Invalid Default Notices

[vint1954]

I see the full ballance now.

 

Did BC send a DN previously?

 

This is from the student law journal.

 

Default Notices

Section 87(1) of the 1974 Act allows the creditor to send you a default notice giving you fourteen days from the date you receive it to pay the arrears. The default notice must contain all of the necessary information under the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 ('the 1983 Regulations'), which includes

• a statement saying the notice is a default notice served under section 87(1) of the 1974 Act
  
• a description of the agreement
  
• the name and address of both the debtor and the creditor
  
• details of the breach (i.e. late payment) and, if the breach can be remedied, the date by which it must be remedied or, if the breach is not capable of remedy, the amount required to be paid after the expiry of the specified date;
  
• a statement saying: if the action required by this notice is taken before the date shown no further enforcement action will be taken in respect of that breach
  
• a statement saying: if you do not take the action required by this notice before the date shown then the further action set out below may be taken against you
  
• a clear and unambiguous statement saying that if the action is not taken by the date specified, what it will do (for example, if will it terminate the agreement and recovery possession of the motor vehicle)
  
• if the agreement is one of hire purchase or conditional sale, a statement saying: but if you have paid at least one third of the total amount payable under the agreement set out below (or any installation charge plus one third of the rest of the amount payable). The creditor may not take back the goods against your wishes unless he gets a court order. (In Scotland, he may need to get a court order at any time.) If he does take them back without your consent or a court order, you have the right to get back all of the money you have paid under the agreement set out below
  
• if an amount of money is required to be paid, the amount before deducting any rebate on early settlement
  
• statements saying:
  if you have difficulty in paying any sum owing under the agreement or taking any other action required by this notice, you can apply to the court which may make an order allowing you more time
  if you are not sure what to do, you should get help as soon as possible. For example you should contact a solicitor, your local trading standards department or your nearest citizens' advice bureau
  

Edited March 26, 2010 by vint1954

[vint1954]

Fair point but my question still arises for cases where the DN demands only the arrears.

Where the DN says they will send a Formal Notice of demand, If the demand for the full balance says 48 Hours Notice should that be taken to represent a Formal Notice?

Yes, for requesting the ballance in full.

 

In this case, they have mentioned the arrears and the full ballance, but it is unclear as to which is to be paid. The DN is faulty either way, on more than one area.

[vint1954]

I've already done that, and they are invalid, and the accounts have been terminated by being defaulted and the full balance asked for, but i have not writtedn to any of my creditors accepting termination or the balance should only show the arears.

 

I am paying most a £1 a month, the others are getting nothing, but the letters worry the wife. We can just about manage the money, but it would be nice if the letters stopped and there is always the fear of callers.

 

TBH I wish they would take us to court and them that would be the end of it, but as they know we have nothing I know they never will. My wife is just worried that i won't always be here to write letters to the ****.

If you have made payments against accounts that you consider unlawfully rescinded, then you may well have trouble arguing that the agreement ended.

[vint1954]

Guess he'd have to insist they were token payments towards the arrears balance as the creditor did not provide the arrears totals as requested in any acceptance of termination letter. Worth a shot.

 

I've never had an acceptance letter responded to despite it being sent via recorded delivery and printing proof of delivery. Either way the creditor seems content to stick their head in the sand whilst trying to maintain a position of superiority.

Well he could try, but without further communication regarding his counterclaim for damages following UR, they may have trouble beleiving it.

 

I don't think that the creditors understand. We sometimes give them too much credit for understanding the law. In general, it is not until it gets to the Solicitors, that it sinks in.

[vint1954]

Think you're bang on there Vint, how many years have they had to get a DN right? All that free guidance and a small army of supposedly well qualified people and still we're seeing simple errors and general malaise towards regulation

You're right ther, its not rocket science.

 

They only have to get the programme right to allow 4 working days, exclude weekends and never date them on Sat - Sun and they are home and dry.

 

In addition, they keep making the mistake of putting the full ballance in the DN as a requirement to be paid. Surely someone must check these things.

