Default removal - Is this a reasonable argument?

[maangov]

Hi all,

 

I wish to have a default removed from my record, which i believe was applied as a result of illegal charges. It's not as straight forward as the usual, 'If your default is made up all/mostly charges, there are grounds for removal'. My situation is this:

 

HSBC closed my CC and put a default on my record on 19/11/2004, for the sum of £1,299, due to poor history. Calculating charges on this account, sums up to £180.00 plus £15.76 interest payments. These charges obviously aren't the reason i defaulted. (interestingly i have statements upto Feb 2005 for this account!)

My only other account at the time was my HSBC Current Account. This recieved all my monies, and was used to fund my HSBC credit card. At the time of default on my CC, i had illegal charges amounting to £1036.50. My current account balance was at -£996.37 (OD limit of £1000). I therefore had difficulties meeting my payments.

My argument is this. Had HSBC not taken my monies unlwafully from my current acccount, i would have had sufficient funding to pay off my CC. Also, they technically had my money at the time, so should i argue that i was not in arrears with them, as they did have (1036.50+ 180.00 + £15.76 = £1232.26) of my money?

Is this argument strong enough in your opinion? I really do believe their handling of my account, forced me to use a CC i would otherwise not of needed.

Regards

Mike

[bobflemming]

Hi, Mike,

 

I was thinking the exact same thing last night. My situation was identical to this albeit with Natwest bank and their credit card. I came up to the same conclusion as you. Im just waiting for the credit card statements to come through to take this further.

 

Has anyone else used this reasoning to a good outcome?

Perhaps a Mod could help us with this idea.

 

Bob

[Stornoway]

I'm in a similar but slightly better position. First direct withdrew my current account facilities (nil balance at the time) and transferred my credit card balance to my current account before passing to a DCA. I'm claiming charges (including interest) on the current account of more than the credit card balance so very hopeful of getting default removed.

[bobflemming]

Hi Stornoway, that makes things a little easier. In my case im claiming bank charges just under £5000 and credit card for £800 + default removal. Obviously I dont want both claims going through at the same time in case they combine them and I end up being fast tracked.

 

So i'll being asking the credit card people (different address) to remove the default because of issues with my curent account.... same company but different section, and because they will be separate claims it could get interesting.

[lookinforinfo]

Maangov, I am not sure that ridding yourself of the default is going to be

that easy. As I understand it, you are trying to offset the unlawful charges

on your current account, on which you don't have a default, with a cc

account which only includes a minimum of unlawful charges, but which does

have a default attached.

 

If I read your post correctly, you owe £1299 on your cc and £996.37 on your

current account. Even were they to offset your unlawful charges, they

would surely start by your current account ie £1036.50-£996.37]=£40.13.

Then they would transfer and add the £40.13 on to the unlawful charges and

interest on the cc ie £40.13+£180+£15.76 =£235.89 and when you remove

that fronm the credit card debt, it still leaves a deficit of £1064.10.

 

And if they didn't agree to offset, the figure would not be that much different.

[bobflemming]

Lookinforinfo,

 

The issue is that because money is being taken to cover bank charges from our bank accounts, maangov (and myself) were unable to pay the minimum credit card payment. Had the bank not charged us the unfair fee's that they did then we would have far more in our bank accounts at the end of each month and would probably been in a possition to pay the cc payment each month.

[lookinforinfo]

Oh I know how it works Bob-I've got the same T-shirt.

I have only looked at Maangovs' post and as I said in my response, even

taking out the unlawful charges, there still appears to be a £1000 debt, so the chances of getting the default removed on those grounds seem slim.

[maangov]

Hi all, Thanks for taking the time to reply.

 

Lookforinfo - I'm sorry but i'm a little confused! At this moment in time, my CC debt has been fully paid off, and my current account stands at 0 (if it makes a difference).

 

At that point in time, (19/11/2004) i did have a CC balance of £1,299, however had unlawfull charges not been applied, i would of been able to use my 1036.50, to pay off this card (mostly) and live in my authorised overdraft. Agreed i would still owe the bank money, however i would of been happy to do this for numerous reasons.

 

I realise I havent included interest on charges which HSBC had taken either (£199.17).

