Cause of action/statute barred

[fletch70]

It would appear that there is some confusion of when a debt becomes statute barred and lots of differing opinions being expressed.

 

My understanding has always been that it is from the first missed contractual payment providing no other payments or written acknowledgements are made so in the case of a monthly loan it would be 6 years and 1 month from the last payment (or 6 years from the date of the first missed payment)

 

Others have expressed differing opinions , 6 years from last payment, 6 years from the issuing of a S87(1) DN.

 

Even NDL seem to have inconclusive views on statute barred when looking at their leaflet

 

http://www.bdl.org.uk/images/25_EW_NDL_Liability%20for%20debts%20and%20the%20limitations%20act.pdf

 

Some factually based easy to understand opinions would be useful to lots of people I think

 

Anyone open for comment?

[BRIGADIER2JCS]

Fact is that this proposition has been discussed here before as you well know, the situation remains unchanged

 

No payment, relevant acknowledgment of a debt in 6 clear year from the cessation of payments and a debt becomes statute barred.

 

This as said has been and still is accepted by the DCas and the Courts.

[fletch70]

I know that is your stance but Sidewinder in another thread expressed a different opinion and NDL also express a different opinion to the one you propose. Obviously if you have been on reduced payments/already have the default then it is 6 years from last payment as there has already been a cause of action. What i am trying to establish is if you have a current credit card and for whatever reason decide to stop paying at what point does the clock start ticking.

 

Personally i think this is a very important point to decide as it would be awful to foolishly reset the clock in the last few weeks .

[Peterbard]

I know that is your stance but Sidewinder in another thread expressed a different opinion and NDL also express a different opinion to the one you propose. Obviously if you have been on reduced payments/already have the default then it is 6 years from last payment as there has already been a cause of action. What i am trying to establish is if you have a current credit card and for whatever reason decide to stop paying at what point does the clock start ticking.

 

Personally i think this is a very important point to decide as it would be awful to foolishly reset the clock in the last few weeks .

 

Really Fletch the point has already been decided some months ago. Some are just taking a while to catch up.

 

There seems to be a problem for some to differentiate between the COA as given by section 5 of the act and the acknowledgement as prescribed under section 29.

 

The cause of action to enable the reclaim of a debt must be when the creditor is able to claim the full sum, this cannot happen until the agreement has been terminated, if you look at SB in other countries the situation is explained better than in our SOL but the situation is the same.

 

There is a cause of action of course which occurs whilst the agreement is live, but this would only apply to arrears because this is all the creditor can demand at that point.

[fletch70]

Dodge now I am even more confused. You are saying it is not until a demand for full repayment can be made is that right?.

I do know this has been discussed before but I can not find or remember the outcome apart from it is cause of action and not payment.

 

If we assume you are correct then how do we work out the date, as we know some creditors do not issue default notices especially if a payment arrangement has been made. In my Cap1 agreement it says this (point 16) so it looks like I miss a payment , they then give me a month to fix it and after that they can demand full payment

 

Do you see now why I am confused.

 

So when do you say the cause of action is for

1)A simple credit card contract as per a S78 request

2) A standard monthly repayment fixed term loan as per a S77 request

[Peterbard]

Dodge now I am even more confused. You are saying it is not until a demand for full repayment can be made is that right?.

I do know this has been discussed before but I can not find or remember the outcome apart from it is cause of action and not payment.

 

If we assume you are correct then how do we work out the date, as we know some creditors do not issue default notices especially if a payment arrangement has been made. In my Cap1 agreement it says this (point 16) so it looks like I miss a payment , they then give me a month to fix it and after that they can demand full payment

 

Do you see now why I am confused.

 

So when do you say the cause of action is for

1)A simple credit card contract as per a S78 request

2) A standard monthly repayment fixed term loan as per a S77 request

 

The cause of action is the same in both, and that would be when the creditor is entitled to demand full repayment. If these were unregulated agreements then this may well be triggered by a contractual term, however the CCA says that a regulated agreement cannot be terminated until a section 87 notice has been issued.

 

In a credit card the debtor can contractually repay the loan via installments, only after the agreement has been terminated either by default or because it has come to term is the demand for full repayment enforceable.

 

There is a point where a situation could arise where no termination of the account takes place, this has happened in overdraft agreements, where there is no prescribed repayment regime, someone may not pay anything off their overdraft for years and yet the account would remain active(the SOL period would not commence).

 

In practice accounts have to be terminated at some point as the creditor will want to commence action for the total sums due under the contract.

[fletch70]

What you say is interesting and alarming in that all these debts with bad DN's have not theirfore been terminated and as such the SOL does not apply.

