Consumers warned on 'unenforceable debt 'agreement claims

[Legal Beagles]

The OFT is warning consumers that businesses that claim to be able to use sections 77/78/79 of the Consumer Credit Act 1974 to wipe out their debts are misleading them.

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[WendyB]

Re: Consumers warned on 'unenforceable debt' claims

Hoooraaaaayyyy!!!!!!!!


I like this bit:

However, the guide warns that, even if a credit or hire agreement becomes 'unenforceable', consumers would still owe any outstanding money to the lender, interest could be added to their loan or hire agreement, default charges could be made, and any failure to pay could impact on their credit record. The guide also explains that the debt is enforceable again as soon as the lender provides this information.

[Curlyben]

Re: Consumers warned on 'unenforceable debt' claims

I don't as that's just as misleading

However, the guide warns that, even if a credit or hire agreement becomes 'unenforceable', consumers would still owe any outstanding money to the lender, interest could be added to their loan or hire agreement, default charges could be made, (or NOT) and any failure to pay could impact on their credit record. (as per Mcguffick)The guide also explains that the debt is enforceable again as soon as the lender provides this information.

[The Debt Star]

Re: Consumers warned on 'unenforceable debt' claims

Surely "unenforceable" means exactly what it says on the tin? Until the lender provides the information surely determining what and how much is owed is debateable. I didn't realise McGuffick was about credit scoring, so thanks for clarifying that. Yes, the creditors can and do enter adverse entries and continue debt collection activities via DCAs etc even if the agreements are "unenforceable". In the case of Barclaycard, the tactic is to deny there is a dispute even if they cannot produce a reconstructed copy of the agreement. Itys quite simple: you write to the consumer referring to a copy of the agreement but don't actually put it in the enevlope and then ignore the consumer's repeated requests for a copy thereafter.

[Amethyst]

Re: Consumers warned on 'unenforceable debt' claims

Thought this thread might find the consultation we are currently working on a response to interesting particularly the part which shows what the lenders are asking for by way of ''improvement''

Annex A: stakeholders’ suggestions for improvements to consumer credit and insolvency regimes
Decision to borrow

· replace any remaining areas of automatic unenforceability of credit agreements with unenforceability without a court order or another appropriate penalty

· rationalise the requirements around signing of agreements so that more agreements can be concluded on line

· rationalise/repeal section 18 (see below) of the Consumer Credit Act (CCA) setting out the requirements which apply to multiple agreements

· align all provisions concerning the cancellation of agreements with those which apply to the new right of withdrawal introduced by the Consumer Credit Directive

· repeal or rationalise the CCA provisions which apply to modifying agreements

· rationalise the requirement to provide statements for people who have moved house or entered into an IVA

· require consumers to show genuine disadvantage before a breach of the CCA can make an agreement unenforceable

· review the need for sections 99 and 100 (see below) of the CCA concerning Voluntary Terminations

· review the provisions of section 185 (see below) CCA 1974 concerning information to be provided to joint account holders

Read more at: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation - Legal Beagles Consumer Forum

CCA parts referred to above

multiple Agreements

18 Multiple agreements

(1) This section applies to an agreement (a “multiple agreement”) if its terms are such as—
(a) to place a part of it within one category of agreement mentioned in this Act, and another part of it within a different category of agreements so mentioned, or within a category of agreement not so mentioned, or
(b) to place it, or a part of it, within two or more categories of agreement so mentioned.



(2) Where a part of an agreement falls within subsection (1), that part shall be treated for the purposes of this Act as a separate agreement.
(3) Where an agreement falls within subsection (1)(b), it shall be treated as an agreement in each of the categories in question, and this Act shall apply to it accordingly.
(4) Where under subsection (2) a part of a multiple agreement is to be treated as a separate agreement, the multiple agreement shall (with any necessary modifications) be construed accordingly; and any sum payable under the multiple agreement, if not apportioned by the parties, shall for the purposes of proceedings in any court relating to the multiple agreement be apportioned by the court as may be requisite.
(5) In the case of an agreement for running-account credit, a term of the agreement allowing the credit limit to be exceeded merely temporarily shall not be treated as a separate agreement or as providing fixed-sum credit in respect of the excess.
(6) This Act does not apply to a multiple agreement so far as the agreement relates to goods if under the agreement payments are to be made in respect of the goods in the form of rent (other than a rent-charge) issuing out of land.

