Unenforceability & Template Letters II

never-in-doubt

leemuddywaters wrote: »

The DCA contacted me this morning offering a settlement figure of £3000, the balance is £3570.

I'd limit that to £1500 - bear in mind what they paid for it (probs 12p in the £) :beer:

leemuddywaters

never-in-doubt wrote: »

I'd limit that to £1500 - bear in mind what they paid for it (probs 12p in the £) :beer:

Well they didn't offer in exchange for removal of the default.

What are the actual chances of having this removed? Any success stories?

never-in-doubt

leemuddywaters wrote: »

Well they didn't offer in exchange for removal of the default.

What are the actual chances of having this removed? Any success stories?

They won't - you need to make that offer in writing (it also shows the court - if it gets that far - you wanted to repay the debt and tried everything to get it sorted).....

Regards to success - yea, a few people have been successful - thus the letter template exists..... If there were no successes then the letter would be obsolete

never-in-doubt

moo_cow wrote: »

thanks NID, that's perfect. Do you think this good news for me? They've had so much out of me and I certainly don't owe what they are trying to get out of me.

Yes it is good news, they have kinda admitted they have no agreement, so send the letter as detailed in last post to you and see what they come back with

You should not be paying anything right now anyway...

never-in-doubt

terimon wrote: »

36 years old. And this is the worst situation i have ever been in since i was 18. I was even better off when i was at Uni

Ahhh a couple of years younger than me then

Come on mate, all students are loaded - - - with the banks money :rotfl::rotfl::rotfl:

leemuddywaters

never-in-doubt wrote: »

They won't - you need to make that offer in writing (it also shows the court - if it gets that far - you wanted to repay the debt and tried everything to get it sorted).....

Regards to success - yea, a few people have been successful - thus the letter template exists..... If there were no successes then the letter would be obsolete

NID, Your gonna have to start charging for all this advice! Would you recommend going in with an offer of 20% first then. And not bother with the CCA request.

never-in-doubt

leemuddywaters wrote: »

NID, Your gonna have to start charging for all this advice! Would you recommend going in with an offer of 20% first then. And not bother with the CCA request.

I cannot charge people - hahaha!

Ok, so your balance is £3570 - offer £800 then move to £1250, then £1500 then £1750 and stop there. Should take about 6 weeks to sort out a firm no or yes

leemuddywaters

never-in-doubt wrote: »

I cannot charge people - hahaha!

Ok, so your balance is £3570 - offer £800 then move to £1250, then £1500 then £1750 and stop there. Should take about 6 weeks to sort out a firm no or yes

Thanks, Ill get the letters off this week, with the settled default I will send a CCA.

Scouse19

Hi NID

I have sent that letter to the bank so lets see what they come back with. Can I just ask, what is the relevance of McGuffick vs RBS to us who are querying unenforceability? Surely the templates posted on page 1 of this thread are not as valid as they were due to the fact that in them we tell lenders that they are unable to chase for debt whilst they are in default as that is enforcement action. Doesn't the test case above say that reporting to CRA's, having DCA's chase, calling or sending letters and threatening court action is not classed as enforcement...the judge ruled that they are steps towards enforcement, not actual enforcement??? Just want to clarify where we all stand now as the templates seem to me to be technically not correct anymore which is unfortunate :-(

never-in-doubt

Scouse19 wrote: »

Hi NID

I have sent that letter to the bank so lets see what they come back with. Can I just ask, what is the relevance of McGuffick vs RBS to us who are querying unenforceability? Surely the templates posted on page 1 of this thread are not as valid as they were due to the fact that in them we tell lenders that they are unable to chase for debt whilst they are in default as that is enforcement action. Doesn't the test case above say that reporting to CRA's, having DCA's chase, calling or sending letters and threatening court action is not classed as enforcement...the judge ruled that they are steps towards enforcement, not actual enforcement??? Just want to clarify where we all stand now as the templates seem to me to be technically not correct anymore which is unfortunate :-(

Yea, that judgement only relates to the passage of data between the lender and you with the CRA's but there is a back door.... my letter on page 1 which tells the CRA's to remove the information or we'll sue them for libel. Obviously they don't want to take that 'chance' and so they remove the data.