[Peterbard]

What you say is interesting and alarming in that all these debts with bad DN's have not theirfore been terminated and as such the SOL does not apply.

 

Yes a good point, however, we are talking about enforcement. If the creditor needs to enforce the agreement would have had to been terminated, if what you say were the case he would still be unable to enforce because of the lack of a compliant DN, so it would hardly be an argument he would use.

 

However creditors on fixed sum loans are leaving enforcement until the agreement terminates for precisely this reason.

Usually the debts are assigned of course, which is an added complication but I think that a court would consider that an agreement had been terminated and then the SOL clock started if it had been assigned. this may be arguable, but in reality I do not think it would happen.

[fletch70]

I suppose it is a fine line and open to interpretation because the cause of action is when a creditor would have been able to ...so it would suggest to me that at what point could they issue a DN and as such what is the earliest point they could have demanded full repayment . Then we get into the realms of unfair business practice.

 

Here is an example

RBS group tend not to sell on their debts (at least in my experience) but also tend to issue rather crappy DN's. If we take what you say is true they could issue a claim at say 8 years , you file a defence of SB so they then say oops sorry the DN is bad so it is not terminated reissue a valid DN and there you go, another 6 years. I know that is unlikely

[Peterbard]

I suppose it is a fine line and open to interpretation because the cause of action is when a creditor would have been able to ...so it would suggest to me that at what point could they issue a DN and as such what is the earliest point they could have demanded full repayment . Then we get into the realms of unfair business practice.

 

Here is an example

RBS group tend not to sell on their debts (at least in my experience) but also tend to issue rather crappy DN's. If we take what you say is true they could issue a claim at say 8 years , you file a defence of SB so they then say oops sorry the DN is bad so it is not terminated reissue a valid DN and there you go, another 6 years. I know that is unlikely

 

 

Yes it did occur to me, however would the court allow such a thing ? They purported to terminate the agreement eight years earlier, can the just change their minds, I think that as well as a common sense approach there may well be estoppel problems.

[Peterbard]

I must say that at least now we are discussing the right issues, the law regarding SOL cause of action is clear and inescapable.

[fletch70]

The issue I think is that for as many arguments you put forward there are other people saying differently.

For example NDL

To be fair to the Brig the OFT guidelines do indeed state 6 years of no payments although they are the guidelines on debt collection so it would be fair to assume that the accounts have already been defaulted.

Some of the DCA's refer to entry dates with CRA however we know there does not need to be a S87 DN for an entry to be made

 

In any event I am pretty sorted as all my debts have long ago been defaulted or were fixed sum loans over a specific period and that period is up but it is not about me but about others.

 

Going back to the issue of when it starts and could it be interpreted as the earliest time they were entitled to claim rather than the time they actually followed the process . That scenario relies on a common sense approach and we all know that judges have heaps of that and never make mistakes:roll:

[Peterbard]

The issue I think is that for as many arguments you put forward there are other people saying differently.

For example NDL

To be fair to the Brig the OFT guidelines do indeed state 6 years of no payments although they are the guidelines on debt collection so it would be fair to assume that the accounts have already been defaulted.

Some of the DCA's refer to entry dates with CRA however we know there does not need to be a S87 DN for an entry to be made

 

In any event I am pretty sorted as all my debts have long ago been defaulted or were fixed sum loans over a specific period and that period is up but it is not about me but about others.

 

Going back to the issue of when it starts and could it be interpreted as the earliest time they were entitled to claim rather than the time they actually followed the process . That scenario relies on a common sense approach and we all know that judges have heaps of that and never make mistakes:roll:

 

Actually the OFT guidelines substantiate the view, as they would, it is not really arguable. Many on here understand the mechanisms involved, it is not popular like many facts, so they keep their heads down. Once the reality is accepted it will be quoted by everyone and these disagreements will be forgotten, I have seen this before.

[fletch70]

Dodge, not sure why yo suggest the OFT guidelines substantiate the view as I thought they were a little ambiguous

 

Not being argumentative just seeking clarification. Would be nice if some of the site team gave some input on this don't you think?

 

It is still clear as mud to me as exactly what a court would accept as all circumstances are different

[Peterbard]

Have a look for yourself, it identifies the COA and also the acknowledgement as different functions,. which of course they are, if only acknowledgement was the issue why mention the COA ?

 

Also why would you presume the site team are any better informed than anyone else, some may be, some most certainly are not, without being presumptuous their function is to maintain order, not to be the fonts of wisdom. Although I stand to be corrected.

[fletch70]

I have looked myself and can not see anything definitive that is why I was asking.

