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Halifax Current Account- Is this a defective Default Notice? Help please!


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Hi,

 

Hopefully someone with a more astute mind than mine can help with this one!!

 

I have a Halifax Bank Account which is in joint names.

 

This account had an authorised overdraft facility of £5,000.

 

We ran it in accordance with the terms and conditions, and the last time we paid money in was the 28th of May 2009.

 

As we were short of money, this account was pretty much run up to the overdraft limit, but we never went over. We failed to pay money in due to a drastic reduction in income.

 

As a result of interest charges, and a number of ridiculous £35 fees incurred because I was late in cancelling the Direct Debits and they bounced, the account has gone over the overdraft limit.

 

Since then we have been hit with a £28 charge each month and eye watering interest on the whole overdraft.

 

We have had a few letters stating that we are over the overdraft limit, and to pay money in. Unfortunately, priority debts took precedence and we have not been able to comply.

 

Thats the scene set, so here is what has happened since:

 

1. Letter dated 10/08/2009 - Default Notice served under Section 87(1) Consumer Credit Act 1974.

 

States that we are in breach of the agreement because we have failed to repay the whole or part of the overdraft.

 

Quote: "To remedy the breach you must pay into your bank account the sum of (amount over the overdraft limit with an asterisk* by it) before the 8th of September 2009"

 

From what I can gather, the *amount they have requested, is the amount above the overdraft limit plus interest calculated to the 8th of Sept.

 

Then the usual threats of what they will do if we don't pay.

 

2. Letter dated 22/08/2009 (12 days after the first letter)

 

This letter reminds us of the previously issued default notice and that we are in breach of the agreement.

 

Quote:

 

"You have failed to repay the requested amount by the date shown in the notice. As a result we have terminated your credit agreement"

 

The letter goes on to say that the account will now be managed by the Debt Recovery Department, and further threatens DCA and/or Court action.

 

Sorry about the rambling on but here are my questions:

 

1. I am assuming that an overdraft is a 'credit agreement' similar in operation to a credit card. Is this correct?

 

2. Why have they terminated the 'credit agreement' before the 8th of September after telling us we had until then to pay up?

 

3. I thought that a default notice had to allow 14 days notice to rectify the breach? They terminated the 'credit agreement' after only 12 days, and thats not even allowing for postage. Is this okay to do?

 

4. How long should a credit agreement be in breach of the conditions before it is defaulted?

 

5. What do I do now!!!!???????

 

Any help would be very much appreciated.

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Was the default notice issued under the Consumer Credit Act etc etc.....?? And if they terminated only 12 days into the default situation (do you have the termination letter ?) Then i'd say they have possibly unlawfully terminated and could be also an unlawful recission of contract....BUT, I know that overdrafts only come under certain aspects of the Consumer Credit Act, and hopefully somebody may be able to answer this....can you post up the DN and the termination letter (but leave dates on and delete personal info and amounts) ?

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First line of default notice dated 10/08/09 states:

 

Default Notice served under section 87(1) of the Consumer Credit Act 1974.

 

Gives me until 8th Sept to remedy the breach by paying the amount by which I am over the overdraft limit. (plus interest calculated to the 8th of Sept)

 

I then get a termination letter dated 22/08/09, the text of which is recorded exactly as written in the original thread.

 

Will post up the letters tomorrow. Many thanks for your reply.

 

My initial interpretation is that the default is defective because in terminating the agreement they failed to give me the 14 clear days to rectify the breach.

 

I was just wondering if because it's an overdraft it is treated differently.

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The default notice:

 

http://i742.photobucket.com/albums/xx64/doomerchant/HalfaxJointDefault1.jpg?t=1251853233

 

http://i742.photobucket.com/albums/xx64/doomerchant/HalfaxJointDefault32.jpg?t=1251853383

 

http://i742.photobucket.com/albums/xx64/doomerchant/HalfaxJointDefault3.jpg?t=1251853493

 

And the termination letter:

 

http://i742.photobucket.com/albums/xx64/doomerchant/TerminationDan.jpg?t=1251853605

Edited by 3tea
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Well it looks on the face of it to be an unlawful recission of contract as they terminated before you had the chance to satisy the default notice !!! however as I mentioned above, this certainly applies to loans / credit cards, but i'm not sure on overdrafts....however if they are quoting the Consumer Credit Act then it should be governed by it..... - Did you see this - http://www.consumeractiongroup.co.uk/forum/legal-issues/170345-tale-dodgy-dn.html

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.

 

DEBT COLLECTION LETTER/SAR/AGREEMENT TEMPLATES ARE HERE - http://www.consumeractiongroup.co.uk/forum/content.php?65-legislation

 

IF WE HAVE BEEN HELPFUL -PLEASE, PLEASE, PLEASE GIVE A DONATION TO HELP US TO CONTINUE HELPING YOU

 

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I would agree with 42man, they have given you a remedy date and then terminated BEFORE that date has even been reached.

