Halifax keep selling on an unenforceable debt..

[blueeyedboy1980]

I CCA'd Halifax in sept 2007 and have received a letter about a year ago saying they were unable to locate the agreement. they have been selling the debt on to DCA's and having them sold back to them about 3 months later. I have informed each dca about the unenforceable nature of the debt as soon as they have requested payment. They are now onto the 4th or 5th dca. Halifax say that they can keep chasing me for it or a dca can but it is unenforceable in court. it is getting ridiculous and i want it off my credit file.

 

With a seperate debt the debt has been written off their end but my credit file still shows full amount. is there a way to remove it if they have defaulted on the cca request?

[foolishgirl]

You should report the Halifax to the OFT. You could also seek compensation for harassment - at the very least you need to send them a letter telling them to desist or else. There is a template here that you can adapt for your purposes:

 

I am writing in relation to the quantity and frequency of telephone calls that I have received from your company, which I deem to be personally harassing.

 

I have verbally requested that these stop, but I am still receiving calls. (Delete if necessary)

 

I now require all further correspondence from your company to be made in writing only.

 

You are reminded of the following under The Administration of Justice Act 1970.

 

Section 40 of the act provides that a person commits an offence if, with the object of coercing another person to pay money claimed from the other as a debt due under contract, he or she:

 

(a) harasses the other with demands for payment which by their frequency, or the manner or occasion of their making, or any accompanying threat or publicity are calculated to subject him or his family or household to alarm, distress or humiliation;

(b) falsely represents, in relation to the money claimed, that criminal proceedings lie for failure to pay it;

© falsely represent themselves to be authorized in some official capacity to claim or enforce payment;

(d) utters a document falsely represented by him to have some official character or purporting to have some official character which he knows it has not.

 

I am of the view that your harassment of me by telephone puts you in breach of Section 40 of the Administration of Justice Act 1970, and the Protection from Harassment Act 1997.

 

If you continue to harass me by telephone, you will also be in breach of the Communications Act (2003) s.127 and I will report you to OFCOM, Trading Standards and The Office of Fair Trading, meaning that you will be liable to a substantial fine.

 

Further to this all calls from your Doorstep Collectors must also cease unconditionally and with immediate effect. I note that there is only an implied license under English Common Law for certain people to visit me on my property without express permission; the postman and people asking for directions etc (Armstrong v. Sheppard and Short Ltd [1959] 2 Q.B. per Lord Evershed M.R.).

 

Take note, I revoke license under English Common Law for you, or any of your representatives to visit me at my property and if you do so without my permission, you will then be liable to damages for a tort of trespass. You would also be conspiring in a trespass if you sent someone to visit me nevertheless. Any trespassers you attempt to send therefore will be dealt with accordingly.

Re. the matter of the default, you may find this thread informative:

http://www.consumeractiongroup.co.uk/forum/general-debt-issues/111211-defaults-background-removal-methods.html

[blueeyedboy1980]

Thanks for your reply, but phone calls are not the problem. it is the fact that i receive a new letter from a new dca every 3 months or so and have to go through the process of writing or calling them to inform them that the debt is unenforceable. they then request it from halifax, halifax cant find it so the debt is sold back. the debt is then sold on to someone else and it all starts again..

 

I had 2 debts that i cca'd with halifax, 1 smaller credit card and 1 larger one. the smaller one has been removed from my credit file at some point but the larger one keeps going around in circles. its getting demoralising.

[BankFodder]

Halifax selling an unenforceable debt? This simply can't be. This would be dishonest of them and we know that British banks wouldn't do that kind of thing, would they boys and girls?

[blueeyedboy1980]

Tbh i expect people like cap 1 to do it and they haven't. they have just left it. i've got so many unenforceable debts sitting on my credit file and nobody will remove them. surely if they are unenforceable then they cannot be left on my file?

[BankFodder]

Tbh i expect people like cap 1 to do it and they haven't. they have just left it. i've got so many unenforceable debts sitting on my credit file and nobody will remove them. surely if they are unenforceable then they cannot be left on my file?

