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When is an OVERDRAFT creditor entitled to terminate the agreement?


ScabHunter
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Overdrafts cause more trouble on the CAG debt forums than all other types of account put together.

 

This question relates purely to the termination procedure of an overdraft account.

 

With credit card accounts, for example, the law is clear as to exactly when a creditor is entitled to issue a default notice, and then, provided the breach is not remedied, terminate the account.

 

An overdraft is a running agreement. The bank decides an amount which the account holder is entitled to be overdrawn by, and the account holder has to stay within that limit.

 

The questions are –

 

At what point is the creditor entitled to terminate the agreement?

Having decided to terminate the agreement, what does the creditor have to do to perform this legally?

Is there any requirement for a default notice? If not, what takes its place?

 

If anybody can shed any light on this, it would be much appreciated. We now have a court case which has gone beyond my ability to offer help, so we now need input from someone who understands the law as it relates to bank overdrafts.

 

SH

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I am dealing with a claim in relation to a loan and an overdraft. Received a Formal Demand for repayment on both, but no default notices ever received.

 

Claimant have produced screen print from bank's computer system showing DN issued ("as the bank do not keep copies of Default Notices as these are produced by an automated system") and the usual but "it would have looked liked this".

 

DN (for the loan) under S87 of CCA and NOTICE under S76(1) and S98(1) in relation to current account to terminate the overdraft facility.

Edited by Moral Dilemma
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S76 (1) and S98(1) both state in relation to a regulated agreement.

 

Current accounts and overdrafts are covered by S10 of CCA 1974.

 

S8(1) states "A personal credit agreement is an agreement between an individual ("the debtor") and any other person("the creditor")…

 

S8(2) states "A consumer credit agreement is a personal credit agreement…"

 

S8(3) states "A consumer credit agreement is a regulated agreement within the meaning of this Act if it is not an agreement (an "exempt agreement") specified under S16".

 

S10(1)(a) running account credit is a facility under a personal credit agreement

 

Hope that helps, T&C's should say if an agreement under CCA.

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Which would suggest creditor required to issue a termination notice under S76 before being entitled to demanding earlier payment of any sum S76(1)(a)

or

under S98 Duty to give notice of termination (non-default cases)

(1) creditor or owner is not entitled to terminate a regulated agreement except by or giving…not less than seven days' notice of termination

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i have had what i assume is a running overdraft for approximately 6/7 years have never received any correspondence regarding this overdraft in all the years Ive had it

until last week that is when they sent me an e-mail saying that i can have my overdraft for another 12 months

no help i know but i do find it rather strange

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hi hallowitch

 

i got something very similar. except they said they wrote to me on the 23/02/09 which was yesterday and informed me that they i need to visit the local bank and cancel it. i have been making the minimum payments on it for the last 6 years.

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Ive never went over my overdraft limit Ive sailed very close to the wind on loads of occasions over the years

Ive never had a dept collector or a bailiff at my door

i moved to wales over10 yrs ago and about 3 month after i moved into my house the bailiffs called at my next door neigbour

what hapend that day put the fear of good into me

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