 

The original Default Notice I believe was issued correctly in that it gave you more than the required 14 days.

 

However, by terminating a) before the remedy date was reached has, I would have thought created a problem for them and b) further compounded that error by terminating inside the legally required 14 days.

 

I think you need the assist of someone like surfaceagentX20, Ivegotnomoney, perhaps steven4064 could provide more information on this. I will send out a few SOS's :D

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I agree with CB. An entitlement to any of those things set out at Consumer Credit Act 1974 section 87 (1)(a) to (e) is subject to prior service of a default notice in accordance with section 88, giving to the debtor not less than 14 days following service to comply.

 

Section 88(2) says

A date specified under subsection (1) must not be less than 14 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 14 days have elapsed.

 

Any attempt to claim the entitlements before the expiration of the period of time for compliance (being not less than 14 days following service) would amount to a breach of section 88(2) and any notice of termination of the agreement delivered within the period allowed for compliance would in my opinion, constitute an unlawful termination of it.

 

x20

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3tea, I have asked the site team if they can offer any further advice for you. :)

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Hi 3tea,

I am new to the site, but I was reading a sticky by tomterm8 (Gold account holder) and he states that you can't request a CCA for overdraft agreements as they are exempted by OFT.

Have a read yourself its the 'sticky' above titled 'basic information on credit agreements' just above your thread listing.

exasp

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Hi exasperated!

 

Thanks for you message.

 

I had pretty much thought that the CCA request for an agreement did not apply to an overdraft, and so I have just asked about the default legality.

 

As far as I can see from the excellent advice on here, that the overdraft does fall under the remit of the Consumer Credit Act, and certainly the default notice was issued under Section 87(1) of the Act.

 

Thinking about it logically, an overdraft is very similar in operation to a credit card and I am assuming it falls under what is called a 'revolving credit agreement' but is applied for in a different way. Hence no CCA request for enforcability as you suggest.....

 

My question is whether or not they have complied with the Consumer Credit Act in terms of the default only, and not enforcability.

 

They seem to have given me loads of time to remedy the breach

(Default issued 10/08/09. Remedy by 08/09/09 or else!!)

 

But then they terminated the agreement on the 22nd of August thereby not allowing the statutory period of 14 days minimum.

 

As far as I can see, they are now only entitled to claim the arrears as stated on the default notice, and all of that is charges and interest.

 

Thanks to all those that have given advice so far, it's very much appreciated.

 

;):D:)

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3tea,

 

First I would like to thank you as your post of a current HBOS default notice will be very useful to me in dealing with HBOS.

 

With regard to your question an overdraft is subject to the CCA 74. It is a regulated debtor-creditor agreement within the meaning of sections 8 and 13© of the Act, providing for 'running-account credit' within the meaning of section 10(1)(a) of the Act.

 

However, section 74 allows the OFT to exempt overdrafts from complying with Part V of the the act. Part V is sections 55-74 and deals with 'entry into credit agreements' in particular it covers sections 60-65 which deal with the form of the agreement and the prescribed terms. The exemption by the OFT is called a determination under section 74. This means that they do not need to have an agreement - It is arguable, but not tested in court, that if an agreement actually exists then the bank have to provide is as they are not exempted from section 78.

 

But for a bank to benefit from the determination the bank must have complied with the requirements of the determination about sending letters at the time that the overdraft was taken out. All of this is explained in the following Court of Appeal case:

 

Coutts & Co v Sebestyen [2005] EWCA Civ 473 (28 April 2005)

 

Particularly look at paragraphs 17-20.

 

In your case you may want to see if the letters sent by the bank when you exceeded the overdraft meet requirement © of the determination, because if my memory serves me correctly they do not include the interest rate required by the determination.

 

If they do not then the bank cannot rely on the determination for the amount you exceeded the overdraft limit by, and would require a full CCA for it - which of course they do not have.

 

This may make the DN invalid. There is a lively debate elsewhere as to how to respond to that.

 

Separately, as SX20 says, they have terminated the agreement early and unlawfully. Again there is a debate about how to respond.

 

Hope that helps

 

Dad

Edited by dad
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dad,

 

Many thanks for your excellent reply. Where on earth did you dig that one up from?

 

I had suspected that an overdraft did not fall under enforcibility rules, and so have not been looking at that particular issue.

 

I have been concentrating on the default issue, and the way I am thinking is that I am going to accept the recission of contract in writing as suggested elsewhere on this forum, which I believe will only entitle them to collect the arrears.

Given that the arrears are almost entirely made up of punitive charges, I may follow up with an unfair charges claim.

 

I have just checked, and they caused me to go over the limit by applying a £35 charge!

