Invalid Default Notices

[mot22]

A letter accepting unlawful rescission is realy a belt and braces job, and you would need to send that at the point of termination.

 

The problem is that if you have made payments since the DN date, then you have acted as though the agreement endured.

 

Thx so much for the quick reply vint1954.

Yes that is my understanding.

I asked because at the time of the DN's I didn't know of UR.

I understand there are laws stipulating how a DN must be complied with by the OC.

Is there anything as to a debtors unawareness of their rights on how to respond to an invalid DN?

Or would it come down to how the issue is argued or put in court?

[dasby]

The problem is that if you have made payments since the DN date, then you have acted as though the agreement endured.

 

Assume the debtor as likely for most people, didnt know to send a letter accepting unlawful repudiation after termination by the OC. If they continued paying a monthly amount that totalled less than the arrears on the DN would that be continuing to accept the agreement or simply paying towards arrears that the OC is entitled to in the DN?

[Lord_Alcohol]

A letter accepting unlawful rescission is realy a belt and braces job, and you would need to send that at the point of termination.

 

The problem is that if you have made payments since the DN date, then you have acted as though the agreement endured.

 

Is it not that the account endured, but the contract was terminated? Ie, the contract ended in that no further rights to use credit, but account transferred to DCA for collection. Or can a contract be passed to a DCA intact for later restitution to the debtor?

 

There must be some mechanism that terminates an agreement or contract for the account to be passed to a DCA (I would have thought), or even the act of passing the account to a DCA is the termination? Bit hazy on this one - can you help Vint?

 

What happens, for example, if the debtor doesn't receive a termination notice? How can he determine whether the contract is terminated without this, unless it is by observing an event that strongly implies the contract is terminated (such as the end of credit facilities and recovery action)?

 

There are no time limits contained within CCA or the Regs, just that s87 precludes payment of earlier sums where the notice doesn't comply with s88. So am quite confused by this issue.

 

LA

[bradfordlad]

Greetings.

Firstly I'd like to thank everyone for the immense contribution on this site.

I really don't know where I stand and hope for some help.

As simply as I can put it, I have a number of DN's from about a year ago that are invalid.

Having started on a DMP just prior to the DN's and then continued, post DN's to pay DCA's

via a DMP up to about November 2009 and nothing since, I would like to know if and how

I should proceed with unlawful rescission ?

I have, and continue to read as much as I can but I don't know where I stand as it appears that UR is only an appropriate response if done fairly immediately or if the nature of ones action is materially different post DN as per pre DN?

Many thx.

 

Assuming you haven't paid more than the arrears that were outstanding, could it be that you DID write to the creditors accepting their termination, and explaining that any future payments were towards the arrears only? Perhaps you can find a copy of that letter?

[nks22]

I'd be inclined to accept UR now. As a layman I don't think it unreasonable that you should be a little slow to understand the implications of a faulty DN.

[means2anend]

Thx so much for the quick reply vint1954.

Yes that is my understanding.

I asked because at the time of the DN's I didn't know of UR.

I understand there are laws stipulating how a DN must be complied with by the OC.

Is there anything as to a debtors unawareness of their rights on how to respond to an invalid DN?

Or would it come down to how the issue is argued or put in court?

 

 

In this situation where you are 'guessing' as to what may or may not have received...I should start by requesting a Subject Access Report fro your lender/Original lender.

 

Trawl through IT to see if at ANY time there has been a TN served upon you.If there was it is then that the issue of a defective DN and UL should be looked at.

 

That is the most productive and time consuming way although it will cost you £10.00 but the cost/benefit is worth it even if only for peace of mind.

 

DO NOT ALERT them to any problems UNTIL you are sure otherwise you may find you are doing their work for them.

 

CHECK your SAR

 

m2ae

[Lord_Alcohol]

Assuming you haven't paid more than the arrears that were outstanding, could it be that you DID write to the creditors accepting their termination, and explaining that any future payments were towards the arrears only? Perhaps you can find a copy of that letter?

 

 

and if you did pay more than the arrears you could always claim back the overpaid amount

 

LA

Edited May 10, 2010 by Lord_Alcohol
Typo

[mot22]

In this situation where you are 'guessing' as to what may or may not have received...I should start by requesting a Subject Access Report fro your lender/Original lender.

