Credit file default

[Peterbard]

Comment

The Court of Appeal’s decision is both pragmatic and

commercially sound. The Agreement, like many others,

stated that the balance became due upon termination. If the

Agreement had been regulated by the CCA, termination is

subject to the lender serving (where appropriate) a notice under

the CCA (most commonly a default notice or, for non-default

cases, a combined enforcement and termination notice). Notice

is specifically required before a lender can become entitled to

(amongst other things) demand “earlier payment of any sum”.

If the Court of Appeal had come to any other conclusion it

would have been contrary to the wording of the CCA. This

envisages that the balance does not become due (and cannot

be demanded as being due) until after the expiry of the notice

period. The Court of Appeal’s decision can also be used in

appropriate circumstances by lenders wanting to stop the

limitation period running. It seems clear that, subject to an

argument that the lender has affirmed the agreement by not

taking steps to accept a debtor’s repudiation, termination could

be delayed until the end of the term of the agreement. This

would allow lenders to delay (most obviously where the debtor

is in a difficult financial position or cannot be located) issuing

proceedings until the last moment, like BMWFS did, and avoid

being time-barred.

[Peterbard]

Thanks Ida, not going to argue, the point here that differs is that ''payments'' had already ceased hence the original default.

 

No I wouldn't argue because you re wrong.

 

Could be an important point if people are depending on your advice regarding when an agreement becomes SB.

[Peterbard]

The cause of action would be if the op stops making payments not the default.

 

This is correct however the sb would be re-set on each payment

[BRIGADIER2JCS]

An appropriate notice (DN) has already been served and the period for compliance exhausted I do not think an ''arrangement to pay'' after a default constitues a further regulated agreement.

 

The matter wasnot in reference to statue barred debt but on the simple Limitation on starting action after 6 years/

[Peterbard]

An appropriate notice (DN) has already been served and the period for compliance exhausted I do not think an ''arrangement to pay'' after a default constitues a further regulated agreement.

 

The matter wasnot in reference to statue barred debt but on the simple Limitation on starting action after 6 years/

 

There is some confusion here i think, just because the SB period is re started by part payment does not mean that the SB 1980 does not apply, it means that it is reset by virtue of section 30, not section 5 as you quoted earlier.

 

It is still SB 6 years from the payment date under the act

[Jimmy99]

With apologies to another site where I have stolen this quote

(5) Subject to subsection (6) below, where any right of action has accrued to recover—

 

(a) any debt or other liquidated pecuniary claim ; or

(b) any claim to the personal estate of a deceased person or to any share or interest in any such estate ;

 

and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment.

[BRIGADIER2JCS]

Section 30 (1) To be effective for the purposes of setion 29 of this Act, an acknowledgment must bein writting and signed by the person making it.

 

I am not sure the OP did this, if he did so I agree.

[Jimmy99]

I do not see where the poster has said he actually stopped paying, maybe he just didn't make sufficient payments.

[UnitedFront]

OK I am not often on the CAG these days but since this thread has caught my eye for all the wrong reasons, here goes...

 

FIRSTLY

If you are talking about the Limitation Act 1980 then you ARE talking about a debt being (or not being) statute barred - that is what the Act is about!!

 

SECONDLY

It is true that no court action can be taken after the expiration of 6 years from the date that the cause of action accrued (s.5 Limitation Act 1980)...

 

BUT

 

s.29 Limitation Act 1980 makes it clear that the cause of action is taken to have accrued at a later date if a written acknowledgement or part payment of the debt are made. For ease of reference I have quoted both sections below.

 

SO WHAT IS THE CONCLUSION?

If the OP has an outstanding debt that he has NOT MADE A PAYMENT ON or acknowledged in writing for 6 years, no court action can be taken. BUT if the OP has been making payments, then the 6 year time limit starts ticking at the date of the last payment.

 

Some of the advice given so far on this thread is quite clearly palpably wrong and could cause people an awful lot of heartache.

 

Whilst certain members may say that this has nothing to do with statute barred - IT DOES.

 

5. Time limit for actions founded on simple contract.

An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.

