Lender has terminated my loan in error, where do I stand

cos_2

Um

http://legal-dictionary.thefreedictionary.com/Rescission+of+contract

charlie3090

Op,
if you are so sure that you are correct,why all the fuss?,
a lot of good people have tried to help and advise you and they mainly speak from experience.
I have followed this thread and right from the start you were not prepared to listen to any viewpoint other than your own.
call me stupid and misguided if you like but i think you are in for a bit of a surprise,however right you think you are,
i hope you get the result you want,
C.

redpete

Away for a couple of days and the thread has exploded - sort of.

If I'd realised that the OP was looking for a legal loophole to get out of paying off the debt rather than wanting to know how best to sort out a mistake (by the lender) I wouldn't have posted what I did. I might have posted something else though, something more critical sarcastic and rude.

simon_the_poet

HI Conrad. Was this a credit card account?

Sorry if any of this has been covered before , i have scanned the thread but I may have missed something.

You say a default notice was sent, before this you should have received two notices of arrears did you receive these also?(section 86)

The notice should have given you 14 days to remedy before they terminated, did you try and contact the creditor in this time and sort out the mater?(section 87)

Is it the case then that as far as they are concerned they have terminated the agreement in default?

Regarding your comment about the unlawful rescission of the agreement due to the incorrect default notice, I think I know where you got this from it is incorrect.
This was an idea that was widely believed and several people tried using it as defenses in court.

The Harrison Vs link case disproved the idea.

The reason being that a default notice under section 87 of the CCA says that before an agreement can be terminated upon default the debtor must be made aware of the amount they owe and given 14 days to remedy.

If for any reason the information on the notice is incorrect or missing the agreement cannot be terminated, it is therefore legally still live.

This enables them to issue further corrected notices.

There is of course a facility for the creditor to terminate the account without default, the procedure for this was clarified in the EU amendments to the CCA which came into force in Feb this year, the creditor wishing to terminate an agreement must give 28 days notice and also a justifiable reason for doing so, an example of some acceptable reasons are identified in the directive, if you want to look there is a copy on balli.

Simon

Conrad2

Hi Simon, and thanks for you excellent reply. It is the type of response I was hoping for when I first posted.

The difference in this case is that, although a DN was issued, it and the subsequent termination by default, as no termination notice was given, were both generated by admin error, and therefore not related. Basically, the contract was breached without care, meeting no requirements of CCA74. Any breach of contract that occurs can be treated as a rejection of said contract and the other party has the right to then also reject the contract, reaching rescission.

And no, I had no notice of arrears at all. The account wasn't in arrears, and I hadn't missed a payment - and contrary to posts on this site, still haven't officially.

My credit report shows me as overdue for August, and I have asked the lender to correct this as soon as possible.

As I said at the start, this is a very unusual case, and I never entered into it expecting the debt to be written off. If the lender had responded to my complaint, there would have been no issue. They have treated me very unfairly, and still have not contacted me other than via automated messages. Frankly, I would have been happy to negotiate a better deal when I first entered into this, but they have been so useless that I now think they will get what they deserve.

Lou67

So if the lender makes a little error whilst collecting your loan repayments, the whole loan is written off? I have never heard of this happen before and find it extremely unlikely. But maybe I am wrong. I can't see any financial institution letting 1000s of pounds go in a loan because of an admin error. I have known companies send debt collectors to peoples homes for £300.

simon_the_poet

Conrad2 wrote: »

Hi Simon, and thanks for you excellent reply. It is the type of response I was hoping for when I first posted.

The difference in this case is that, although a DN was issued, it and the subsequent termination by default, as no termination notice was given, were both generated by admin error, and therefore not related. Basically, the contract was breached without care, meeting no requirements of CCA74. Any breach of contract that occurs can be treated as a rejection of said contract and the other party has the right to then also reject the contract, reaching rescission.

And no, I had no notice of arrears at all. The account wasn't in arrears, and I hadn't missed a payment - and contrary to posts on this site, still haven't officially.

My credit report shows me as overdue for August, and I have asked the lender to correct this as soon as possible.

As I said at the start, this is a very unusual case, and I never entered into it expecting the debt to be written off. If the lender had responded to my complaint, there would have been no issue. They have treated me very unfairly, and still have not contacted me other than via automated messages. Frankly, I would have been happy to negotiate a better deal when I first entered into this, but they have been so useless that I now think they will get what they deserve.

HI

Yes i know what you refer to.