 

Trawl through IT to see if at ANY time there has been a TN served upon you.If there was it is then that the issue of a defective DN and UL should be looked at.

 

That is the most productive and time consuming way although it will cost you £10.00 but the cost/benefit is worth it even if only for peace of mind.

 

DO NOT ALERT them to any problems UNTIL you are sure otherwise you may find you are doing their work for them.

 

CHECK your SAR

 

m2ae

 

m2ae.

Thank you. I'm unclear when you say "what you are "guessing"....?

 

Re: SAR's.

With creditors I have not SAR'd I was sent aTN.

With creditors I have SAR'd I was not sent a TN.

With those SAR'd there is no mention of a TN.

However, with those SAR'd nor is there reference to the the DN that was sent to me.

(although there is a reference to "Charged Off").

So I am unclear as to what or how a SAR helps here?

 

Where I was not sent a TN I do have requests for the full balance, post DN, either via the OC or DCA's.

 

bradfordlad:

I shall check my files. Thankyou..

 

Lord Alcohol:

Yes there are many issues that interconnect it seems.

 

nks22:

Thankyou. I am trying to understand how to proceed and the ramifications of doing so?

Edited May 10, 2010 by mot22

[means2anend]

A SAR is most helpful when it says in it that a TN was sent to you...but in practice you either received/did not receive/or lost it. This means that at some point your Account WAS TERMINATED by them.

 

Then if the DN notice prior to that TN was actually invalid and did not conform to the Sections 87(1) 88..then you KNOW that the agreement was unlawfully rescinded on the back of dodgy DN...And you have the evidence.

 

That is what I was meaning..I came out a little confusing my apologies.

 

m2ae

[bradfordlad]

Always happy to help when I can

[mot22]

A SAR is most helpful when it says in it that a TN was sent to you...but in practice you either received/did not receive/or lost it. This means that at some point your Account WAS TERMINATED by them.

 

Then if the DN notice prior to that TN was actually invalid and did not conform to the Sections 87(1) 88..then you KNOW that the agreement was unlawfully rescinded on the back of dodgy DN...And you have the evidence.

 

That is what I was meaning..I came out a little confusing my apologies.

 

m2ae

 

Thank you. Yes I follow what you say and no need to apologize,

indeed I apologize for asking what has probably already been asked,

but I am overwhelmed with the amount of information and my situation.

 

Remaining relevant to the thread and that my DN are invalid,

and whether a TN was via a TN letter or asking for the full balance post DN,

my initial confusion remains as to how to proceed

in so far as what has occurred post DN (and post Termination).

Edited May 10, 2010 by mot22

[Lord_Alcohol]

Thank you. Yes I follow what you say and no need to apologize,

indeed I apologize for asking what has probably already been asked,

but I am overwhelmed with the amount of information and my situation.

 

Remaining relevant to the thread and that my DN are invalid,

and whether a TN was via a TN letter or asking for the full balance post DN,

my initial confusion remains as to how to proceed

in so far as what has occurred post DN (and post Termination).

 

s87(1)(b) states that the creditor may not demand anything more than the arrears at the time of DN (or termination), where the DN is non-compliant with s88.

 

So presumably a claim by the creditor that is based on the full amount of the debt can be successfully defended under this subsection. You would only lawfully owe the arrears.

 

There is clearly a link between recording a default with the CRAs and issues under the 1998 Data Protection Act. It may be an argument to propose that, as the DN was defective, "failure" to remedy the default should not have been viewed as such and so should not have been recorded as such with the CRAs.

 

The argument is (I think) that defects in the DN may have prevented you from repaying the arrears claimed and remedying the default.

 

If that's the case, then would you be able to make a claim to seek an order requiring the creditor to remove damaging data under DPA s10(1) ("Right to prevent processing likely to cause damage or distress"), in addition to seeking compensation for their own mistakes?

 

LA

[Lord_Alcohol]

A SAR is most helpful when it says in it that a TN was sent to you...but in practice you either received/did not receive/or lost it. This means that at some point your Account WAS TERMINATED by them.

 

Then if the DN notice prior to that TN was actually invalid and did not conform to the Sections 87(1) 88..then you KNOW that the agreement was unlawfully rescinded on the back of dodgy DN...And you have the evidence.

