Interest charges on CCJ'd debt

[sionnach67]

Hello!

 

I've been on a DMP for just over a year, and it's gone pretty smoothly really, but I received a yearly statement from one of my creditors which has made me go

( they are the only one who took me to court and gained a CCJ... during which time you guys were amazing with your advice, so thank you again! )

 

Basically, the debt is £5500 to this creditor, and I pay £138 a month. So, I've paid a little over £1600 over the year, but, with interest charges and arrears charges, the amount I have actually paid off over the year is less than £100!

 

Does anyone have any idea as to what would be the best way to approach them to ask them to reconsider the excessive charges? The standard letters on my DMP site just don't seem adequate.

 

( for completion, my overall debt is now around £19000 and I pay £650 a month to my DMP)

 

Thank you very much!

Sx

[citizenB]

You say this is money is in respect of a CCJ ? What did the Court order demand.. did it allow for interest charges ?

 

What DMP company are you with.. one that charges you or one of the charities such as National Debtline ?

[citizenB]

Do you know if any of these debts have default charges and or PPI that might have been mis sold? If so, despite them being in arrears, you can reclaim them.

[sionnach67]

Hi there, thank you for the reply... as far as I can tell, there is nothing mentioning interest charges on the Judgement, just the amount of the debt. I asked my Debt Manager ( I'm with Payplan) and he sad that they could add interest if they wanted to.

They are also adding a £35 arrears fee each month.

 

Sx

 

PS, I have claimed back the PPI that I could.. and other than this creditor, nobody else appears to be adding unreasonable charges.

[citizenB]

I am pretty certain that unless the order actually specifies that interest can be charged then they arent allowed to.

 

Do you have a copy of the order ?

 

Meanwhile I will try and get the above confirmed for you.

 

I dont think they are allowed to add default charges either.. sheesh.. !1

[sionnach67]

Thank you! As mentioned, I remember reading that they couldn't charge interest if it was not on the Judgement, but, the chap at Payplan says they can do if they want to.... it's a bit of a minefield!

 

I appreciate your help

 

Sx

[citizenB]

Hmm, I think the chap at Payplan is wrong.. but I have left a message for those on the site team who would know

[sionnach67]

Thank you. I just read the Judgement which says it is ordered that the defendant pay the claimant the outstanding sum in installments of £138.89 for every month. Below that there is a note with says "Where judgement is entered for more than £5000 or includes a sum in respect of contractual or late payment interest, the claimant may be entitled to further interest".... I'd never really noticed that bit before ( my head is normally stuck under a sand dune)... so I guess they can)

 

Edited November 5, 2011 by sionnach67

[the_shadow]

Have a read of this http://www.consumeractiongroup.co.uk/forum/entry.php?191-Post-judgment-interest-on-CCA-regulated-debts

[sionnach67]

Thank you for the link... it says it is an invalid blog? Do you have another link please?

 

Sx

[citizenB]

Just in case there is a problem with the link, I have copied the information out for you.

 

This is what it says..

 

Interest can accrue on county court Judgments in two ways. For most of them it accrues due to the fact that the claimant has requested for statutory interest to be applied to the debt in accordance with Section 74 of the County Courts Act 1984. The other way that interest can be added is by the claimant requesting contractual interest be applied. It’s important to know that Consumer Credit Act regulated agreements cannot accrue post-judgment statutory interest, the law does not allow it. If any creditor tries to apply it they it should be challenged citing Section 2 of the County Courts (Interest on Judgment Debts Order) 1991. This blog entry is going to pay particular attention to post-judgement contractual interest and how a creditor should going about claiming it.

 

 

The Director General of Fair Trading v First National Bank

 

Post-judgment contractual interest was always thought to be unrecoverable. One of the main assumptions was that the rules surrounding the application of it would echo that of statutory interest, and as such a clause allowing it to be recovered would be unfair. The above case went all the way to the House of Lords who decided such a clause could be fair, and so post-judgment contractual interest can now be claimed. All this was nearly a decade ago by the way. The key problem is precisely how this interest should be claimed - as the creditors all seem to have a different take on it. In the case of First National, two of the Law Lords took time to look at the Scottish legal system and specifically the fact that the sheriffs would award post-judgment interest at the contractual rate - so long as the creditor gave notice to the debtor that they wanted to claim it. The Lords wanted the courts to address the fact that a debtor may not be liable to pay back the entire debt as per the contract if post-judgement interest could not be applied. The County Court Rules 1981 historically allowed for an interlocutory judgment which would have provision for an amount of interest to be decided by the court to be added too. This provision can also be found within the Civil Procedure Rules at r12.6(2) and r14.14(2). If a creditor has not specified their desire to include post-judgment interest in this way it cannot be added to the actual judgment itself. In short, judgments obtained prior to 1st October 2008 could have contractual interest accrue so long as the above rules were followed by the claimant.

 

What if interest accrues separately from the judgment debt?

Many creditors seem not to add the post-judgment interest to the original judgment, instead they state that the interest would accrue separately and that they can bring separate action to recover it at a later stage. The Lords in the First National case assumed it was possible to do this although that particular technical argument was never discussed as part of the case. Rule 7.3 of the Civil Procedure Rules states that a single claim should be used to cover all legal arguments; this would allow everything to be conveniently disposed of in the same proceedings. The overriding objective also states that all parties should present the court with all issues to be dealt with in one action. Any failure to comply with this should be argued as an abuse of process and the case dismissed or struck out.

