1st Credit / Default date

[RustyHAT]

Hi All,

I was pointed to these forums by a helpful soul on the Money Saving Expert forums and I am hoping you can all help me.

I received letters for debts in which the last payment was made in May 2007 so is now over 6 years so I believe is Statute Barred.

The default dates for these debts vary from September to December 2007 according to my credit file (checked via Noddle.co.uk).

I received response (after sending Statute Barred claim letter) from a couple of companies who have returned the debts to the original holder as they have no evidence to pursue.

One company, 1st Credit, confirmed that the last payment (acknowledgement) was made in May 2007 however are citing the following as evidence that they can still pursue and are demanding payment.

www.forwarn.com/news/db.asp?PageName=Court_of_Appeal_provide_welcome_re lief_for_Finance_Companies

They are also stating that I cannot pursue this with Financial Obudsman Service as "the matter of the account being statute barred is a matter that only a court can decide"

Please can someone advise my position here?

Thanks all for your help

[CleverClogs]

Re: 1st Credit / Default date

I received letters for debts in which the last payment was made in May 2007 so is now over 6 years so I believe is Statute Barred.

Your belief may be mistaken.

The default dates for these debts vary from September to December 2007 according to my credit file (checked via Noddle.co.uk).

The default markers, whilst interesting, are not really significant. What does matter is when the Default Notices were sent and when the notice period for each expired. Until then, there was no "cause for action", so the limitation period starts when the default period has expired.

I received response (after sending Statute Barred claim letter) from a couple of companies who have returned the debts to the original holder as they have no evidence to pursue.

Well done! Your assertion may be stercus bovi but, with luck, they won't find out until it's too late.

One company, 1st Credit, confirmed that the last payment (acknowledgement) was made in May 2007 however are citing the following as evidence that they can still pursue and are demanding payment.

The Bayernische Mistenwagen case did not really change the law, though 1st Crud may like to pretend otherwise.

What is important is when the default notice period expired. If you were sent a Default Notice halfway through June 2007, then the alleged debt will (almost certainly) be SB; if it was not sent until the middle of August 2007, then it won't be SB yet.

They are also stating that I cannot pursue this with Financial Obudsman Service as "the matter of the account being statute barred is a matter that only a court can decide"

Isn't it nice of them to relieve the FOS of having to reply for themselves?

Take no notice of them; if nothing else, the FOS will slow the buggers down.

[Nibbler]

Re: 1st Credit / Default date

Heard of that case, but I don't think I have ever heard of a creditor successfully relying on it in court?

[CleverClogs]

Re: 1st Credit / Default date

Heard of that case, but I don't think I have ever heard of a creditor successfully relying on it in court?

That is because they would not need to refer to it.

The outcome of the case was such that no legal precedent was actually set.

[Nibbler]

Re: 1st Credit / Default date

By that I mean the argument/interpretation regarding the start date of the limitation period put forward in that case, not necessarily the case itself.

I don't recall hearing of any other case succeeding on that argument since BMW vs Hart? (Could have missed it of course)

Previously the more or less accepted position was as per Swansea City Council v Glass (1992) and West Bromwich Building Society v Wilkinson (2005), where default and termination were considered a procedural matter that did not form part of the cause of action. Not only was that the position espoused on most forums such as this, but was the one one put forward in the majority of training materials for professional debt advisors.

[ODC]

Re: 1st Credit / Default date

IMHO Worst Credit are chancing their arms by using their favourite practice of smoke and mirrors. Personally I would write back to the buggers telling them that your position remains unchanged and the alleged debt IS Statute Barred. If DCAs were all permittedto go by the default date then if no Default letter was ever issued the shelf life could be prolonged indefinitely. I thought the general rule of thumb was one month after your last payment because by the terms of your CCA they could then take action.

Just my opinion

[charitynjw]

Re: 1st Credit / Default date

The cause of action would be when a 'reasonable person', having the same knowledge as the lender, realised there was a problem.

This should initiate a letter before action, the DN, to allow the borrower time to regularise the account.

After this the agreement can be terminated.

It is common that this period is about 3 months all in all.

[FlamingParrot]

Re: 1st Credit / Default date

The argument regarding the cause of action has been extensively debated, however, it's commonly agreed that a debt would be SBd 6 years after the first missed payment (unless there's been written acknowledgment). I would agree that it should be no more than 3 months after the last payment and, if it was me, I'd be sending 1st Crud the SBd letter. See this thread for reference: http://www.legalbeagles.info/forums/...statute+barred

The entries on your credit file have nothing to do with the Statute of Limitations, although a default is supposed to be recorded between 3 and 6 months after the first missed payment, in practice it can be much later and there's no law that forces creditors to default at a certain time, it's all just guidance. :rant:

[FlamingParrot]

Re: 1st Credit / Default date

Statute barred letter: :grin:

Dear Sirs

Re: Statute Barred Account xyz


You have contacted me regarding the account with the above reference number, which you claim is owed by myself. I would point out that under the Limitation Act 1980 Section 5 "an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued".

I would also point out that the OFT say under their Debt Collection Guidance on statute barred debt that "it is unfair to pursue the debt if the debtor has heard nothing from the creditor during the relevant limitation period". The last acknowledgement to this debt was made over six years ago and no further acknowledgement or payment has been made since that time. Unless you can provide evidence of payment or written contact from me in the relevant period under Section 5 of the Limitation Act, I suggest that you are no longer able to take any action against me to recover the alleged amount claimed.