 

m2ae

 

Nicely put m2ae - I think this is exactly so, only that it may be the legal contract that is terminated rather than the monetary account (as accounts are passed to DCAs for recovery).

 

LA

[vint1954]

Thx so much for the quick reply vint1954.

Yes that is my understanding.

I asked because at the time of the DN's I didn't know of UR.

I understand there are laws stipulating how a DN must be complied with by the OC.

Is there anything as to a debtors unawareness of their rights on how to respond to an invalid DN?

Or would it come down to how the issue is argued or put in court?

Yes, the law surrounding Default notices is part of the CCA1974 s87-88 and s89. For seven days, now read fourteen. Amended in 2006.

 

PART VII

DEFAULT AND TERMINATION

Default Notices

87.—(1) Service of a notice on the debtor or hirer in accordance with section 88 (a "

default notice ") is necessary before the creditor or owner can become entitled, by

reason of any breach by the debtor or hirer of a regulated agreement,—

(a) to terminate the agreement, or

(b) to demand earlier payment of any sum, or

© to recover possession of any goods or land, or

(d) to treat any right conferred on the debtor or hirer by the agreement as

terminated, restricted or deferred, or

(e) to enforce any security.

(2) Subsection (1) does not prevent the creditor from treating the right to draw

upon any credit as restricted or deferred, and taking such steps as may be necessary to

make the restriction or deferment effective.

(3) The doing of an act by which a floating charge becomes fixed is not

enforcement of a security.

(4) Regulations may provide that subsection (1) is not to apply to agreements

described by the regulations.

 

88.—(1) The default notice must be in the prescribed form

and specify—

(a) the nature of the alleged breach;

52

(b) if the breach is capable of remedy, what action is required to remedy it

and the date before which that action is to be taken;

© if the breach is not capable of remedy, the sum (if any) required to be

paid as compensation for the breach, and the date before which it is to be paid.

(2) A date specified under subsection (1) must not be less than seven days after the

date of service of the default notice, and the creditor or owner shall not take action

such as is mentioned in section 87(1) before the date so specified or (if no requirement

is made under subsection ( 1)) before those seven days have elapsed.

(3) The default notice must not treat as a breach failure to comply with a provision of

the agreement which becomes Operative only on breach of some other provision, but

i£ the breach of that other provision is not duly remedied or compensation demanded

under subsection (I) is not duly paid, or (where no requirement is made under

subsection ~1)) if the seven days mentioned in subsection (2) have elapsed, the

creditor or owner may treat the failure as a breach and section 87(1) shall not apply to

it.

(4) The default notice must contain information in the prescribed terms about the

consequences of failure to comply with it.

(5) A default notice making a requirement under subsection (1) may include a

provision for the taking of action such as is mentioned in section 87(1) at any time

after the restriction imposed by subsection (2) will cease, together with a statement

that the provision will be ineffective if the breach is duly remedied or the

compensation duly paid.

89. If before the date specified for that purpose in the default notice the debtor or hirer

takes the action specified under section 88(1)(b) or © the breach shall be treated as not having occurred.

 

There are no specific laws surrounding UR under CCA1974, but there are high court judgements, which MUST be followed by lower courts. Specifically:

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 gives rise to a counter claim for damages Kpohraror v Woolwich Building Society [1996] 4 All ER 119

With regard to their actions and debtor awareness, you should check out CPUTR 2008.

[vint1954]

Assume the debtor as likely for most people, didnt know to send a letter accepting unlawful repudiation after termination by the OC. If they continued paying a monthly amount that totalled less than the arrears on the DN would that be continuing to accept the agreement or simply paying towards arrears that the OC is entitled to in the DN?

Thats a bit of a weak one, unless you took other action that clearly indicated that the agreement no longer endured.

 

In the DN, they do give you the opportunity to seek legal advice, but you may get away with the argument that you were a simple layperson, faced with a sophisticated organisation who you assumed, until the point you realised that they had unlawfully rescinded, would not make such a mistake.

 

In that case you could try starting your letter: Having recently sought legal advice, it has come to my attention, that the DN issued............

 

But I would not hold my breath. If you send that letter and they don't react to it, you could argue that their non action was their agreement to their unlawful actions. It could work both ways.

[vint1954]

Is it not that the account endured, but the contract was terminated? Ie, the contract ended in that no further rights to use credit, but account transferred to DCA for collection. Or can a contract be passed to a DCA intact for later restitution to the debtor?