This is a point which is due to be discussed by the Commercial court sometime this year

[blueeyedboy1980]

This is a point which is due to be discussed by the Commercial court sometime this year

 

Thanks for the heads up on that. I'm so desperate to rebuild my credit rating. I'm stuck in the house i rent due to the fact that i cant get a mortgage due to my credit rating and no surprise here, i cant rent somewhere else because i fail their credit checks too.

[foolishgirl]

Thanks for your reply, but phone calls are not the problem. it is the fact that i receive a new letter from a new dca every 3 months or so and have to go through the process of writing or calling them to inform them that the debt is unenforceable.

 

I said in my post it was a template to adapt & amend to suit your personal circumstances. There are no standard letters on here that suit everybody, we all have slightly different problems; however the same harassment issues apply to you, you just need to alter the template to suit your situation.

[citizenB]

I have found that by making a "bundle" of letters previously sent to other DCAs attempting to collect on a an account that the Original Creditor is unable to supply an agreement for, usually sends the new agency packing.

 

So, either print off or photocopy letters you have sent to other agencies. Include the letter from the Halifax stating they do not have / cannot find the agreement.

 

Include a covering letter which says something along the lines of:

 

"Dear DCA,

 

Account No...

 

Please find enclosed copies of the following:

 

Letter from Halifax stating they are unable to provide a copy of the agreement.

 

Having discovered they are unable to prove there is an amount owed to them, they have taken to passing this account on to several DCAs, please find copies of my responses to them.

 

Please also find enclosed a copy of a letter from Susan Edwards of the Office of Fair Trading.

 

Might I suggest you now return this account to the Halifax.

 

Please be aware, I will have no hesitation in making a complaint to the Office of Fair Trading if you continue to make attempts to collect on this without proof that it is owed.

 

Yours etc.

 

 

The letter below is the text format of an original letter. The original is in posts 35 and 37 of the following link.

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/196114-miss-muppet-mbna-costs-7.html

 

 

 

 

 

THE CONSUMER CREDIT ACT 1974 - Sections 77 and 78

Summary

On request and when accompanied by £1, a consumer has the right to:

• a copy of their executed agreement

• any other document referred to in it

• a statement showing

- the total sum paid under the agreement by the debtor

- the total sum which has become payable under the agreement by the debtor but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due, and

- the total sum which is to become payable under the agreement by the debtor, and the various amounts comprised in that total sum, with the date, or mode of determining the date, when each becomes due. If the creditor is unable to give this information, he can state instead how the dates and amounts fall to be ascertained.

The copy of the executed agreement need not be an exact copy but it must be a ‘true copy’ and not some reconstruction of what the original might have been and it must contain the same terms as the original. Where the terms have been varied as provided for within the agreement, the copy of the original agreement must be accompanied by a document setting out the current terms, as varied. Certain details may be omitted from the original agreement eg the signature but the debtor must be in no doubt as to the true nature of his obligations under the loan.

Should no original agreement be in existence it is very hard to say that the copy the creditor offers to the debtor is, in fact, a true copy as there would be no original with which to compare it. In our view the onus of proof would be on the creditor to show that the copy is a true one and where none existed he may have difficulty discharging this. Neither should creditors suggest that a consumer has signed a credit agreement where they are unable to provide evidence to support this — to do so is likely to be a misleading action under Regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) and would also constitute an unfair or improper business practice.

In our view a debt collector who has bought the debt is the ‘creditor’ and as such takes on the liabilities of section 77.

Under section 77(4), if the creditor is unable to provide this information, he is not entitled to enforce the debt while he remains in default (Decriminalised from 26 May 2008 on the coming into force of the CPRs).

Legal Argument

A copy of the executed agreement

 

Under the prescribed condition, section 77 of the Act requires the debtor to (Typo, she means Creditor I think) ‘...give the debtor a copy of the executed agreement (if any)....‘. The ‘if any’ most naturally refers to the exception for agreements older than 1985 (Not sure this is correct, "if any" was inserted to cover Verbal Agreements).

Where a creditor receives a request to supply a copy of the executed agreement, the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 (‘1983 regs’) apply. Regulation 3(1) sets out the basic position that ‘every copy of an executed agreement... shall be a true copy’.

