Limitation Act, section 87 and old student loan

Ian-S_3

I have an old student loan. Haven't made any payments in more than six years. Loan co. now apply to Court. I say "statute barred" because no contact from me in more than six years. Loan co. says section 87 of Consumer Credit Act applies, because they say the six years should run from when the default notice was served, not from when the first payment was due. Have been in touch with National Debtline and they say I need a lawyer! Due in Court soon.

Does anyone have any ideas on how to deal with this? Thank you.

poppy_f1

do you have to send deferrment forms in for the loan, if so this could be considered contact
if not then ignore

floss2

Can I ask why you haven't made any payments in 6 years? Is it because you haven't earned enough to make payments?

Have a look at this: http://www.payplan.com/debt-library/joint-and-several-liability-the-limitation-act-1980.php

and this http://www.insolvencyhelpline.co.uk/debt_factsheets/liability_for_debts_and_the_limitation_act.htm#12

fatbelly

My understanding is that they have six years to take action from the day when they could first take action ('from when the cause of action accrued').

I think the relevant date would be the expiry date of the default notice. When was that?

Ian-S_3

They claim the default notice was sent last year, but I didn't receive it.

fermi

The date of the last "cause of action" is generally considered to be the date that you last acknowledged the debt in writing or by making a payment.

I've never heard it to be successfully argued that a default issued at a later date started the clock ticking again from that date.

EDIT: Have also sent you a PM.

silvercar

Depends whether your loan was before Septemeber 1998, see here:

http://www.bdl.org.uk/images/25_liability_for_debts_and_the_limitation_act.pdf

Ian-S_3

Yes it was.

silvercar

good news:

"This means that the Limitation Act can apply if you have not paid or acknowledged the debt for over 6 years. (Asking for the loan to be deferred could count as acknowledging the debt and start time running again)."

fatbelly

But, Silvercar, when did the time start running?

If it is a legal requirement for a default notice to be issued before court action can be taken, then the clock starts running from that time.

You can extend the period by making payments or otherwise acknowledging the debt but the Limitations Act gives the creditor six years to take action.

Remenmber this is a student loan and there could have been no requirement for the op to make payments for some of the period when he did not.

fermi

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=25_liability_for_debts_and_the_limitation_act

You can argue that the creditor is out of time or 'statute barred' from taking you to court for this debt if:

* the creditor has not already obtained a judgment against you;

and

* you or anyone else owing the money (on a debt in joint names) have not made a payment on the debt during the last six years;

and

* you have not written to the creditor admitting you owe the debt during the last six years.

Not anything stating that a default can restart the clock there.

And again I've never heard it successfully being argued that it can.

Unless a CCJ is obtained within the Limitation period it is normally argued that only the debtor can restart the by acknowledgement or payment and so giving a 'cause of action'. With the old style student loans that could include deferment.

This is old style loan so:

Student loans

Student loan agreements are simple contracts and this gives the Student Loans Company (SLC) six years from the date you last paid or acknowledged the debt to go to court to enforce the agreement. There are two sorts of student loans and different rules apply depending upon when you took out the loan.

Old style student loans

Old style or 'mortgage' student loans are consumer credit agreements. Payments cannot automatically be deducted from your wages. The SLC has to go to court before they can enforce the debt against you. This means that the Limitation Act can apply if you have not paid or acknowledged the debt for over six years.

WARNING Asking for the loan to be deferred could count as acknowledging the debt and start time running again.

Best choice is to get some legal advice as suggested by NDL.