 

There must be some mechanism that terminates an agreement or contract for the account to be passed to a DCA (I would have thought), or even the act of passing the account to a DCA is the termination? Bit hazy on this one - can you help Vint?

 

What happens, for example, if the debtor doesn't receive a termination notice? How can he determine whether the contract is terminated without this, unless it is by observing an event that strongly implies the contract is terminated (such as the end of credit facilities and recovery action)?

 

There are no time limits contained within CCA or the Regs, just that s87 precludes payment of earlier sums where the notice doesn't comply with s88. So am quite confused by this issue.

 

LA

Once an agreement is unlawfully terminated, usually on the back of the deficient DN, then it no longer endures, so there is nothing to pass on.

 

If the OC does everything correctly, that is issues a complient DN, then he is at perfect liberty to sell on your account, which then transfers the rights of that contract to a third party. If he does it unlawfully, then he is snookered.

 

Some creditors issue termination notices, others do not but take actions that terminate the agreement, selling the account, court action or demanding the ballance in full.

 

UR is not covered by CCA1974 but contract law.

[vint1954]

Assuming you haven't paid more than the arrears that were outstanding, could it be that you DID write to the creditors accepting their termination, and explaining that any future payments were towards the arrears only? Perhaps you can find a copy of that letter?

You may have written such a letter, advising them that you will be paying £x per month towards the genuine arrears, only you can say.

 

However why would you pay towards the arrears when you are asking them for a figure, against which you will claim for unlawful rescission. Also it may be a coincidence that your payments post rescission are identical to those pre rescission.

 

I have no such appropriate letter.

[vint1954]

A SAR is most helpful when it says in it that a TN was sent to you...but in practice you either received/did not receive/or lost it. This means that at some point your Account WAS TERMINATED by them.

 

Then if the DN notice prior to that TN was actually invalid and did not conform to the Sections 87(1) 88..then you KNOW that the agreement was unlawfully rescinded on the back of dodgy DN...And you have the evidence.

 

That is what I was meaning..I came out a little confusing my apologies.

 

m2ae

And if they have asked for the ballance in full at any point after the defective DN, that is UR.

[means2anend]

Nicely put m2ae - I think this is exactly so, only that it may be the legal contract that is terminated rather than the monetary account (as accounts are passed to DCAs for recovery).

 

LA

 

Therein lies the DCA's 'roundabout'...NO LEGAL CONTRACT...just passing the account around 'in the hope' that some 'fearful' debtor will just give in...

 

I still am of the view that at some point a s103 Consumer Credit Act 1974 might be conclusive of the matter and could go some way in 'testing' these DCA's or Original Lenders whether they are contravening CPUTR 2008 Regulations as to misleading the debtor into thinking that there is a valid contract when in fact it was a 'shrouded' termination.

 

A statement is binding on Creditor/Owner

 

172. Statements by creditor or owner to be binding. — (1) A statement by a creditor or owner is binding on him if given under—

section 77(1),

section 78(1),

section 79(1),

section 97(1),

section 107(1)©,

section 108(1)©, or

section 109(1)©,

(2) Where a trader—

(a) gives a customer a notice in compliance with section 103(1)(b), or

(b) gives a customer a notice under section 103(1) asserting that the customer is not indebted to him under an agreement,

the notice is binding on the trader.

 

 

A Termination Statement

 

103. Termination statements. — (1) If an individual (the “customer ”) serves on any person (the “trader ”) a notice—

(a) stating that—

(i) the customer was the debtor or hirer under a regulated agreement described in the notice, and the trader was the creditor or owner under the agreement, and

(ii) the customer has discharged his indebtedness to the trader under the agreement, and

(iii) the agreement has ceased to have any operation; and

(b) requiring the trader to give the customer a notice, signed by or on behalf of the trader, confirming that those statements are correct,

the trader shall, within the prescribed period after receiving the notice, either comply with it or serve on the customer a counter-notice stating that, as the case may be, he disputes the correctness of the notice or asserts that the customer is not indebted to him under the agreement.

