in the contract". So when a creditor is not permitted to enforce a contract, they are not allowed to "use" or "rely" on any claused in the contract.

 

So for instance, during a default of a s77/s78 request they cannot "use" any of the clauses of the contract (e.g. add interest, request payments etc)

 

 

So I agree there is an agreement in place during the whole period, but while the creditor is in default the creditor has no right to add any charges or rely on any of the terms of the agreement.

 

This would mean that if they have added interest etc, they have done this without any legal basis.

[IdaInFife]

they should not add charges or persue you for the debt during that period

 

 

but sometime what they should not and what they do are completely different things and you are entitlte to make a complaint if this is the case

[stoic2008]

In fact, I have just thought...

 

While they are in default, there is no debt.

 

"The Debt" is in fact just an amount of money that is payable under the agreement. So, even thought the agreement exists throughout the period of default, because they are not able to "enforce" any of its clauses, they may not "use" any of the clauses that cause "the debt" to exist.

 

Of course if/when they finally compy with the s77/s78 request they can again enforce the clauses of the agreement and "the Debt" will exist again.

 

I think that this was in fact the exact intention of s77/s78 in order to "encourage" creditors to comply with providing this information and to provide a penalty if they do not.

[creditcardmug]

Hi you are correct, while the creditor is in default of your request, he is not permitted to do ANYTHING else.

However the question of enforceability is something else, the law on this is complex as im sure you understand, reasons why an "agreement may not be enforceable are many and varied, and ultimately can only be tested in court

[stoic2008]

Yes, I agree ccmug, whether an agreement is enforceable needs to be tested in court. But whether the actual agreement is enforceable or not, I am really looking at the specific point of a creditor being in default of a s77/s78 request.

 

In the discussions here, I have read of many creditors that have been in default for over 12 months. Many people have stopped payment once the creditors have gone into default. But the worry has been that the creditor might turn up with a credit agreement at the court.

 

In the mean time the creditor has withdrawn facilities, added interest, put the credit card/loan into default and put adverse info with CRAs

 

Well from my understanding the case should be as follows:

 

If they do turn up in court with an agreement, then yes the agreement can be tested to see if it is enforecable, BUT...

 

The creditor will still be in default of the s77/s78 request and will not be able to enforce any part of the agreement until it properly complies with the request.

 

This means that they must provide:

 

1. Copy of CCA

2. Any documents mentioned in it

3. A signed statement of account

 

Perhaps they can do this in court, maybe by handing the documents over in person.

 

They will then be able to 'enforce' the clauses within the contract from that point onwards. But the account would have to be returned to state it was in prior to the creditors default. So they would need to reinstate the account, remove the interest added, remove any arrears on the account and correct the records at CRAs.

 

At this point the credit card holder could then continue to make the normal monthly payments and use the facilities of the card as before the creditor defaulted on the s77/s78 request.

 

The only effect should be that the creditor has lost the interest that they could have charged in the period they were in default.

 

I think this was the actual intented effect of a s77/s78 request in the Act. In order to make creditors provide this information when it is requested and in the time required.

[creditcardmug]

Your making a lot of points here, fiirst , if they turned up in court with valid docs after 1 year of not complying with your request, i think the court would take a dim view.

As soon as you stop making at least the minimum payments, then you are considered a risk by them (rightly) so they will withdraw facilities, which they are entitled to do, with or without a valid contract, so theres no way youre ever going back to using your card again, or any other form of credit, because you will be blacklisted by the CRAs.

The bottom line here i think is, if the creditor is not prepared/or cant come up with at least a copy of the agreement, then i think they have nothing, so would be foolish to pursue it in court. So the issue of adding charges etc. after defaulting on your request would be irrelevant.

[stoic2008]

ccmug I have no legal training either, but I am trying to work out the actual logic of how this works.

 

The s77/s78 request must have been put in the cca 1974 for a reason. I am guessing that the reason was to compel creditors to provide certain information in a certain timeframe. The penalty being that they are neutered of their rights in the agreement until they comply.

 

So irrespective of whether the agreement is properly executed or can be enforced the default of a s77/s78 request means that the creditor cannot enforce ANY part of the agreement.

 

1. This surely means that there are NO mimimum payments due.

2. Withdrawing facilities would be exercising a right under the agreement (but they are not permitted to exercise any rights)

3. Adding interest similarly

4. They may not want to reissue the cards, but I don't see that they have any legal way that they can't.

5. Blacklisting by CRAs would be defamation as you would not have done anything wrong as there were not payments due on the agreement.

 

I know that I seem to be taking an extreme view on the effect of a default on a s77/s78 request. But that is what is in the Act. Is it not?

[creditcardmug]

Well i cant disagree with what your'e saying there, lets wait and see what others think on this one.