 

All in all on 19/11/2004. HSBC owed me Charges (CC + Current) + Interest on charges (CC + Current), which is £1216.50 (180+1036.50) plus £214.93 (15.76+199.17). A grand total of £1431.43. This is money i would of used to clear my CC balance, and the remainder would of been in my current account, thus reducing my £1000 authorised overdraft to £868.56.

 

Does this make sense and hold up? HSBC were stealing from one hand, forcing me to use, and preventing me from paying the other.

 

The other way to look at it is as bobflemming mentions. They were preventing me from making payments. I simply couldn't affford it with all their illegal charges!

 

Gratefull for any further views.

 

Thanks guys

Mike

[lookinforinfo]

Maangov, I am sorry-I misread your current account situation and you are

right in your assessment.

That being said, your chances of getting the default removed would, in my

opinion, [not sure why you would take my opinion when my first one was so wrong ]be easier to achieve if you were to reclaim your unlawful charges

with an additional claim to have the default removed at the same time, rather

than just going for a removal of the default on its own, which is what you

appear to be suggesting at the moment.

[maangov]

Hi lookforinfo,

 

Thanks for taking the time to revisit, and follow this up. I know how hard it is to try and understand what i'm trying to explain!

 

I'm currently at the stage where i sent an LBA for the full amount of Current Account Charges, and also CC charges. HSBC have offered me £1030 for my current account, and referred my CC to another dept. My LBA asked for default removal using the standard statement. I'm not refusing or accepting until i've decided what to do on the default front.

 

When you suggest an additional claim, how do you mean in practice? Drop the default claim in my LBA? Of kep it there under this argument? I was thinking it may get to the stage where i issue a court claim for refund and default removal, they offer me the full amounts, but refuse to remove the default. I would then continue this into court and let the judge decide. Is this what your suggesting?

 

Thanks for your help so far!

Mike

[maangov]

Ok i have drafted letters now. Hopefully this will get as far as court, and i can then request removal.

 

Gratefull for any further comments

 

Mike

[Glenn UK]

If i have understood the issues i thin you will have difficulty getting the default removed.

 

Here goes and Ive probably read it wrong too but anyway.

 

There was a CC which had a default registered on it.

 

At the same time the Current Account had large amounts of charges on it which you state caused you to default on the credit card.

 

I think the bank would argue and the courts would probably see that both accounts had debit balances at the time, and you couldn't pay them off.

 

I think life's **** and the banks suck, sadly i think you are on a loser.

 

That doesn't mean you cant give it a try, I would if it were me, but i think it has to be try in the expectation that you wont win easily and then if you its a real bonus.

 

If you have a look around as far as I'm aware removal of defaults is one of the things banks have been resisting pretty hard.

 

JMHO

 

Glenn

[maangov]

Thanks Glenn you have understood correctly, i appreciate your opinions. I understand this isn't going to be an easy fight, but i'm prepared to give it a go!

 

If they make me a full settlement offer for the charges, but won't remove the default, do i continue to court just to fight out the default removal? Or does the whole case get heard?

 

If i then lose, do i get my MCOL costs back?

 

I'm hoping to fight it out!

 

Cheers

Mike

[lookinforinfo]

Glenn, Maangov is working on the prmise that it was the unlawful charges on

her current account [£1036] that forced the situation.

In the light of the charges on the c/c being only £180, I assume that his

credit limit would have been £1000, the same as the overdraft limit. Had the bank not taken that money, then both accounts could have been running at

around £600 each in the red- [1299+996= 2295-1036= 1232] that is without

taking interest and another £200 off into account.

So to register a default of over £1000 when the total debt would have been

within the limits of the accounts [even if the c/c limit was only £500] does

seem hard to justify.

[lookinforinfo]

Maangov-I did not know you were as far advanced as the LBA stage. Your

first post only asked if we thought you were justified in asking for the default to be removed.

As you have already asked for your bank charges back and default to be

removed, that is what I meant in my earlier post.

 

I think Glenn is probably better equipped to advise on whether to accept the

offer of your £1036 back, or continue to push for the default removal as well.

 

My own view is that they won't want to challenge you over a default in

Court, but if it does go to Court, the Judge might rule against you and maybe

even the £1036 might be in jeopardy? Glenn?

[maangov]

Ah yes, sorry lookforinfo, my first post didn't make it clear.

 

Yes indeed, this is my next worry. I'm fairly sure i will get the full settlement offer, but i doubt they'd give in and offer removal. In that case, i'd like to carry on to court, but obviously not if it would risk losing it all!