 

 

I think that if a debtor is unaware that there MAY have been a termination but suspects that there is s/he should in my opinion based upon the above 2 provisions take the initiative (subject to prima facie evidence such as information present/absent in a SAR or other documents present/absent)

 

If there is anything other than the true presentation of the facts issuing from the 'mouths' of the creditor/owner there is the possibility of behaviour falling within the prohibitions of CPUTR 2008 misleading/malpractices....

 

Using this method is NOT putting the debtor at risk by conduct of accepting the 'breached' contract and therefore 'missing a lost opportunity to rescind' it is a mere request for information which puts the creditor under pressure to conform to CPUTR 2008

 

m2ae

Edited May 11, 2010 by means2anend

[Lord_Alcohol]

Once an agreement is unlawfully terminated, usually on the back of the deficient DN, then it no longer endures, so there is nothing to pass on.

 

Could this also apply to the arrears? Ie, the arrears are monies owed under an agreement that is no longer in existence due to unlawful termination. On what basis should those arrears now be paid?

 

s87(1)(b) is clear that no claim can be made for monies not paid unless a proper DN is issued, but it seems very unclear what happens to the claim for arrears where there is a defective DN + termination.

 

At this point the arrears as a separate entity disappear, to be replaced by the entire debt. The issue here is why now just pay an amount of this (the "arrears"). Paying nothing seems to be equally allowable and possibly more so!

 

LA

[Bigdebtor]

I think the simplest (and safest) thing is to remember you DID write accepting their unlawful rescission and stating that you would continue to make monthly payments to clear the lawful arrears. I'm sure you will find your copy of this letter if you look hard enough! If the OC has lost their cpopy of this then that is not your concern.

 

Good luck

 

BD

[vint1954]

Could this also apply to the arrears? Ie, the arrears are monies owed under an agreement that is no longer in existence due to unlawful termination. On what basis should those arrears now be paid?

 

Not realy, as the arrears were due until the contract was unlawfully terminated. The arrears are due, less the amount that you intend to claim for UR, say £1000.

 

s87(1)(b) is clear that no claim can be made for monies not paid unless a proper DN is issued, but it seems very unclear what happens to the claim for arrears where there is a defective DN + termination.

 

At this point the arrears as a separate entity disappear, to be replaced by the entire debt. The issue here is why now just pay an amount of this (the "arrears"). Paying nothing seems to be equally allowable and possibly more so!

 

You have to look at the state of the agreement at termination.

 

LA

Vint

[vint1954]

I think the simplest (and safest) thing is to remember you DID write accepting their unlawful rescission and stating that you would continue to make monthly payments to clear the lawful arrears. I'm sure you will find your copy of this letter if you look hard enough! If the OC has lost their cpopy of this then that is not your concern.

 

Good luck

 

BD

But be careful that you don't trip yourself up. It would be hard to prove that you just continued with the same payments to clear the arrears, while not having a clear statement of arrears from the OC. Don't forget that the arrears will increase from the sum stated in the DN, up to the point of rescission

[pumpytums]

Hi Vint,

well my UR letter went off. I had been paying token payment they will now stop on the account. I actually had the in house DCA on the phone today and I asked them are you demanding the whole amount. They said yes so my UR letter is perfectly valid. They confirmed they would now be getting another DCA involved who may visit me oooo scary.

 

I actually tried to ask them why they had sent 3 DN's they said it was an automated system. Shame really I think they realised they had said too much in the end. Daft because I did explain to them (in the past) in about a year I will have the funds to pay it off in full. So if they had sat tight and kept accepting my payments they would have got their money back. Sadly all they will be getting back is a counter claim for UR and my PPI insurance.

 

Game over I'm afraid.

 

 

Pumpytums

[means2anend]

Hi Vint,

well my UR letter went off. I had been paying token payment they will now stop on the account. I actually had the in house DCA on the phone today and I asked them are you demanding the whole amount. They said yes so my UR letter is perfectly valid. They confirmed they would now be getting another DCA involved who may visit me oooo scary.

 

I actually tried to ask them why they had sent 3 DN's they said it was an automated system. Shame really I think they realised they had said too much in the end. Daft because I did explain to them (in the past) in about a year I will have the funds to pay it off in full. So if they had sat tight and kept accepting my payments they would have got their money back. Sadly all they will be getting back is a counter claim for UR and my PPI insurance.

 

Game over I'm afraid.

 

 

Pumpytums

 

 

There you go..exactly what I suspected in post 2451 above

 

m2ae:)