They then continued to pay at least 4 direct/debits and standing orders and charged me £35 for each of these, whilst I was over the limit!!!

 

You will have to forgive my ignorance, but are you saying that the format of the 'exceeding the overdraft' letters I received may also render the DN ineffective, and make the overdraft fall into a section that requires a CCA?

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hi 3tea,

there may some bits of use in this witness statement (post 114) with regard to regulation of an o/draft, aided and checked by andyorch:

http://www.consumeractiongroup.co.uk/forum/legal-issues/192486-court-claim-o-draft-2.html

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3Tea,

 

You will have to forgive my ignorance, but are you saying that the format of the 'exceeding the overdraft' letters I received may also render the DN ineffective, and make the overdraft fall into a section that requires a CCA?

 

Partly,

 

Let me explain using an example.

 

Suppose you have an agreed overdraft of £1,000 on 1 January. On that day a £100 payment hits the account. The bank rejects it and sends you the bounced item letter - pay £35.

 

Fourteen days later, 15 January, they charge the account £35 - so your overdraft is now £1,035, created with the tacit agreement of the bank.

 

Under the terms of the determination

© that where a debtor overdraws his current account with the tacit agreement of the creditor and that account remains overdrawn for more than 3 months, the creditor must inform the debtor in writing not later than 7 days after the end of that 3 month period of the annual rate of interest and charges applicable.

 

So by the end of 3 months and seven days, roughly 22 April, if the overdraft has not been repaid, the bank must write to you setting out the annual interest rate eg 28.8% and any charges. Otherwise they must get you to sign a CCA for the £35 loan.

 

So on 1 June along comes the DN which says arrears of £35 pay up in 14 days or else. That amount is unenforceable because of non compliance with the determination and no CCA. So DN invalid.

 

Is that clearer?

 

Dad

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I have had the same as you 3tea. Halifax defaulted me and then terminated my account without giving me enough time to rectify the default. I had already started court proceedings for refund of charges but they have ignored this and still passed it on to DCA and Blair Oliver Scott. Two DCA's now. My arrears on the original DN was for the charges not the o/d but on the second DCA letter they have added the o/d. Going round in circles with these people. I have sent off my AQ and waiting for the court to send directions. I am sure these silly bugs will also start proceedings against me! Will keep watching your thread with interest.

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Hi all

 

Default Notices do not apply to Overdrafts.Termination Notices do or otherwise known as Notice Served under Sections 76(1) an 98(1) of the CCA 1974.It is a notice to terminate your overdraft faclity and still allows 14 days plus service for you to make a proposal or alternative arrangement to pay back to the Bank and which is acceptable.

 

I trust the above is of help

 

Regards

 

Andy

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Would it be best then Andyoch to offer some payment (monthly) off the o/d. As I have a claim in for charges which cover 3/4 of my o/d I dont want to pay all of the o/d off just deduct the eventual refund of charges from the o/d?

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Would it be best then Andyoch to offer some payment (monthly) off the o/d. As I have a claim in for charges which cover 3/4 of my o/d I dont want to pay all of the o/d off just deduct the eventual refund of charges from the o/d?

 

That would be your choice as the account is technically in dispute anyway ie unfair charges you could instigate a claim as you have and settle the balance when they have refunded.I summise the account is now dormant and there is no better bargaining tool if they owe you and you owe them;)

 

 

Regards

 

Andy

Edited by Andyorch

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Sorry to hijack. Just one quick thing Andyoch (thanks for help). I have already sent a letter account in dispute to Halifax but they keep passing the account on to DCA's and I am concerned they will end up taking me to court for o/d and I have already started a claim fpr refund of charges. Should I just ignore the DCA's?

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Sorry to hijack. Just one quick thing Andyoch (thanks for help). I have already sent a letter account in dispute to Halifax but they keep passing the account on to DCA's and I am concerned they will end up taking me to court for o/d and I have already started a claim fpr refund of charges. Should I just ignore the DCA's?

 

Dosent everybody anyway:D

 

If they do take you to court at least you will get your money and them theirs far better than it dragging n forever with every muppet in town chasing you for a disputed debt;)

 

 

Andy

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Hi all

 

Default Notices do not apply to Overdrafts.Termination Notices do or otherwise known as Notice Served under Sections 76(1) an 98(1) of the CCA 1974.It is a notice to terminate your overdraft faclity and still allows 14 days plus service for you to make a proposal or alternative arrangement to pay back to the Bank and which is acceptable.

 

I trust the above is of help

 

Regards

 

Andy

 

Andy,

 

If a default notice does not apply to an overdraft, why would they serve one on me under Section 87(1)?

 

Are you saying then what they have done in my case is perfectly okay?

 

Regards

 

3tea

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3tea,

have a read of the link in post 15. if u follow on in that thread from the WS andy explains in more detail the processes that must be followed (post 119 in particular).

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