 

29.— Fresh accrual of action on acknowledgment or part payment.

(1) Subsections (2) and (3) below apply where any right of action (including a foreclosure action) to recover land or an advowson or any right of a mortgagee of personal property to bring a foreclosure action in respect of the property has accrued.

(2) If the person in possession of the land, benefice or personal property in question acknowledges the title of the person to whom the right of action has accrued—

(a) the right shall be treated as having accrued on and not before the date of the acknowledgment; and

(b) in the case of a right of action to recover land which has accrued to a person entitled to an estate or interest taking effect on the determination of an entailed interest against whom time is running under section 27 of this Act, section 27 shall thereupon cease to apply to the land.

(3) In the case of a foreclosure or other action by a mortgagee, if the person in possession of the land, benefice or personal property in question or the person liable for the mortgage debt makes any payment in respect of the debt (whether of principal or interest) the right shall be treated as having accrued on and not before the date of the payment.

(4) Where a mortgagee is by virtue of the mortgage in possession of any mortgaged land and either—

(a) receives any sum in respect of the principal or interest of the mortgage debt; or

(b) acknowledges the title of the mortgagor, or his equity of redemption;

an action to redeem the land in his possession may be brought at any time before the expiration of twelve years from the date of the payment or acknowledgment.

(5) Subject to subsection (6) below, where any right of action has accrued to recover—

(a) any debt or other liquidated pecuniary claim; or

(b) any claim to the personal estate of a deceased person or to any share or interest in any such estate;

and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment.

(6) A payment of a part of the rent or interest due at any time shall not extend the period for claiming the remainder then due, but any payment of interest shall be treated as a payment in respect of the principal debt.

(7) Subject to subsection (6) above, a current period of limitation may be repeatedly extended under this section by further acknowledgments or payments, but a right of action, once barred by this Act, shall not be revived by any subsequent acknowledgment or payment.

[sequenci]

The original CoA is the default date IMO.

 

it's the earliest time at which an actuin could be brought - Reeves v Butcher [1891] 2 QB 509. This is usually the point of default as you say - which contractually may not be the point in which a payment is missed but the point in which a claimant can first commence action. Take, for example, most credit agreements - they usually require a couple of missed payments which will then trigger the default process.

 

As an aside, a creditor cannot prevent the cause of action from commencing by never servicing a default notice etc, the cause of action will always be whatever's written in to the terms and conditions.

[UnitedFront]

JUST TO ADD A SHORT CORRECTION

 

I note that it was not the OP that the above post was relevant to, but rather an inquiry made within this thread by markstone. The OP Has obviously repaid his debt and so SB is not at issue.

 

Markstone SB is at issue.

[sequenci]

Comment

The Court of Appeal’s decision is both pragmatic and

commercially sound. The Agreement, like many others,

stated that the balance became due upon termination. If the

Agreement had been regulated by the CCA, termination is

subject to the lender serving (where appropriate) a notice under

the CCA (most commonly a default notice or, for non-default

cases, a combined enforcement and termination notice). Notice

is specifically required before a lender can become entitled to

(amongst other things) demand “earlier payment of any sum”.

If the Court of Appeal had come to any other conclusion it

would have been contrary to the wording of the CCA. This

envisages that the balance does not become due (and cannot

be demanded as being due) until after the expiry of the notice

period. The Court of Appeal’s decision can also be used in

appropriate circumstances by lenders wanting to stop the

limitation period running. It seems clear that, subject to an

argument that the lender has affirmed the agreement by not

taking steps to accept a debtor’s repudiation, termination could

be delayed until the end of the term of the agreement. This

would allow lenders to delay (most obviously where the debtor

is in a difficult financial position or cannot be located) issuing

proceedings until the last moment, like BMWFS did, and avoid

being time-barred.