 

In reality, out of every 1000 DN;s issued, I don't suppose that more than one is ever questioned. I read somewhere, that 100'000's of DN's are issued every day:eek:

[vint1954]

Here you go:

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.

[vint1954]

A never ending source of comfort.

[vint1954]

http://i827.photobucket.com/albums/zz199/Worsteve/EGGDefaultnotice002mod.jpg

 

http://i827.photobucket.com/albums/zz199/Worsteve/EGGDefaultnotice003mod.jpg

 

http://i827.photobucket.com/albums/zz199/Worsteve/EGGDefaultnotice004mod.jpg

 

Hello everyone

can you give me your opinion on this DN Please? Egg and ARC are now beginning to get active. I think I must get ahead of the game and see if there any issues with these DN's.

 

Many Thanks

They appear to have given you plenty of time and only requested the arrears.

[vint1954]

Can someone help me here. I am trying to help someone who is in court tomorrow for an appeal and I am just reading the transcript now.

 

Sorry everyone I just haven't got time to read the whole of this thread. I haven't even got to the end of the transcript or the judge's summing up but am trying to deal with things as I go along.

 

The judge accepted the lawyer's argument that a Default Notice did not have to be served by Amex because Default Notices are really more to do with fixed credit agreements, rather than running credit agreements, and because Amex say they can terminate the agreement at any time as a default notice is just a formality and they could really have just written a letter.

 

The lawyer was quoting from Sections 98 and 87 and I haven't got time to look those up.

 

Would really appreciate your help here.

 

DD

Then that Judge was wrong and this should be appealed. Were they mad.

 

s87 applies to all agreements regulated by the CCA 1974 and applies to Default situations. If the borrower defaults the creditor can only use s87, to emable him to then go on and enforce. It has nothing to do with fixed term or running account agreements. It covers them all.

 

s98 refers to non default termination, which the creditor is at liberty to do. If there is no default, the creditor can use s98 to terminate the agreement, but cannot demand his ball back. The repayent terms continue.

 

s 98 is a ploy that they are trying, as they are coming unstuck with their DN's.

[vint1954]

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;

 

(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.

 

Termination of agreements ( Non Default situations)

98.—(1) The creditor or owner is not entitled to terminate a regulated agreement

except by or after giving the debtor or hirer not less than seven days' notice of the

termination.

(2) Subsection (1) applies only where—

55

(a) a period for the duration of the agreement is specified in the agreement, and

(b) that period has not ended when the creditor or owner does an act mentioned in

subsection (1), but so applies notwithstanding that, under the agreement, any

party is entitled to terminate it before the end of the period so specified. (3) A

notice under subsection (1) is ineffective if not in the prescribed form. (4)

Subsection (1) does not prevent a creditor from treating the right to draw on any

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

make the restriction or deferment effective. (5) Regulations may provide that

subsection (1) is not to apply to agreements described by the regulations. (6)

Subsection (1) does not apply to the termination of a regulated agreement by

reason of any breach by the debtor or hirer of the agreement.

[vint1954]

There's a habit of creditors' counsel trying to bluff their way past judges by suggesting that default notices are a minor matter, a de minimis issue.

 

They are not.

 

If they want the benefits of S87, they must stick to it.

It beggers beleif that Judges let them get away with it. If not telling porkies it is definitely trying to deceive.

[vint1954]

And from the 2006 ammendments.

6.8 Under section 98 of the 1974 Act, the creditor is not entitled to

terminate a regulated agreement (in non-default cases) unless he

provides the debtor with a notice of his intention to terminate at least

seven days before taking such action.

[vint1954]

Hi everyone again,

 

Now have a letter from Amex which says, "The Default Notice does not need to comply with Schedule 2, para 8 of the CCA (Enforcement, Default and Termination Notices) Regulations as it does not require an earlier payment of a sum in order to remedy the breach."

 

I've googled this but can't find what it means about para 8.

 

DD

That could be the case if they were only suing for the arrears and not the full amount.