Regulation 3(2) goes on to concede that there may be omitted from this true copy various information such as details which are not required to be in the agreement by law: the signature box, signature (it should be noted that sub-ss 3-5 of section 127 do not apply to agreements entered into after 1 April 2007.A Court may then, for example, enforce unsigned agreements if it considers it is just to do so.) and date of signature. In our view the effect of Regulation 3(2) is that the creditor is only obliged to send out a generic copy of the agreement the debtor has signed up to. The creditor is not obliged to make an actual photocopy of the agreement.

However, the copy does have to be a ‘true copy’. This is a technical term, which has been discussed in a number of cases, mostly relating to bills of sale and the need to register a ‘true copy’ of the bill with the High Court. These cases come from the days before typewriters, when copies were made by hand. The consequences of filing a copy which was not a true copy were severe, since the bill would then be void and the creditor deprived of his security.

Meaning of ‘true copy’

 

In this context, the courts decided that a ‘true copy’ need not necessarily be an ‘exact copy,’ but it must be ‘so true that nobody reading it can by any possibility misunderstand it’ or be misled by it (In re Hewer ex parte Kahen (1882) LR 21 Ch.D. 871 at 875). The copy must contain ‘every material provision which is contained in the original’ (except that if the defect is made good by reading the document as a whole, the omission will not be fatal) (Court of Appeal in Burchell v Thompson [1920] 2 KB 80 at 98-99). Further, it is not sufficient for the copy merely ‘to state with complete accuracy in a summary form the effect of the stipulations contained in the original. It is not merely a document that is to state the true legal effect of the original; it is to be a copy of the original’ (per Atkin LJ in Burchell at 105).

Hewer, ex parte Kahen - the filed copy of the bill omitted the precise day of the month on which payment was to be made. The court held this was trivial, and no debtor would be misled by it.

Sharp v McHenry (1888 ) LR 38 Ch.D. 427- the copy contained blanks which were not in the original. The court decided that the blanks were unimportant, since the omitted words were not required for the original bill to be valid.

Burchell v Thompson [1920] 2 KB 80 - the copy failed to include the words ‘per annum’ after the interest rate of 55%. The reader of the copy would have to guess whether the interest was per annum, per month or something else but as one could sensibly assume, correctly, that it was per annum it was a true copy.

Commercial Credit Company of Canada Ltd v Fuiton [1923] AC 798 - suggested further that where there are a raft of smaller differences in a bill of exchange copy, this could prevent it being a true copy. However where the differences were such as to make the copy contract actually different to the original, the copy will not be true. Lord Sumner, speaking of the man who may wish to refer to the copy, concluded that ‘the Act promises him ... a true copy, not a puzzle. He is to inspect it, not to recover the original by a process of conjectural emendation’ (at 807).

Terms and Conditions

 

Regulation 7(1) of the 1983 Regs requires that a requested copy of an agreement which has been unilaterally varied under section 82(1) of the Act, shall be accompanied either by the latest notice of variation or a copy of the terms and conditions as varied. Regulation 7(2) extends the principle to copies of varied securities supplied either to the consumer or the surety.

Debt collectors as creditors

A consumer credit debt can be assigned in two ways: in law under the Law of Property Act 1925 or in equity but in practice we need to be concerned only with statutory assignments.

For a debt to be assigned in law, there are three conditions:

• the assignment must be absolute.

• the assignor must make the assignment in writing.

• express notice of the assignment must be given in writing to the debtor (see section 136 of the Law of Property Act 1925).

 

The reason the debt is assigned is immaterial. For instance, books of loans may be sold on to be collected as an asset rather than as a discounted debt.

In some instances, the debt collector may have purchased a debt but not have the relevant agreement. Whilst, in general, ‘liabilities’ cannot be assigned there must be a question mark over whether ‘duties’ are the same. This is important since there is a rule, expressed in Tito v Waddell (No 2) [1977] Ch 106 at 289 to 302, that where a benefit is conditional upon some burden, the assignee must also take the burden. An example is where the contractor has the right to mine on condition that they pay compensation to those disrupted by the mining. If they assign their right to mine, the assignee takes this right subject to the duty to pay compensation.

