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Faulty Default & Termination, What to do next?


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Hi,

This is my first time here and wondered if anyone could help and is what I'm considering doing, a wise move.

 

The background is, that I lost my job nearly 3 years ago and was out of work for about 5-6 months before getting a new job but a much lower salary (about 2/3 of previous salary). Consequently got into arrears on a loan.

 

Is the following letter a good move to make, have I made any errors. The letter is based others I've seen on various sites and also explains the story so you will be able to get the gist of what has happened.

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Dear Sir/Madam

 

I am writing with reference to the formal reminder I sent 16/10/2010 requesting a true and full copy of the regulated agreement referred to above and a full breakdown statement of all interest and charges applied, and advising you that you are in breach of the Consumer Credit Act 1974 {sections 77-79) and had defaulted in respect of this account as I had already sent a formal request 01/09/2010. I am also taking this opportunity to reply to the default and termination notices you have sent recently.

To date, I have received a copy of the agreement (your correspondence dated 02/10/10) that is missing pages 3 and 4 of the agreement and I’m still waiting for a breakdown of interest and charges applied to this account. Consequently you are still in default. I’m sure you are aware that it is an offence to take action against an account while you are in default. Therefore by sending me a Termination Letter dated 02/10/10 (same date as you sent your reply to my CCA request) you have committed an offence.

After receiving the default notice from you dated 20/08/10. I checked if this default notice complied with the CCA 1974 and the default notice send to me 20/08/10 is in clear breach of the said act i.e. it is not laid out in the prescribed form (excludes rectify date etc.). I also decided to obtain a credit report from a credit reference agency; I was also extremely concerned to note that you had already registered a default on this account in May 2008. I have searched my records and don’t have a default notice from 2008 if this default notice doesn’t exist then you have acted unlawfully by registering a default against me. Furthermore although I could not find the said default notice I did find a letter dated 23/08/2008 that said that a notice of default had been issued on this account on 25/05/2008. Now if the default notice was issued on that date, then you never gave me the 14 days required by statute before placing the account in default with the Credit Reference Agencies, another breach of the Consumer Credit Act.

I feel these default entries are added unlawfully. Doing so has immediately put you liable to a breach of Consumer Credit Act 1974.

 

Below I give relevant case law to illustrate my point.

The requirement for a valid Default Notice to lawfully Terminate an Account whilst in default

 

1. Notwithstanding the matters pleaded above, the Claimant must under Section 87(1) of the Consumer Credit Act 1974 serve a valid Default Notice before they can demand early payment of sums not yet due under a Regulated Credit Agreement.

 

2. Under the Interpretation Act 1978 Section 7, it states:

 

Where an Act authorizes or requires any document to be served by post (whether the expression "serve" or the expressions "give" or "send" or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have effected at the time at which the letter would be delivered in the ordinary course of post."

 

2. Practice Direction

Service of Documents - First and Second Class Mail.

 

With effect from 16 April 1985 the Practice Direction issued on 30 July 1968 is hereby revoked and the following is substituted therefore.

1). Under S7 of the Interpretation Act 1978 service by post is deemed to have been effected, unless the contrary has been proved, at the time when the letter would be delivered in the ordinary course of post.

2). To avoid uncertainty as to the date of service it will be taken (subject to proof to the contrary) that delivery in the ordinary course of post was effected:-

(a) in the case of first class mail, on the second working day after posting;

(b) in the case of second class mail, on the fourth working day after posting.

"Working days" are Monday to Friday, excluding any bank holiday..

3). Affidavits of service shall state whether the document was dispatched by first or second class mail. If this information is omitted it will be assumed that second class mail was used.

4). This direction is subject to the special provisions of RSC Order 10, rule 1(3) relating to the service of originating process.

 

 

 

 

8th March 1985

J R BICKFORD SMITH Senior Master

Queen's Bench Division

 

3. Further to point 2 above, CPR rules on service also state the required timescales to be given for

 

serving of documents:-

 

Under CPR 6.26 First class post (or other service which provides for delivery on the next business day) is deemed to be “served” The second day after it was posted, left with, delivered to or collected by the relevant service provider provided that day is a business day.

 

4. The Default notice supplied by the Claimant is dated Friday 3rd August, to allow service in line with the statutory requirements mentioned in points 2 & 3 above, 2 working days were required to allow for 1st Class postage. Thus the Rectify date should be 14 calendar days from Wednesday 8th August, namely Wednesday 22nd August 2007, not the 14 calendar days from the date of the letter as stated in the Default notice which would have been 17th August.