 

But if they are suing for the full amount, they need their Ducks in a row, valid DN followed by valid TN.

[vint1954]

Right have scanned my default notice and the final payment one can someone have a look and tell me if they are indeed invalid and what my next steps are much appreciated!!! (or should i just let cccs handle my case and get all the sh*t that will follow....)

 

 

 

http://i980.photobucket.com/albums/ae289/tuvelpit69/dn.jpg

 

http://i980.photobucket.com/albums/ae289/tuvelpit69/tn.jpg

 

 

 

 

Thanks in advance..

Hi Bilious,

 

DB is spot on. The DN could never be complient with the dates quoted and the form is not brilliant either. I don't understand why they never learn.

 

The act is very specific:

 

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.

 

In particular s88 explains the form of the notice.

 

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 fourteen 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 fourteen days have elapsed.

 

The text in red is quite clear that the debtor must be given 14 days from the date of service, which in accordance with the Interpretation Act is 2 working days for first class post and 4 working days for second class post or companies such as UK mail. Weekends and bank holidays are excluded from the posting period.

 

What you need to look out for now is a letter either terminating the agreement or demanding tha ballance in full. If this arrives then they have unlawfully rescinded the agreement.

 

I would start your own thread on this and put a link back to here.

 

You will need to accept the UR at the appropriate time.

[vint1954]

Continuing from the above they are taking him to Court on his last DN which, I believe does not give enough time. They admit it was sent by 2nd class post.

Posted on the last Tuesday in the month [June] with payment required BEFORE the 13th July.

If I am right on my workings out on 2nd class delivery, service should have been on the following Monday [1st July] assuming it was posted on the Tuesday and not the following day which is the more likely.

 

So should I tell him to accept their unlawful rescission?

Depends how long ago it was. If this was 2009, then the last tuesday in june was 30th.

 

If you can be specific with the year and dates, it will help.

[vint1954]

I have a friend who has had over 10 default Notices sent to him over the period of the loan-3 years to date. Still has a year to go.

Some of them are ok date wise others are not if sent 2nd class and one is hopeless date wise even on 1st class. Problem is the DN is dated way back in 2006 [yes I know it was just 7 days then]. He didn't pay back all the arrears within the stipulated time and nor has he accepted their unlawful rescission.

 

He is now being taken to Court for arrears incurred more recently. What defence , if any, does that defective DN give.

 

They only two times they have admitted how their DNs were served they confirmed they were served by 2nd class post so not unreasonable to suppose that they all were.

Sorry, just seen this post. If it was 2006, then it is far too late to accept UR.

[vint1954]

Thanks Pumpy

 

The DN I have (a) allows only 13 days and (b) forgets about service, as I think the 1983 Regs specify 14 days after the date of service. I think there should have been a total of 18 days including 2nd class service.

 

Yes, Halifax terminated the agreement 2 weeks after the deadline on the DN, and have demanded the full amount from that date.

 

LA

It was changed to 14 days in the 2006 upgrade:)

[vint1954]

Just to throw the cat among the pigeons and be wholly contentious the acceptance of the recission as most of us know can be by letter (ideally) but also by conduct (less favourable if payment was not made anyway before the invalid default and termination as there is no distinction between debtor performance before and after recission).

 

However, going back to the actual letter given the fact that there is no legal requirement for the debtor to provide proof of posting why not just produce one you wrote earlier? Contentious of course but at the same time you'll merely be playing the same games as many of the creditors and DCA's themselves.

 

Question is then - are we prepared to stoop to their level? :-|

You may well indeed come accross one that you did not remember, maybe in early 2009 at the point when they demanded the ballance in full, but don't send one now.

 

Other than in writing, you would need to cease payments or act in a way that accepted the UR, at the point of recsission. So if you stopped payments in June, it would not be accepted for a recsission in November.

[vint1954]

OK, so we have a defective DN and the CCC terminates the ag on the back of that. That I guess is "unlawful rescission" which is then accepted by the debtor leaving the creditor in serious poo :grin: - unless it goes to court and finds a sympathetic judge

 

Then you appeal on a point of law if the Judge misdirects himself.

