Defaults and Statute Barred Debts

Cosmo312

Hi everyone, wondering if someone could help with this?

Am I correct in the following -

A defaulted account (settled or not) is removed from your credit file 6 years following the default date.

If you made a payment to the account after the default date the account is still removed 6 years following the date of the default.

Does a debt become Statute Barred 6 years following the last payment to the account or is it simply 6 years following the default date?

Hope that makes sense!

Thanks for any advice.

fermi

The default date has nothing at all to do with it.

The 6 year period first starts on the "cause of action".

For most debts, that is the first time that you missed a payment that was legally due.

Then, once that initial "cause of action" has accrued, each later payment or acknowledgement by you restarts the 6 year clock.

So can be different dates depending on what exactly you did.

If (a), you just stop paying and never later acknowledge or make a payment, then the 6 years runs from the date of the first missed payment.

Or if (b), at some point later you do acknowledge or pay, then the 6 years runs from the date of that acknowledgement or payment.

fermi

From an advisor's training course.

A cause of action can still accrue (i.e. time starts to run) even though a claimant is prevented from suing by a statutory procedural requirement which precludes the issue of proceedings.

In Swansea City Council v Glass (1992) the local authority brought a claim against a landlord for reimbursement of the cost it had incurred in repairing a house in multiple occupation. The issue was whether the cause of action accrued when the work had been completed or or only when the local authority had served a written notice demanding payment as required by The Housing Act 1957. The Court of Appeal held that the statutory requirement for a written notice was a procedural matter and that time ran from the date that the costs were incurred and the work completed. If this were not the case the local authority could prevent time from running indefinitely simply by not serving the statutory notice.

In respect of an agreement regulated by the Consumer Credit Act, the question is whether the time runs from the date of actual default by the debtor or from the date of (or the date of expiry of) the default notice that must be served under s87 CCA1974.

The situation is analogous to the Swansea City Council case in that the requirement for the service of a the default notice is a procedural matter that does not form part of the cause of action. It does not affect the creditor's right to payment but only the procedure for enforcing it. If this were not the position, a creditor could delay the running of time indefinitely by not serving a default notice.

This view was supported by West Bromwich Building Society v Wilkinson (2005), where the House of Lords stated that it would be 'strange if a lender could stop time running by its own act'

Cosmo312

fermi wrote: »

The default date has nothing at all to do with it.

The 6 year period first starts on the "cause of action".

For most debts, that is the first time that you missed a payment that was legally due.

Then, once that initial "cause of action" has accrued, each later payment or acknowledgement by you restarts the 6 year clock.

So can be different dates depending on what exactly you did.

If (a), you just stop paying and never later acknowledge or make a payment, then the 6 years runs from the date of the first missed payment.

Or if (b), at some point later you do acknowledge or pay, then the 6 years runs from the date of that acknowledgement or payment.

Thank you Fermi.

Ok then, so if for example the original default date was Feb 2006, generally speaking the defaulted account would fall off your file in Feb 2012.

If I made a random payment to the account in say Sept 2006, the Statute Barred clock starts then?

Does the a/c still fall off my credit file in Feb 2012 or does it stay on till Sept 2012?

Thanks for your help with this - I'm struggling to get my head around it.

fermi

Yep. It can be a bit of a struggle to understand.

But in this case.......

Cosmo312 wrote: »

If I made a random payment to the account in say Sept 2006, the Statute Barred clock starts then?

Yes it would.

Cosmo312 wrote: »

Does the a/c still fall off my credit file in Feb 2012 or does it stay on till Sept 2012?

The default would still come off in Feb 2012. 6 years after it was first placed.

The date the 6 years runs from for the default has nothing at all to do with the date for when the debt is statute barred.

They just both happen to be 6 year periods, so naturally people get them mixed up or think one depends upon the other. They don't.

Cosmo312

Thank you so much Fermi, that makes sense now.

timbstoke

Also worth noting that it doesn't have to be a payment. To take your example above, If they call you in March 2010 to discuss your account, and you pass their security checks and confirm that you have an outstanding balance, the 6 year Statute Barred clock starts again even though no payment has been made.

Cosmo312

timbstoke wrote: »

Also worth noting that it doesn't have to be a payment. To take your example above, If they call you in March 2010 to discuss your account, and you pass their security checks and confirm that you have an outstanding balance, the 6 year Statute Barred clock starts again even though no payment has been made.

Yep, I understand that. It is an acknowledgement of the debt that starts the clock again, not just a payment.

For clarity, I'm sorting this out for my husband who previously had a tendancy to stick his head in the sand so I'm sure he won't have acknowledged anything. It's just the payment dates that worry me.

I don't mind if we have to pay the debt, if it turns out it is his and not yet another that his ex-wife ran up in his name. It's his credit file being clear we need. If the account falls off his file after 6 years of the default then that's all we are concerned with.

fermi

timbstoke wrote: »

Also worth noting that it doesn't have to be a payment. To take your example above, If they call you in March 2010 to discuss your account, and you pass their security checks and confirm that you have an outstanding balance, the 6 year Statute Barred clock starts again even though no payment has been made.

Not true at all. :eek:

To count, acknowledgement MUST be in writing and signed by the debtor.

Phone calls, no matter what happens, even if recorded, do not count.

See : http://forums.moneysavingexpert.com/showpost.php?p=34906357&postcount=7

timbstoke

fermi wrote: »

Not true at all. :eek:

To count, acknowledgement MUST be in writing and signed by the debtor.

Phone calls, no matter what happens, even if recorded, do not count.

See : http://forums.moneysavingexpert.com/showpost.php?p=34906357&postcount=7

Ah, I always like to be proven wrong when the result is a good thing :-) Useful information, thanks!

ST55

Does this mean that you HAVE to write to the creditor for the clock to restart. Its taking a while for me to get my head around it, apologies