 

The site team are in some cases experts in their fields or at the very least have a duty to protect the integrity of the site and try to make sure inaccurate information is corrected

[Peterbard]

I have looked myself and can not see anything definitive that is why I was asking.

 

The site team are in some cases experts in their fields or at the very least have a duty to protect the integrity of the site and try to make sure inaccurate information is corrected

 

I would dissagree about any duty to correct information.

 

As for the OFT guidance, print it up.

[sequenci]

the answer to this is that it really does depend.

 

Let's go back to the case of Reeves v Butcher [1891] 2 QB 509

- 'It has always been held that the statute runs from the earliest time at which an action can be brought'.

 

s38(1) of the Limitation Act 1980 defines 'action' as 'any proceedings in a court of law'.

 

What's important to remember that the cause of action is the very first point in which a creditor can sue.

 

- So for CCA regulated debts, like loans and credit cards, that is unlikely to be the point where payments stop.

 

Now, it always used to be the case that the cause of action would begin when a creditor could first sue as per the terms of the contract

- so typically that may mean a number of missed payments, a default and potentially a termination notice.

 

The OFT thought so too, they stated that the default notice requirement was simply a 'procedural bar'.

 

Of course, things have been shaked up a little due to the BMW v Hart case where,

- on the face of it,

- the cause of action may be able to be delayed until the termination notice has been served.

 

In short,

could a creditor really delay this until a point in time of their choice?

 

I'm not so sure

- but I would imagine this case will polarise opinion massively.

And people may need to get their distinguishing caps on.

 

I understand for a start that BMW v Hart was all to do with an unregulated HP agreement.

 

I think it's also important to bear in mind that in some cases the cause of action will start once the demand for payment is first made.

 

For example - some overdrafts could run and run for years until the bank calls it in - It's at that point that the six years will begin..

 

Not all debts are going to fall under section 5, some that we often find on here may fall under s6.

[Peterbard]

Yes I agree mostly, however to my mind the BMW case just ratified what was already apparent. That is simply the COA cannot commence until proceedings for the recovery of the debt could commence.

 

Some overdrafts are different in that they can be recalled and terminated under a clause in the agreement, the cca allows for this.(section 76)

[fletch70]

Dodge, print it up?

I have it in PDF on my PC

 

 

Sequenci I would say thanks but I am still confused. As you say it does seem to be polarising opinion but if I read you correctly the one thing we can be sure of is that it is not the time of the last regular contractual payment?

[sequenci]

Yes I agree mostly, however to my mind the BMW case just ratified what was already apparent. That is simply the COA cannot commence until proceedings for the recovery of the debt could commence.

 

Don't think that this will be the end of it, though, and I'm still surprised by the outcome of that case, as people feel that the cause of action *should* run from the point in time in which the creditor could have sued. So if that's, say, after 2 or 3 months - that's when it should begin. The arguments of procedural bars may come back into the fold. And I really hope that they do.

[Peterbard]

Don't think that this will be the end of it, though, and I'm still surprised by the outcome of that case, as people feel that the cause of action *should* run from the point in time in which the creditor could have sued. So if that's, say, after 2 or 3 months - that's when it should begin. The arguments of procedural bars may come back into the fold. And I really hope that they do.

 

Yes you would hope that common sense would come into play at some point, in practice i suspect that the issue of prolonging COA on open ended agreements would be a rare occurrence because creditors usually like to be able to enforce at the earliest possible juncture.

[sequenci]

Yes you would hope that common sense would come into play at some point, in practice i suspect that the issue of prolonging COA on open ended agreements would be a rare occurrence because creditors usually like to be able to enforce at the earliest possible juncture.

 

True, though you can imagine squillions of DCAs arguing that they've never sent default or termination notices to mislead people about the cause of action. I've a feeling things may get messy.

[Peterbard]

True, though you can imagine squillions of DCAs arguing that they've never sent default or termination notices to mislead people about the cause of action. I've a feeling things may get messy.

 

Indeed, and the issue that should be addressed IMO. I seem to remember that the Irish version states that the COA on open ended agreements commences when the first demand for full payment is sent, not sure if that is any better.

[sequenci]

 

Sequenci I would say thanks but I am still confused. As you say it does seem to be polarising opinion but if I read you correctly the one thing we can be sure of is that it is not the time of the last regular contractual payment?

 

That's not usually the case when it comes to the initial cause of action. Think about it. If you have a credit card and have been paying on time each month. The creditor cannot sue you the minute you miss the first payment - there needs to be a cotractual breach first - and this is usually governed by the terms of the contract.

 

Once the cause of action starts if payments are made the 6 years will be reset by every payment (provided there hasn't been a six year gap of course).