 

This is where i am now unsure! What would get discussed in court? Would the bank just drop it as they'd have to discuss the charges and the default, or would the just discuss the default? If they didn't attend, do i win anyway, or does the judge decide?

 

Thanks for all your help so far guys.

Mike

[Glenn UK]

Glenn, Maangov is working on the prmise that it was the unlawful charges on

her current account [£1036] that forced the situation.

In the light of the charges on the c/c being only £180, I assume that his

credit limit would have been £1000, the same as the overdraft limit. Had the bank not taken that money, then both accounts could have been running at

around £600 each in the red- [1299+996= 2295-1036= 1232] that is without

taking interest and another £200 off into account.

So to register a default of over £1000 when the total debt would have been

within the limits of the accounts [even if the c/c limit was only £500] does

seem hard to justify.

 

I realise what thee argument is, i think the problem is that you have to get a judge to buy into the fact that although you owed money on both accounts, that it was the other account that caused this problem.

 

I don't have a problem seeing the logic. However, you have to get in front of a judge to argue that point along with the unlawfulness of the charges.

 

There are other issues as well, if the claimant was overdrawn/over their limit the Defendant was within their rights to withdraw that facility.

 

I am not trying to say they were right, only trying to point out how difficult it can be and how muddy the water will get.

 

Re going to court over the default, on its own id say don't bother, you could win but you would have to be very well prepared/knowledgeable, you may be the person for that i don't know.

 

There have been some new letter templates posted in the template library about rejection/acceptance of offers designed specifically to help claimants keep their claims in a state that means the bank cant 'split' the claim up, settle the bits they want to and leave the rest making it effectively impossible for the claimant to settle for he lot.

 

Use one of those when you accept/reject the partial offer and proceed would be my view.

 

HTH

 

Glenn

[dayglo]

as requested, I've popped over to have a look to see if I can help but you appear to have had the same advice that I would give.

 

if you do decide to go for default removal later on as a sep. claim then your first one will have no bearing on the second I don't think. Not my area of expertise I'm afraid - there's a lot of very subtle differences in the default removal world and it's a damn sight harder to establish a definite flowchart or process for all of it!

 

good luck.

[maangov]

Thanks Dayglo, appreciate you taking the time to look.

 

I'll procede in this manner, with S10 as a fallback.

 

Thanks

Mike

[shayshay]

I have had judgement passed on my charges from Abbey for just under £3k, plus I asked for the default. Should that happen automatically or would I need to pursue that as well?

[dayglo]

if you've obtained a judgement that includes default removal then yes of course it should happen... but as ever..... I'd chase up daily until it's gone!

[maangov]

Hi all,

 

I've comiled my POC:

 

IN THE xxxxx

IN THE CASE BETWEEN:

xxxx

CLAIMANT

- and -

HSBC BANK PLC

DEFENDANT

Particulars of Claim

 

1. The Claimant had an HSBC CURRENT ACCOUNT: xxxxxxxxx and HSBC CREDIT CARD ACCOUNT: xxxxxxxxxxxx ("the Accounts") with the Defendant. The current account was opened on or around xx/xx/xxxx, and the credit card account was opened on or around xx/xx/xxxx

 

2. The Accounts are governed by the Defendant’s Personal Banking Terms and Conditions (“the contracts”)

 

3. During the period in which the Accounts have been operating the Defendant has debited numerous charges to the Accounts in respect of purported breaches of contract on the part of the Claimant and also charged interest on the charges once applied.

 

4. The Claimant understands that the Defendant contends that the charges were debited in accordance with the terms of the contracts between itself and the Claimant.

 

5. Two schedules of charges are attached to these particulars of claim.

 

6. The Claimant will further rely on the Office of Fair Trading’s (“the OFT”) statement of 5th April 2006 concerning default charges in credit card contracts, as the OFT’s recommendations regarding standard default terms in credit card contracts have wider implications, as regards bank current Account agreements.

 

7. The Claimant thus contends that:

a) The charges debited to the Accounts:

i) are punitive in nature;

ii) are not a genuine pre-estimate of cost incurred by the Defendant;

iii) exceed any alleged actual loss to the Defendant in respect of any breaches of contract

on the part of the Claimant;

iv) are not intended to represent or relate to any alleged actual loss, but instead unduly enrich the Defendant which exercises the contractual term in respect of such charges with a view to profit.