As discussed previously you will have had to accept this state, as if you do or did nothing, then the OC is able to argue that you acted as though the agreement endured.

 

Whether the ag is lawful or not (I think that's a separate arg), I'm struggling to understand what happens next.

 

Yes it is.

You ask when you accept their UR, for a note of true arrears at the point of termination, against which you will claim for unlawful termination. This would or should have been in your letter accepting UR, had you sent one.

 

Should I wait for the court claim from the CCC/DCA (and argue for the claim to be thrown out on the basis of a dodgy DN), or should I take the initiative and start an action to get the default de-registered with the CRAs (and presumably leaving the 'debt', whether enforceable or not)?

 

Most unwise in my opinnion to be the claimant. You will need to prove your case. Can you?

 

If it goes to court and I argue for unlawful rescission, what is the legal instrument to use for limiting the debt to the arrears and not the full amount? I don't want the judge to ask me why the CCC's claim should be limited to the arrears and not having a clue!

 

Read s87-88 of the act, it will become clear. Monies not yet due.

 

TIA

LA

Vint

[vint1954]

Well it's here:

 

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.

 

If the DN is not in the prescribed form, they cannot legally go on to do any of the above.

 

Therefore when they terminate, they close the agreement. Doing so unlawfully, leaves them only able to collect ammounts due at that time.

 

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

[vint1954]

But judges are still ruling for creditors even if there is an invalid DN, and appeals can cost a lot of money.

 

Do you think we could start a No. 10 Petition about this - requiring that they have to stick to the CCA 1974?

Or that judges need to know what they are doing.

[vint1954]

Or that judges need to know what they are doing.

After all, you don't get people off of the sweet counter in woolworths ( when they were around ) being allowed to repair your car in a garage.

[vint1954]

Indeed DB.

 

It is however strange that Scottish Judges do not seem to misdirect themselves so often.

 

Makes you wonder if it is deliberate here. Maybe conflicting interests.

[vint1954]

I know it's been raised before but please enlighten me.

 

If a DN is issued for an account, can the OC at a latter date issue another DN with larger arrears say a year latter?

I would have said no as the first DN notice is basically saying if you do not pay us £ by we are entitled to do the following. Now providing the DN is valid they are perfectly in their right to do what they say they want to. In issuing another DN haven't they just gone back on their first? The only time I would imagine 2 DN's getting issued are if the first was satisfied and the creditor then defaults again.

 

Thanks

 

Pumpytums

It will depend Pummpytums, if the account is closed or terminated following a DN, then no they cannot reissue.

[vint1954]

Thanks Vint, this is a real help.

 

So, under s87(1)(b), a dodgy DN excludes the right to claim the full amount, leaving just the amount claimed as arrears on the DN? That makes sense - the arrears being "late payment" and not "early payment".

 

Once the agreement is terminated or the ballance claimed in full.

 

So, to then get the default de-registered, that would mean an action of some description, assuming the CCC isn't interested in helping. I guess that could be either a counter claim in defence of an action started by the creditor, or an action started by the debtor.

 

You could try arguing with the CRA's that the DN is faulty and inaccurate information, therefore they are not allowed to process and have a duty of care to check.

 

You don't sound too enthusiastic about the latter, but what might the pitfalls be? Is part of the problem (or in fact all of the problem) trying to argue that there has been no default, when clearly there has been?

 

It is far better to negotiate than to litigate. If the CRA's are made aware of the possible fimne involved.

 

Is the only real way to do it to use the defective/unlawful agreement argument and not a flaw in the DN?

 

Using the agreement will be a long track. Search for a thread started by surleybonds recarding CRA's and data removal. There has also been discussion here: http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/222663-cras-ocs-credit-ref.html

 

Or is there something else I could do or argue?

 

Hope you've got time for this - your opinions are v. helpful and I'm sure not just for me !!

 

Cheers

LA

Vint