Therefore, there is a strong argument that under the Act, the right to payment is never absolute. It is always subject to duties (many of which are imposed under the Act). For instance, the right to enforce the credit agreement at all is subject to the duty to comply with section 77 or 78. This duty is not a ‘liability’ as such under the credit agreement but is a condition of the right to repayment.

 

There has been a suggestion that debt collectors can avoid complying with section 77 and 78 by claiming that the agreement is no longer `live’ in some way as it has been ‘terminated’ based on section 103 of the Act. This talks of a ‘trader’ who was the creditor under a regulated agreement, implying that ‘trader’ is no longer a creditor once an agreement is ended. Section 103, however, deals with where the customer no longer owes any money at all and therefore it is correct to say that he is no longer a debtor and the trader is no longer his creditor. Where money is still owed, section 103 would not apply, since the consumer would not be entitled to a termination statement.

The first issue on when the debt collector becomes the creditor is relatively simple. Section 189(1) of the Act defines ‘creditor’ as ‘the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law.’

 

Where the debt collector is not acting as the creditor’s agent, or otherwise on his behalf, the only legal basis he can have for demanding payment from the debtor is if the creditor’s rights and duties have been assigned to him. Therefore we can be reasonably confident that a debt collector who has bought the debt is the ‘creditor’.

 

Unpalatable though section 77 and 78 may be for some creditors, if the debt collector is unable to prove the debt, they should be more careful about the debts they buy. They cannot complain that the sections are somehow unfair as it is in the Act and so must be complied with. It is up to them to ensure they purchase and maintain sufficient records to be able to prove the debt and comply with the other requirements of the Act.

 

Misleading statements to debtors

 

Sections 77 and 78 refer to supplying a copy of the ‘executed’ agreement within 12 working days of receiving a written request from the debtor. Failure to do so makes the agreement unenforceable against the debtor until a copy is provided. In addition, if the default continues for a period of 1 month the creditor is in breach of the Act.

Execution involves signing the agreement. If no agreement has been executed, it is impossible to supply a true copy of the agreement. Should a creditor supply a copy agreement, even though the debtor has never signed any agreement with that creditor, no indication should be given that it is a true copy or a copy of an executed agreement. To do so may contravene Regulation 5 of the CPRs and be an unfair or improper business practice.

 

The consequence of the debtor not having signed a credit agreement with the creditor is that the agreement is unenforceable except where the court orders that enforcement may take place. Where the agreement was made before 6th April 2007 the court is not able to make such an order unless the agreement was signed by the debtor.

 

Therefore it is misleading to state, when complying with a section 77 or 78 request, that the debtor has signed or would have signed (or similar) the enclosed agreement where the debtor has not done so. From 26 May 2008 such a statement will be a breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Regulation 5 of the CPRs states that a commercial practice is a misleading action if it contains false information in relation to the main characteristics of the product (amongst other matters) and is likely therefore to cause the average consumer to take a transactional decision he would not have taken otherwise. The product in question is the credit agreement and the main characteristics include the ‘execution of the product’ (Regulation 5(5)(d) of the CPRs).

Telling a consumer that he signed such an agreement is also a misleading statement about his rights and the risks he might face as covered by Regulation 5(4)(k) of the CPRs. It is our view that it is likely that a consumer will take a transactional decision to make a payment under the credit agreement or to refrain from exercising his rights under the agreement as a result of being misled about whether he signed it.

 

Breach of Regulation 5 of the CPRs is a criminal offence under Regulation 9 and can also be enforced under Part 8 of the Enterprise Act 2002. Under section 218A of the Enterprise Act, where an application for an Enforcement Order is made the court may require the Respondent ‘to provide evidence of the accuracy of any factual claim’ (such as a claim that a debtor has signed a credit agreement).

In addition, it should be noted that threats to take action that cannot be taken is listed as one of the factors that will be considered in assessing aggressive practices in Regulation 7(2) of the CPRs.

May 2008

 

Susan Edwards

Head of Credit Investigations and Enforcement, Office of Fair Trading