 

5. I therefore put the Claimant to strict proof that any Default Notice sent to me was valid and allowed the statutory 14 clear days to rectify the breach. I also note that to be valid, a Default

 

Notice needs to be accurate in terms of both the scope and nature of breach and include an accurate figure required to remedy any such breach. The prescribed format for such document is laid down in Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) and amendment regulations the Consumer Credit (Enforcement, Default and Termination Notices) (Amendment) Regulations 2004 (SI 2004/3237).

 

6. The 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 an unlawful rescission of contract which would not only prevent the Court enforcing any alleged debt, but give me a counter claim for damages Kpohraror v Woolwich Building Society [1996] 4 All ER 119.

 

 

 

 

7. It is submitted that the above Default Notice served s87(1) Consumer Credit Act 1974 failed to comply with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561).

 

8. For a Creditor to be entitled to terminate a regulated Credit Agreement where there is a breach, demand repayment in full or take any legal action to recover any monies due under the Agreement, a creditor must serve a Default Notice under section 87(1) of the Consumer Credit Act 1974 which

 

states:

Section 87. Need for Default Notice

(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.

 

9. The Act also sets out via Section 88(1), that the Default Notice must be in the prescribed form, as below:

 

Section 88. Contents and effect of Default Notice

 

(1) The Default Notice must be in the prescribed form…

 

10. The wording must make it clear that no variation is acceptable. Therefore it cannot be dispensed with as a De Minimus issue.

 

 

11. I note that the regulations do not allow any variation in the form of these statements and therefore it is suggested that where the statements are not as laid down in the regulations the Default Notice is rendered invalid as a consequence.

 

12. In the case of Woodchester Lease Management Services Ltd v Swain & Co - [1998] All ER (D) 339 in the Court of Appeal, the Court addressed in some detail the issue of the contents of a Default Notice and should the notice fail to comply with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) it would render the Default Notice invalid I quote the comment of KENNEDY LJ: "This statute was plainly enacted to protect consumers, most of whom are likely to be individuals" the judgment appears to confirm the consumer credit legislation made under the Consumer Credit Act 1974 as plainly enacted and set out to offer protection to the consumer. Therefore it is suggested that the failure of the Claimant to set out the Default Notice in accordance with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) could unduly prejudice me as it failed to allow the required time to remedy the alleged default.

 

13. The Claimant’s failure to issue a valid Default Notice must surely prevent a right of action and would make any Termination of the Agreement unlawful, as statute provides the procedure that must be followed. Since the Claimant has failed to adhere to statutory procedure it is averred that the Claimant does not have a right of action, and can never now have a right of action having terminated the Agreement unlawfully.

 

14. Furthermore, the Arrears Total outlined cannot be accurate, as the Balance on the Account was at least partly comprised of Unlawful Charges plus additional Charges and interest added unlawfully whilst the Account was in Dispute. Therefore, the Arrears claimed cannot be accurate, as they are themselves calculated using a Total that was itself inaccurate.

 

15. This is at all times an Agreement Regulated by the Consumer Credit Act 1974. There is no provision in the Act that allows a large financial institution to terminate an Agreement that is in alleged default or breach simply by giving notice to the Consumer. Section 98(6) makes that quite clear. The Creditor must follow the steps outlined in Section 87 and Section 88 if they

are to lawfully Default and Terminate, and enjoy the benefits of Section 87.

 

 

 

 

 

 

16. Finally, an invalid Default Notice cannot be remedied by simply issuing a new Default Notice.

 

The Claimant may not serve a second effective default notice in prescribed form post-termination of the agreement. Any such second default notice will necessarily state a date by when I would be required to comply after which in default the agreement would terminate. The second default notice would therefore contain the fiction that the agreement endured when that cannot be the case, as it was terminated on XX/XX/XX. Terminating an Agreement on the back of a defective Default Notice, simply confirms the undeniable truth that Termination of the agreement by the Claimant was carried out in circumstances which then prohibited them from enjoying the benefits of Section 87, namely the opportunity to seek early Payment of a sum that was, prior to Termination, only payable in the future.

 

I never received any such notice dated 25/05/2008 and as a result I contest the accuracy of the default and until such time you can provide proof that you complied with the above Act, you must remove all derogatory data from the files of any credit reference agency. I also contest the validity of the Default and Termination notices sent to me 20/08/10 and 02/10/10.

 

I am more than happy to issue you a Subject Access Request which should include a copy of the documents I request, which I am hopeful will include a copy of said default notice which, if they are missing, will leave me no alternative but to seek legal enforcement via CPR31.16. Without sight of said default notice, I cannot argue the authenticity, enforceability or execution and therefore will use this as my claim if I am forced into taking legal action, all costs will also be claimed.