 

b) Further to 7.a), the charges debited to the Accounts are penalties rather than liquidated damages. A charge is held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach. A penalty clause is void in its entirety and unenforceable. The precedent for this was Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, along with Murray v Leisure Play [2005] EWCA Civ 963. It was held that a contractual party can only recover damages for an actual loss or liquidated losses. It is clear that these charges do not reflect any actual and or real loss

 

c) The contractual provision that permits the Defendant to levy such charges is unenforceable by virtue of the Unfair Contract Terms in Consumer Contracts Regulations (1999), the Unfair Contract Terms Act 1977 and the common law.

 

d) In the alternative to 7.a), b) and c), if the Court finds that the charges are not a penalty, then the Claimant contends that they are unreasonable within the meaning of s.15 Supply of Goods and Services Act 1982

 

8. Contractual Interest

a) The Claimant claims compound interest on the amounts claimed under the principle of mutuality and reciprocity in the contract between the Claimant and the Defendant, using the rate and method specified in the said contract, and as is applied by the Defendant to monies it is owed.

 

b) The Claimant’s grounds for seeking restitution of the compounded contractual rate of interest is that the Defendant would be unjustly enriched if the Claimant's entitlement was limited to the statutory rate of interest in that the Defendant has had use of the sums and would have used these sums to re-lend at commercial compounded rates.

 

c) The Claimant contends that the taking of unlawful penalties from the Claimant’s Accounts is unauthorised borrowing by the Defendant. Therefore, under the principle of mutuality and reciprocity in the contract between the Claimant and the Defendant, in the first instance the Claimant has calculated compound interest originally charged by the defendant, being 25.90%.

 

d) In the alternative to 8.c), if the Court decides that the Claimant is not entitled to the contractual rate of interest under the principle of mutuality and reciprocity in the contract between the Claimant and the Defendant, then the Claimant has calculated interest under section 69 County Courts Act (1984) at the rate of 8% a year

 

e) Details of charges, interest calculated & rates used are attached to these Particulars of Claim as follows:

Schedule A

– Details of charges applied to claimants current account

Schedule B

– Compound interest on current account charges, calculated daily at an annual rate of 15.90%

Schedule C

– Statutory

interest on current account charges under s.69 of the County Courts Act 1984 at an annual rate of 8.00%

Schedule D

– Compound interest on credit card account charges, calculated daily at an annual rate of 15.90%

Schedule E

– Statutory

interest on credit card account charges, under s.69 of the County Courts Act 1984 at an annual rate of 8.00%

 

9. Accordingly, the Claimant claims:

a) The return of the amounts debited between xx/xx/xxxxand xx/xx/xxxx in respect of charges in the sum of £1xxx.xx

 

b) The removal of the default applied to the Claimants Credit file by HSBC. Under section 14 of the Data Protection Act 1998, a Court has the authority to order the removal of inaccurate data. It is my belief that HSBC Bank PLC entered details of this default solely due to the level of unlawful charges imposed on my bank account prior to May 2006, specifically that the default amount was the sum of £xxxxxx and the level of unlawful charges was £xxxxxx

 

Further, under section 13 of the Data Protection Act, it is possible to claim for compensation for failure to comply with the requirements of section 14. Whilst not part of my existing claim, I shall retain the right of further action under this clause in the future, should I see fit.

 

c) All applicable Court fees

 

d) Contractual interest at an annual 15.90 % compounded daily from the date of each transaction to 21st February

2007 of £xxxx.xx, as detailed in Schedules B and D attached hereto, and also interest at the same rate, from this date, up to the date of judgment or earlier payment, at a daily rate of £x.xx

 

e) In the alternative to 9.d), interest under section 69 County Courts Act (1984) at the rate of 8% a year, from the date of each transaction to 21st February 2007 of £xxx.xx, as detailed in Schedules C and E attached

hereto,

and also interest at the same rate, from this date, up to the date of judgment or earlier, payment at a daily rate of £x.xx

 

Statement of Truth

 

Dated this 28th February, 2007

I believe that the facts stated in these particulars of claim are true.

 

Signed:

Claimant

Given the situation i am in regarding the default, do i need to be more specific, of does the POC work ok?

Gratefull for any comments

MA