 

 

Judgments obtained from 1st October 2008 onwards

 

The Consumer Credit Act 2006 has brought in some really useful changes outlining what a creditor must do if they wish to claim post-judgment interest. Once a judgment has been entered the creditor has to serve notice that they are claiming post-judgment interest to the debtor. There is a statutory requirement to do this under s130a Consumer Credit Act 1974. Further reminders of their ability to claim it have to be sent to the debtor every six months. This interest can be charged from the date the first notice is given, if the creditor does not serve the notice they cannot add it until they do actually serve the notice. Due to these new rules a creditor cannot include a claim for post-judgment contractual interest as as part of the actual judgment itself within the particulars of claim, they do not have the legal entitlement to do so – interest can only start to accrue once notice has been served on the debtor - which starts after the court order has been granted. Therefore, the post-judgment interest will accrue in a separate pot, and not part of the original judgment debt at all. This rule is made clear via the prescribed rules outlining how s130a notices should be served and also via Reg 9a of the Enforcement, Default and Terminations Notices Regulations 1983. Since it is now very clear that there are no possibilities for post-judgment interest to be applied as part of the original judgment interest cannot accrue on regulated Charging Orders either; again the interest has to accrue in a separate pot - away from the charge. As a result of these statutory changes, the position for all judgments obtained after 1st October 2008 is that a creditor would have to try and bring separate action for their post-judgment contractual interest. As you’ve seen earlier within this blog, there are strong arguments to counter their abilities to do this under the Civil Procedure Rules. It may also be possible to halt post-judgment contractual interest accruing on a CCA regulated debt by making an application to the court for a Time Order, you can read about them here.

 

 

Strategies to deal with post-judgment contractual interest

 

Scenario A: Judgment entered prior to 1st October 2008 with an interlocutory judgment with post-judgment contractual interest included:

 

Check to ensure the creditor has followed the correct process to claim post-judgment interest. If they have, an application should be made for a time order under s129(1) of the Consumer Credit Act. At the same time the court can consider reducing or freezing the interest under s136 of the act.

 

Scenario B: Post-judgment interest is accumulating in a separate pot (judgment entered at anytime)

 

Remember that the rules of the court should prevent any separate action to recover the interest. If the judgment was entered on or after 1st October 2008 the claimant can only charge the interest once notice has been served on the debtor in the correct prescribed format. In all circumstances a time order could be considered to try and prevent the interest accruing at all.

 

Please note that some creditors will argue that a time order is not possible once a judgment has been entered. This should be challenged, especially since the new s17 notice even mentions the possibility of a time order on a regulated judgment.

 

[sionnach67]

Brillant ( if a bit mindblowing ! )

I shall try and engage my brain and study that. (I'm also trying to fill in divorce papers at the moment... Never rains but it pours eh? )

 

Sx

[dx100uk]

basically

if the judgement box does NOT mention post judgemental int they CANNOT charge it

unless you miss a ccj payment

 

as for default sums NO either

 

you need to contact the court as a matter of urgency

 

dx

[citizenB]

S dx says, contact the court for clarity of the order. I would also point Payplan to the information you have been given and ask them from where they obtain their information that states the company can ignore a court order and just charge what it likes ?

[sionnach67]

Thank you dx and Citizenb....

I did ask payplan for advice and to be honest, although they have been great at getting the plan up and running, the response I've had to these kind of queries has missed the point completely.. eg in relation to late payment charges they suggest I just pay them on a different date, and in relation to the interest, they suggest I just write and ask them to stop interest.

 

I will contact the court for clarification, and ask Ocean to justify the charges.

 

At the current rate, it'll take me 50 years to clear the debt

[citizenB]

TBH I was never happy with advice given from PayPlan..

 

You could always see if you can shift over to another free DMP, such as National Debtline !

[sionnach67]

Aye... I had thought about that, I think I'm just afraid of unsettling the creditors ( most of whom have actually been accommodating) if there were any glitches in the transfer.

 

Sx

[citizenB]

Aye... I had thought about that, I think I'm just afraid of unsettling the creditors ( most of whom have actually been accommodating) if there were any glitches in the transfer.

 

Sx

 

I can understand that Deal with the issue you have at the moment, then give some more thought to perhaps telephoning ND and asking for their advice

[sionnach67]

It will most definitely take priority on my 'to do' list

Sx

[Nick Pearson]

TBH I was never happy with advice given from PayPlan..

 

You could always see if you can shift over to another free DMP, such as National Debtline !

 

Hi CitizenB, as I noted in a post yesterday NDL will pass over any DMP clients to either CCCS or Payplan in return for a % of the FSC. NDL are an information and advice provider not a DMP provider; they don't neotiate with creditors, distribute repayments etc etc. Its a great service but a DMP provider it ain''t.

[citizenB]

Hi CitizenB, as I noted in a post yesterday NDL will pass over any DMP clients to either CCCS or Payplan in return for a % of the FSC. NDL are an information and advice provider not a DMP provider; they don't neotiate with creditors, distribute repayments etc etc. Its a great service but a DMP provider it ain''t.

 

 

Aha, righto. I didnt realise that. Many thanks for clarifying and I will ensure I dont give misleading information in this respect in future.

[sionnach67]

Just a quick update: I spoke with an exceptionally helpful chap at NDL. He advised me to check the original claim form for comment about interest. As far as I can see, whilst they have made a claim for interest, in both cases it states they wish to claim interest from the date of the claim until the date of judgement. Does that literally mean the date the CCJ is issued? There is nothing in reference to interest beyond this.

He also stated that as far as NDL are aware, there is no scope for adding additional charges ( eg the £35 they are charging each month for payment arrears)

 

Sx

[hatesdebt]

Yes, it infers until judgement.

Regardless, they should not be adding such things as late payment charges - they are not interest.

 

You might want to check your thread on MSE about this as well. You've had quite a few replies.