Furthermore if the said default notice does exist then issuing a second default notice against this account puts you in formal breach of s.87 & s.88 of the Consumer Credit Act 1974 and s.7 of the Data Protection Act 1998. You have acted unlawfully by allowing a second default notice to be registered against the same account. As we both know this is strictly forbidden and leave me no alternative but to seek enforcement against you for the removal of the incorrect default entries.

 

 

 

 

It would, however, be in both our interests if you simply agree to remove the default being there are so many inconsistencies with the alleged default notices, not withstanding the breaches of the Consumer Credit Act & Data Protection Act. The execution, the enforceability and the legal compliance that you must surely have no other alternative but to remove any default notice against the alleged account, least of all as a gesture of goodwill? As I was never in receipt of any of the statutory documents then the actual default notice that is shown on my credit file is unlawful and should be immediately removed, also if the notice of default was served as stated in correspondence from you 23/08/2008 then the default entered in 05/08 could not possibly have given the time required by statute to respond. We also both know that you have acted unlawfully by allowing a second default to be registered against the same account. I do not want to take this through the courts but I will enforce removal by judgment if necessary, at the end of the day you have acted unlawfully by not issuing fully compliant and correctly executed legal documents. Therefore, assuming you are happy with my proposal please confirm, in writing on letter headed paper, the following points will be carried out;

a) The Default Notice will be removed

b) The Status of the account will change from “Defaulted” to “Settled”

c) The Current Balance will appear as £0.00

d) The Default / Delinquent Balance will be set to £0.00

e) There will be no date in the “Defaulted Date” field (as it will be removed)

f) There will be no date in the “Date Last Delinquent” field on the report

g) This will apply to all 3 Credit Reference Agencies, namely Experian, Equifax & Call Credit

 

Failure to agree will result in more formal papers being sent, by return and, I look forward to your response within the next 21 days.

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I would appreciate someone's opinion as there seems to a lot of very knowledgeable people her.

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Larkspur, hello and welcome to CAG.

 

Right then my dear fellow, you had better hold fire on that letter of yours.

 

Can you provide some details/info of the situation with the creditor as it stands presently.

 

Yes, there are a couple of mistakes in that letter I am afraid to tell you, so please, for now anyway, do not send that letter.

 

Has the creditor issued a demand for the full balance?

 

Come back please and let us know exactly what is going on with your case/story/thread.

 

Kind Regards

 

The Mould

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Thanks very much Mould for your reply.

 

They sent Termination letter dated 02/10/10 saying I've not complied with default notice sent 19/08/10.

The Termination notice goes on to say, The outstanding balance will be either passed or sold to debt collection agency for recovery of outstanding balance, and Default information will passed to Credit Reference Agencies.

Why would this not be a win/win situation for me. They are clearly in breach of numerous points of the Consumer Credit Act. The default notice served recently is defective, if they register termination on the back of faulty default they are in breach of CCA, furthermore it is illegal to register a default against an account already defaulted?

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Larkspur you should have a read of this - http://www.hammonds.com/FileServer.aspx?oID=23087

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

 

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I AM HAPPY TO RECEIVE PM's AND I WILL RESPOND IF I FEEL I CAN ASSIST BUT WHEN YOU DO CAN YOU PLEASE PROVIDE A LINK TO YOUR THREAD ON WHICH YOU WOULD LIKE ME TO COMMENT - THANK YOU

 

IMPORTANT - If you are sent a private message directing you for advice or support with your issues to another website,this is your choice.

Before you decide,consider the users here who have already offered help and support.

Private message facilities are offered for users to communicate issues that are/or could be seen to be inappropriate for posting on the main forum.Site rules explain this in more detail.

If you are approached by private message with a view to asking you to visit another website,please inform the site team via the report icon.

 

Forum rules - http://www.consumeractiongroup.co.uk/forum/forum-rules-please-read/9-forum-rules-please-read.html

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Thanks 42 man,

But there are several points of issue here. 1. I'm contesting that they have sent first default notice, 2. If a default notice wasn't issued then they have illegally added default with Credit Reference Agencies, 3. If they did send the default notice then they gave only 4 days to reply due to Bank Holiday before they added default with agencies, 4. They have sent another default notice when they have already added default, 5. They have terminated agreement while still in default with respect to my CCA request, 6. It's not just the date issue with latest default, I've seen one or two identical on this very site that was said by other caggers that they are "a joke" and are clearly defective in a number of ways.

I must have a case here.