In reality if a defective default note is issued they can just send another note, no termination of the account has taken place, it does not matter if they have sent a termination notice, an account cannot be terminated on default without an effective default notice, statute prevents it.

It is however possible for a creditor to terminate an agreement without a default under a contractual term in the agreement, if they do this however they are prevented from making demands of accelerated payments( early repayment ) of sums not yet due under the contract(again by statute).

The idea that if a creditor terminates an agreement incorrectly the debtor is entitled to keep the money is incorrect.
It was proffered on a website some time ago and many people pursued this course only to find themselves with CCJ's and defaults.

In brief the idea comes from a misunderstanding of the way contract law relates to agreements where there are liabilities under the contract.

In contract law there is a facility which states that if an agreement is repudiated(critically breached) by a party then the other party can accept that repudiation(as long as he does it quickly). The agreement will be rescinded and the innocent party can sue for redress.

Some then took this and mistakenly applied it to consumer credit agreements, proffering the idea that if the creditor terminates the agreement, it is repudiation of contract, so if the debtor accepts this, the agreement has to be rescinded and he owes no money.

There are two major flaws in this argument, one is that terminating a CCA contract is not repudiation, and the second more important point is that if you rescind a contract all liabilities under it must be returned, the agreement must be reset to it's original position, pre execution of contract.
The creditor in short would have to be repaid his money, so there really would be no point.

Going back to the OP, i still have a problem understanding why you did not contact the creditor within the period of the default notice and query the notice.

Simon

Conrad2

Lou67 wrote: »

So if the lender makes a little error whilst collecting your loan repayments, the whole loan is written off? I have never heard of this happen before and find it extremely unlikely. But maybe I am wrong. I can't see any financial institution letting 1000s of pounds go in a loan because of an admin error. I have known companies send debt collectors to peoples homes for £300.

I take your point. But I wouldn't call what the lender has done to me, without response, a little error.

somethingcorporate

I called it back in post 58 http://forums.moneysavingexpert.com/showpost.php?p=56280339&postcount=58

That somehow this would result in you coming back proclaiming it would now be written off.

You're a joker, a troll, a wum and a time-waster.

Enjoying your CCJs - you've earned them!

Conrad2

simon_the_poet wrote: »

HI

Yes i know what you refer to.

In reality if a defective default note is issued they can just send another note, no termination of the account has taken place, it does not matter if they have sent a termination notice, an account cannot be terminated on default without an effective default notice, statute prevents it.

It is however possible for a creditor to terminate an agreement without a default under a contractual term in the agreement, if they do this however they are prevented from making demands of accelerated payments( early repayment ) of sums not yet due under the contract(again by statute).

The idea that if a creditor terminates an agreement incorrectly the debtor is entitled to keep the money is incorrect.
It was proffered on a website some time ago and many people pursued this course only to find themselves with CCJ's and defaults.

In brief the idea comes from a misunderstanding of the way contract law relates to agreements where there are liabilities under the contract.

In contract law there is a facility which states that if an agreement is repudiated(critically breached) by a party then the other party can accept that repudiation(as long as he does it quickly). The agreement will be rescinded and the innocent party can sue for redress.

Some then took this and mistakenly applied it to consumer credit agreements, proffering the idea that if the creditor terminates the agreement, it is repudiation of contract, so if the debtor accepts this, the agreement has to be rescinded and he owes no money.

There are two major flaws in this argument, one is that terminating a CCA contract is not repudiation, and the second more important point is that if you rescind a contract all liabilities under it must be returned, the agreement must be reset to it's original position, pre execution of contract.
The creditor in short would have to be repaid his money, so there really would be no point.

Going back to the OP, i still have a problem understanding why you did not contact the creditor within the period of the default notice and query the notice.

Simon

I am not arguing with the points you are making, but I find myself repeating myself again. I am only doing this in response to the points you have made, trying to point out that my situation is different, and possibly unique.

I checked my records an I hadn't defaulted. All payments had been made. No prior notice of a non-payment was provided before the default notice arrived, and the lender engaged a collection agency five days before their stated deadline. I am not lying about this, I am just as perplexed as you are.

The default notice was in error, but but it was one of many, with whole sections of the CCA74 completely by passed, and, even though the lender has been informed - I have now sent them five letters regards the issue, with no response.

Even if they don't accept the validity of unlawful rescissity, they are going to struggle to demonstrate that they have acted in a manner anything less than irrisponsible.

And I consider the error catastrophic until they indicate they are prepared to resolve it.

I have do everything required of me and more. They have done nothing.