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sun.flower

Loan Agreement with Barclays - Unenforceable?

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Hi there,

 

I took out a professional study loan with Barclays in 2005 for £18,000. I went into the bank and came out with a signed agreement. It was just a double sided sheet of paper with the loan details on the front and some terms and conditions on the back. The funds went into my account and that was it. I never received any further confirmation from them and nothing whatsoever in writing for about two years!

 

Last year I realised that they were charging me more interest than what was written on my agreement (11% instead of the 7.5% stated). I challenged this and got a refund for the additional money taken. I have now realised that they have not stated the total amount repayable anywhere on the agreement or the correspondence. Would this render my agreement unenforcable?

 

They have now written to me saying that my monthly repayments have to go up by an additional £110 in order for me to pay back the entire amount within the term of my loan. I was never told this and at the time of making the loan was told that my monthly payments would always stay at this level. I have checked the t&cs on the back and it does say that they can change the repayment amount at any time, but I was under the impression that my monthly payment of £256 was calculated to complete the repayments by the end of the loan term. Can anyone tell me what my options are? (if I have any, or am I stuck with this?!)

 

Thanks ;)

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Hi Sunflower....welcome to the CAG forums, this is the general advice...

 

CCA RULES FOR PRESCRIBED TERMS

CONSUMER CREDIT ACT

8.2 What if prescribed terms are missing or incorrect?

 

s127(3) provides that the court may not make an enforcement order unless a document containing all the prescribed terms of the agreement was signed by the debtor – see Q1.21.

 

If therefore any of the prescribed terms is missing, or incorrect, the agreement is not enforceable against the debtor, and the court is precluded from making an enforcement order.

 

 

8.3 What are the prescribed terms?

 

The prescribed terms specified in Sch 6 are as follows:

 

* amount of credit – see Q8.

 

* credit limit – see Q8.5

* repayments – see Q8.9.

* rate of interest – see Q8.6

 

Sch 6 was not amended by the 2004 Regulations.

IS MY AGREEMENT ENFORCEABLE( Via section 127(3) CCA1974)

PRESCRIBED TERMS FOR THE PURPOSES OF SECTIONS 61(1)(0) AND 127(3) OF THE

CONSUMER CREDIT ACT 1974 Taken from sced.6(1983/1553) regulations

(If you just want to find out, skip the bits in between the stars it’s just some extra information)

 

**What do we mean by unenforceable?

In the Consumer Credit Act section 127 there is a provision for making an agreement unenforceable if it does not contain certain pieces of information.

Subsections 1,2,3,4 state which pieces of information these are, and everything mentioned there must be included within the body of the agreement, if one is missing the agreement is unenforceable.

 

How does unenforceable differ from enforceable with a court order only?

When an agreement is unenforceable it means that the court or the judge cannot make a ruling on it. The court cannot make it enforceable.

When an agreement is enforceable only by ruling of the court it means that the agreement can be stopped by the debtor but the court has the power to re-instate it and allow the credit to continue to enforce.**

 

The Prescribed Terms are these

 

A Amount of credit

A term stating the amount of credit

 

B Repayments

A term stating how the debtor is to discharge his obligations under the agreement to make the repayments, which may be expressed by reference to a combination of any of the following-

(a) Number of repayments;

(b) Amount of repayments;

© Frequency and timing of repayments;

(d) Dates of repayments;

(e) The manner in which any of the above may be determined; or in any other way, and any power of the creditor to vary what is payable.

 

C Rate of interest

A term stating the rate of interest to be applied to the credit issued under the agreement

D Credit limit

This may be a term or the manner in which it will be determined or that there is no credit limit.

--------------------------

 

Which of these applies to you depends on the type of agreement you have?

 

For a Running Account (credit card) agreement

 

BC and D Apply

 

For a Restricted Use Debtor Creditor Supplier

  • Where the dealer is the supplier and the creditor is the one providing the finance.
  • The money can only be used for the purpose it is given.
  • There is no interest on the purchase (the cash price is the same as the total price)
  • And there is no advance payment

A is applicable

 

For a fixed Sum Credit Agreement

A conventional credit agreement with none of the above restrictions

 

A and B apply

 

For a Hire Agreement

 

B is Applicable

 

This paper only covers section 127(3) of the Act agreements can also be unenforceable by contravention of sections 1 and4 this will be the subject of the next paper.

Please note that these Prescribed terms where not changed in any way by the 2004/1482 Ammendments although the form in which they appear on the agreement was. Subsection127(3) was repealed on the 6th of April 2007 so that unenforceability due to 127(3) will only apply to agreements executed before that date.


PLEASE NOTE - I am not a legal expert, what is stated is my own opinion and from what I have learnt from this forum and my own experiences.

 

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Thanks for that :)

Excuse my ignorance, but what are the first steps I should take?

Can I do this myself or should I instruct a solicitor? If I can do it myself I would prefer this.

 

I was looking again at my agreement and I've realised there is no agreement number, and the section staing when the monthly repayments are due to start is also left blank.

 

Regarding the increase in repayments, my agreement is at an interest rate of 2.5% above base rate. At the beginning of my loan the base rate was 5% and has fallen since. Surely, if anything my monthly payments should be reduced?

 

Any more help you can give would be appreciated...

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Best thing to do is to post up a scan of your agreement :)

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