The OFT Debt Collection Guidance states further that "continuing to press for payment after a debtor has stated that they will not be paying a debt because it is statue barred could amount to harassment". I await your written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed.I look forward to your reply.

Yours faithfully,

[Guest]

Re: 1st Credit / Default date

By that I mean the argument/interpretation regarding the start date of the limitation period put forward in that case, not necessarily the case itself.

I don't recall hearing of any other case succeeding on that argument since BMW vs Hart? (Could have missed it of course)

Previously the more or less accepted position was as per Swansea City Council v Glass (1992) and West Bromwich Building Society v Wilkinson (2005), where default and termination were considered a procedural matter that did not form part of the cause of action. Not only was that the position espoused on most forums such as this, but was the one one put forward in the majority of training materials for professional debt advisors.

Regarding the case quoted above the requirements of the issuance of a section 87 notice under the act forbids the request for all liabilities under the contract until the remedy period has elapsed, this distinguishes it from the case in question where sums were due and payable on completion of the work.

This was discussed fully in BMW Vs hart.

On a CCA agreement the SB clock commences when all sums under the agreement are rightfully demanded, this can only occur post termination(because of section 87) before this point sums due can only be demanded under the contractual terms of course.

This is currently the understanding of most advice agencies.

[Nibbler]

Re: 1st Credit / Default date

Yes, I understand that argument. Just find it curious that it is not relied on more by DCAs etc, as they must have had ample time to absorb the conclusions and application.

Would also be useful if someone could link to the latest example of that being applied to a court case (apart from Hart), as if valid then there must be some recent examples. Thanks.

[Guest]

Re: 1st Credit / Default date

It is being more and more sadly, if you look over the road there are a couple i the pipe works at the moment, unfortunately the logic of the argument is inescapable.

here is some more info for those not familliar

http://www.lexology.com/library/deta...0-23&utm_term=

The Facts
BMW Financial Services (GB) Limited ("BMWFS") entered into a hire purchase agreement (the "Agreement") with Mr Hart. It does not appear that the Agreement was regulated by the Consumer Credit Act 1974 (the "CCA"). In July and August 1999, Mr Hart failed to pay two monthly instalments. By a letter dated 26 August 1999, BMWFS accepted Mr Hart’s repudiation of the Agreement and terminated it. BMWFS demanded payment of the unpaid balance.


Mr Hart left the UK without paying. BMWFS issued a claim on 26 August 2005. Default judgment was obtained. On returning to the UK, Mr Hart became aware of the judgment. He successfully applied to have it set-aside by arguing that the claim had been issued outside of the limitation period. His Honour Judge Halbert, sitting in the Chester county court, decided, following Reeves v Butcher [1891] 2 QB 509, that the limitation period started when Mr Hart did not pay the instalment in July 1999 and that the claim was time-barred.


Court of Appeal
BMWFS appealed to the Court of Appeal arguing that HHJ Halbert had erred in his interpretation of Reeves and the terms of the Agreement. After hearing submissions, the Court of Appeal allowed the appeal and decided:
In Reeves, the agreement stated that the monies would not be called in so long as the borrower regularly paid interest. If, however, the borrower missed a payment, the balance of the loan (including interest) would become due 21 days after default.
Under the terms of the Agreement, BMWFS had no right to make a claim for the unpaid balance until it had given notice of termination or accepted Mr Hart’s repudiation of the Agreement.
It was only when BMWFS had given notice of termination or accepted Mr Hart’s repudiation that the sums due under the Agreement became due. Until that point the only sums Mr Hart had to pay were the outstanding instalments.
Mr Hart’s failure to pay the instalment did not, on its own, accelerate the obligation to pay the whole amount due under the Agreement.
The Court of Appeal therefore distinguished the earlier decisions of Reeves and Hemp v Gardland 114 E.R. 994 (which Reeves followed).
Comment
The Court of Appeal’s decision is both pragmatic and commercially sound. The Agreement, like many others, stated that the balance became due upon termination. If the Agreement had been regulated by the CCA, termination is subject to the lender serving (where appropriate) a notice under the CCA (most commonly a default notice or, for non-default cases, a combined enforcement and termination notice). Notice is specifically required before a lender can become entitled to (amongst other things) demand "earlier payment of any sum".


If the Court of Appeal had come to any other conclusion it would have been contrary to the wording of the CCA. This envisages that the balance does not become due (and cannot be demanded as being due) until after the expiry of the notice period. The Court of Appeal’s decision can also be used in appropriate circumstances by lenders wanting to stop the limitation period running. It seems clear that, subject to an argument that the lender has affirmed the agreement by not taking steps to accept a debtor’s repudiation, termination could be delayed until the end of the term of the agreement. This would allow lenders to delay (most obviously where the debtor is in a difficult financial position or cannot be located) issuing proceedings until the last moment, like BMWFS did, and avoid being time-barred

[Nibbler]

Re: 1st Credit / Default date

If you wouldn't mind linking to the cases lost in court so far on that argument (if any), that would be helpful. Thanks.

[Guest]

Re: 1st Credit / Default date

If you wouldn't mind linking to the cases lost in court so far on that argument (if any), that would be helpful. Thanks.

I think the BMW cases is precedent setting, if you wanted to disprove this you would have to find a case where this argument was presented and then failed.

There are a couple of threads going on CAG where DCAs have presented this argument, I will see if I can find them for you.

[Nibbler]

Re: 1st Credit / Default date

I would really like to see some cases where creditors have succeeded on that argument. That would be the only real proof of the pudding so to speak. I presume there must be some?