For a summary of the McGuffick vs RBS Judgement, click here: http://www.stonechambers.com/cases/phillip-mcguffick-v-the-royal-bank-of-scotland-plc--2009--ewhc-2386---consumer-credit.asp

Phillip McGuffick v The Royal Bank of Scotland plc [2009] EWHC 2386 (Comm)

Consumer Credit Act 1974 - Test Case

Andrew Moran QC was involved in this case which was one of a large number of claims before County Courts all over the country concerning the effect of section 77 of the Consumer Credit Act 1974 on loan agreements and other credit arrangements regulated by that Act; it was transferred to the Commercial Court as a test case.

Section 77(1) requires a creditor, upon receipt of a written request and payment of a fee, to provide a debtor with a copy of the executed agreement and of any other document referred to in it, together with a statement signed on behalf of the creditor providing details of the total sums which have been paid, have become payable and will become payable under the agreement. Section 77(4) provides that if a creditor fails to comply with s.77(1) within the prescribed period it is not entitled to enforce the agreement.

In this case the claimant entered into a fixed-sum regulated loan agreement with the defendant bank and fell into arrears of payments. The bank served a default notice together with a standard form letter containing a threat to report information about the agreement to Credit Rating Agencies ("CRAs"). The claimant made a request for information pursuant to s.77(1) of the Act. The bank failed to comply and during the period of non-compliance with s.77(1) it advised the claimant that although it was unable to enforce repayment the agreement was not void and that any continuing default would be reported to CRAs.

The claimant issued proceedings for a declaration of unenforceability and injunctive relief relating to the reporting to CRAs. Amongst the issues for decision were two points that arise regularly in consumer credit proceedings and in relation to which there is little or no authority, these were:

• Firstly, what happens to the debtor's obligation or liability to repay during the period of non-compliance with s.77(1) and corresponding unenforceability under s.77(4); is it extinguished or does it continue?

• Secondly, does reporting or threatening to report to CRAs amount to "enforcement" within the meaning in s.77(4)?

The claimant contended that during the period of non-compliance with s.77(1) the debtor's obligation or liability to repay was extinguished and accordingly the bank ought to be deprived of its right to enforce repayment by taking coercive action - such as reporting or threatening the report to CRAs - to compel or secure performance of the extinguished obligation or liability.
Flaux J dismissed the claim and made the following important findings:

• During the period of non-compliance with s.77(1) a creditor's rights under the agreement and debtor's corresponding liability are not extinguished, s.77(4) simply provides for a restriction on their enforcement.

• Flaux J was not persuaded that that the House of Lords decision in Wilson v First County Trust Limited (No. 2) [2004] 1 AC 816 was authority for an alternative construction of s.77(4). To the extent that there are passages in the judgments of the House of Lords which suggest that unenforceability under s.65 and s 127 of the Act may correspond with the extinction of rights, Flaux J held that these were contrary to earlier authorities, which were not cited to their Lordships and were obiter and thus not binding on the court.

• Even if wrong on his analysis of Wilson, Flaux J stated that his decision on s.77(4) would remain the same as there is a distinction between the case to which s.65 applies, where the bank's rights are always restricted from the outset and the case to which s.77(1) applies, where the agreement is valid and enforceable until the bank's failure to comply with s.77(1) and the agreement becomes fully enforceable again once the request has been complied with. Flaux J also drew support for his analysis from s.77A(6)(c)(ii) of the Consumer Credit Act 2006, which recognises that the debtor has continuing obligations during a period of unenforceability resulting from non-compliance with this provision.

• Reporting or threatening to report the state of the claimant's account to CRAs is not a coercive tool in the hands of the bank, but rather an essential aspect of responsible lending and of the licensing process. Further, reporting or threatening to report to CRAs did not come anyway near amounting to "enforcement" within the meaning in s.77(4). Flaux J referred to Rankine v American Express Services Europe Ltd [2009] CCLR 3 in support of his conclusion; in that case HHJ Browne QC concluded that bringing proceedings is only a step taken with a view to enforcement and not actually enforcement.

This decision brings welcome clarification to the rights and liabilities of the creditor and debtor during periods of unenforceability under the Act; the balance has been firmly tipped in favour of the creditor. For those debtors wanting to protect their credit rating it now appears that the only option is to keep making repayments, even if they have a legitimate complaint or perhaps (depending on the facts) even if they have obtained an order of injunction requiring delivery of the agreement.