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Hi Mould,

The story so far. Because of change in my circumstances got into arrears with the said loan. Started making tokens payments about 15% of regular amount when I lost my job, then got a job but much lower salary than when I took out loan, so increased amount I paid to about 33% of regular payments, that lasted a few months, then I increased again this time to about 70% of regular payments, this was really crippling me.

I sent at least two personal budget sheets to show that I couldn't meet these payments but offered pro-rata payments which was accepted by other creditors but not this one who now were demanding full repayments.

Anyway there was a PPI policy attached to this loan so decided to challenge the miss-sold PPI, the bank accepted that the policy was miss-sold which meant that the premiums I had paid would be enough to cover close to 3 months full loan repayments.

I didn't hear anything for a few months then was sent a iffy default letter dated 19/08/10, I then decided to send CCA request 01/09/10 thinking that if the PPI was dodgy something else might be. I got no reply, so sent CCA reminder telling them that they were now in default until they had complied with my request.

I received communication from them, letter dated 23/09/10 saying that my PPI had been cancelled on 22/09/10. Then got reply from CCA request, the loan agreement was missing 2 pages and they have still not to this day sent breakdown of interest/charges etc. The accompanying letter was dated 02/10/10 the same date as the termination notice was dated.

While all this is going on decided to check credit file with CRA, turns out that a default was registered on this account with CRA in May 2008. Decided to check my records, now I'm not saying I've kept every letter that's ever been sent to me, but think I would have kept a default notice. A letter I did find dated 23/08/2008, was one saying that a Notice of Default was issued 25/05/2008. I may of ignored this letter at the time as this would have been around the time that I had increased my repayments so I may have agreed to increase payments while this letter was in the post.

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Sorry Mate,

Forgot to ask what are the mistakes I've made my letter, is there a better way of putting my arguments across.

It seems to me, reading hundreds of other posts on this site, that this bank have acted improperly with regards to the Consumer Credit Act & Data Protection Act. As I have said in previous a post I've a seen a few other examples of the company's default notices and this is exactly the same definitely not pukka.

As I say its not just this default notice there are a number of things that just don't seem right here.

 

Cheers, appreciate any more feedback

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HI

I am afraid you have been misled.

1) Registering a delinquents account on a CRA file does not depend on an issuance of a Section 87 notice.

A default notice under the Consumer Credit Act is merely necessary for the creditor to enforce the agreement nothing more.

The creditor can provide information about your account to a CRA based on your credit repayment history irrespective of issuing a default. The notice of intention to place a default record on your file is a requirement of the banking code and may be sent with the default notice but it does not have to be.

2)

The lender can terminate an agreement at any time.

It is not unlawful to terminate on the back of a fault DN see above.

A lender can reissue a faulty DN.

A default notice is simply a feature of the at which provides a level of consumer protection in that it:

Ensures the correct information and time to remedy is provide before enforcement . That is all it does, if the default does not do this for any reason it is ineffective and further time must be given to remedy,this is the only sanction for an ineffective default notice.

This whole idea of accepting a fault termination is misguided and has no legitimate foundation in law. It is based on a posting made sometime ago on here that was grossly both misunderstood and flawed.

There has been a lot of people coming unstuck on various threads on here who have followed this “advice” I am sorry to here that you have been added to the list.

Peter

DO NOT PAY UPFRONT FEES TO COLD CALLERS PROMISING TO WRITE OFF YOUR DEBTS

DO NOT PAY UPFRONT FEES FOR COSTLY TELEPHONE CONSULTATIONS WITH SO CALLED "EXPERTS" THEY INVARIABLY ARE NOTHING OF THE SORT

BEWARE OF QUICK FIX DEBT SOLUTIONS, IF IT LOOKS LIKE IT IS TO GOOD TO BE TRUE IT INVARIABLY IS

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  • 4 weeks later...

Hi, Peterbard

Sorry late replying, not been feeling too well recently, fit as a fiddle now!

 

Talking of fiddles, I've recently received a statement, albeit not a full statement, However, what I've been sent is just plain wrong!!

 

It turns out that these jokers are still billing as arrears the full amount of loan repayment AND PPI with following Default & Termination

also including their special brew of creative accounting!

 

I have as documented evidence, that they said they would refund overpaid PPI and new payments would be X amount Nov 2009.

 

Now, never mind the implications of the Consumer Credit Act. This is now FRAUD! They are trying to obtain money that they KNOW and

admitted through previous correspondence, that is not their's to collected.

 

Please advise anyone. I don't see a way out for them. Where do I go from here? how do I lodge complaint with F.S.O. or F.S.A.? Should I

raise account in dispute with C.R.A.'s.?

 

Not messing, these comedians have seriously f#?ked up!!

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