 

This is interesting, as the OFT have made it very clear that the actual 'default' process is regarded as a procedural bar and can be disregarded if a creditor never sends out the notice when they were supposed to as per the contract. It's been a while since I've looked in to this area, I really need to read that case by all accounts

[Peterbard]

This is interesting, as the OFT have made it very clear that the actual 'default' process is regarded as a procedural bar and can be disregarded if a creditor never sends out the notice when they were supposed to as per the contract. It's been a while since I've looked in to this area, I really need to read that case by all accounts

 

Yes it seems to have ether clarified the situation or muddied it dependent on your point of view.

The view of the judge is clearly that the COA occurs on the termination of the agreement, as this is the point when the repudiatory breach is accepted by the creditor, in the case of a CCA this is delayed of course by the requirments of section 87, so would occur if the entitlement to terminate is used after the remedy period.

 

A more convenient method of estimating the actual COA date may well be the date that the creditor demanded full or accelerated payments if this is the case.

[sequenci]

FYI, the whole procedural bar argument stems from Swansea City Council v Glass [1992] 2 All ER 680 and Royal Borough of Kensington and Chelsea v Khan [2002] EWCA Civ 279. The OFT letter was dated 28.5.98 so pretty old! As far as CCA defaults are concerned the argument of procedural bar is cited by Guest & Lloyd in the Encyclopedia of Consumer Credit Law (Sweet & Maxwell at 2-088)

 

Looks like I've a bit more bedtime reading to do!

[fletch70]

I suppose most people have already defaulted and been in some sort of arrangement to pay long before they even look at anything else such as enforceability. In such cases it would be the recognised statute barred time limits that apply.

I have to say i have argued against my own best interests here as many of my defaults will fall off in the next 12 months.

However having the right knowledge is paramount

[Peterbard]

FYI, the whole procedural bar argument stems from Swansea City Council v Glass [1992] 2 All ER 680 and Royal Boroughh of Kensington and Chelsea v Khan [2002] EWCA Civ 279. The OFT letter was dated 28.5.98 so pretty old! As far as CCA defaults are concerned the argument of procedural bar is cited by Guest & Lloyd in the Encyclopedia of Consumer Credit Law (Sweet & Maxwell at 2-088)

 

Looks like I've a bit more bedtime reading to do!

 

Yes i know,an interesting consequence is that the procedural barr created by the absence of conformity to the CCA may also delay the cause of action requirements of the SOL since the agreement cannot be terminated.

[basa48]

I think it should be made clear that 'defaults' recorded on a debtors file with the CRAs have absolutely no connection to a Default Notice issued by a creditor.

 

The former is simply a device by which creditors assess the 'risk' of lending to potential debtors and have no basis in law and nothing flows from them.

 

The latter is a legal notice warning a delinquent debtor that a cause of action will arise upon the expiry of the Notice (usually but not definitely 14 days after receipt by the debtor).

 

Default Notices can be negated by the debtor paying the overdue amounts and continuing normal repayments. Defaults registered with CRAs will not necessarily be removed or negated by that action as the file records actual payment behaviour (i.e. missed / reduced payments etc).

 

Statute Barring (being a legal device) is NOT determined by a default on a CRA file but by the legal device the Default Notice and the CoA it invokes.

 

Hope that is clear.

[BRIGADIER2JCS]

Yes we know thankyou it's appreciated.

[basa48]

Yes we know ..............

 

That was not completely clear I thought.

[Jimmy99]

This gets more complicated by the minute with legal points being put across in a style that not everyone who is interested will understand

 

It was a good point to state that the DN is not related to the recording of a default as not everyone will know that.

[Peterbard]

And equally important is the fact that the CRA recording date should not be taken as the start of the SB period

[markstone]

Is it possible to enter into a payment plan with a DCA, and then stop payments, completley ignore them with no contact for 5 years after to count it as SB, or is the fact you allready made payments admitting liability, discounts any chance of it being SB?

[BRIGADIER2JCS]

Yes stop payments today make no contact for 5 years statute barred in Scotland and completely extinguished!!

 

Clock is restarted by any payment.

[Jimmy99]

That's true although you might need to fight them off , for example by sending a CCA request at the appropriate point.

 

Even if you start paying again after the 5 years it would still be SB

[BRIGADIER2JCS]

Any monies paid after a debt are treated as gifted and are not recoverable.