Termination

99 Right to terminate hire-purchase etc agreements

(1) At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.
(2) Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.
(3) Subsection (1) does not apply to a conditional sale agreement relating to land after the title to the land has passed to the debtor.
(4) In the case of a conditional sale agreement relating to goods, where the property in the goods, having become vested in the debtor, is transferred to a person who does not become the debtor under the agreement, the debtor shall not thereafter be entitled to terminate the agreement under subsection (1).
(5) Subject to subsection (4), where a debtor under a conditional sale agreement relating to goods, terminates the agreement under this section after the property in the goods has become vested in him, the property in the goods shall thereupon vest in the person (the “previous owner”) in whom it was vested immediately before it became vested in the debtor:
Provided that if the previous owner has died, or any other event has occurred whereby that property, if vested in him immediately before that event, would thereupon have vested in some other person, the property shall be treated as having devolved as if it had been vested in the previous owner immediately before his death or immediately before that event, as the case may be.

100 Liability of debtor on termination of hire-purchase etc agreement

(1) Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.
(2) Where under a hire-purchase or conditional sale agreement the creditor is required to carry out any installation and the agreement specifies, as part of the total price, the amount to be paid in respect of the installation (the “installation charge”) the reference in subsection (1) to one-half of the total price shall be construed as a reference to the aggregate of the installation charge and one-half of the remainder of the total price.
(3) If in any action the court is satisfied that a sum less than the amount specified in subsection (1) would be equal to the loss sustained by the creditor in consequence of the termination of the agreement by the debtor, the court may make an order for the payment of that sum in lieu of the amount specified in subsection (1).
(4) If the debtor has contravened an obligation to take reasonable care of the goods or land, the amount arrived at under subsection (1) shall be increased by the sum required to recompense the creditor for that contravention, and subsection (2) shall have effect accordingly.
(5) Where the debtor, on the termination of the agreement, wrongfully retains possession of goods to which the agreement relates, then, in any action brought by the creditor to recover possession of the goods from the debtor, the court, unless it is satisfied that having regard to the circumstances it would not be just to do so, shall order the goods to be delivered to the creditor without giving the debtor an option to pay the value of the goods.

Remember there is a new section which covers a small part
see SI 2010/2010 April 2010 - Feb 2011 commencement

[98A Termination etc of open-end consumer credit agreements]

[(1) The debtor under a regulated open-end consumer credit agreement, other than an excluded agreement, may by notice terminate the agreement, free of charge, at any time, subject to any period of notice not exceeding one month provided for by the agreement.
(2) Notice under subsection (1) need not be in writing unless the creditor so requires.
(3) Where a regulated open-end consumer credit agreement, other than an excluded agreement, provides for termination of the agreement by the creditor—
(a) the termination must be by notice served on the debtor, and
(b) the termination may not take effect until after the end of the period of two months, or such longer period as the agreement may provide, beginning with the day after the day on which notice is served.



(4) Where a regulated open-end consumer credit agreement, other than an excluded agreement, provides for termination or suspension by the creditor of the debtor's right to draw on credit—
(a) to terminate or suspend the right to draw on credit the creditor must serve a notice on the debtor before the termination or suspension or, if that is not practicable, immediately afterwards,
(b) the notice must give reasons for the termination or suspension, and
(c) the reasons must be objectively justified.



(5) Subsection (4)(a) and (b) does not apply where giving the notice—
(a) is prohibited by an EU obligation, or
(b) would, or would be likely to, prejudice—
(i) the prevention or detection of crime,
(ii) the apprehension or prosecution of offenders, or
(iii) the administration of justice.








(6) An objectively justified reason under subsection (4)(c) may, for example, relate to—
(a) the unauthorised or fraudulent use of credit, or
(b) a significantly increased risk of the debtor being unable to fulfil his obligation to repay the credit.



(7) Subsections (1) and (3) do not affect any right to terminate an agreement for breach of contract.
(8) For the purposes of this section an agreement is an excluded agreement if it is—
(a) an authorised non-business overdraft agreement,
(b) an authorised business overdraft agreement,
(c) a debtor-creditor agreement arising where the holder of a current account overdraws on the account without a pre-arranged overdraft or exceeds a pre-arranged overdraft limit, or
(d) an agreement secured on land.]

185

185 Agreement with more than one debtor or hirer

(1) Where an actual or prospective regulated agreement has two or more debtors or hirers (not being a partnership or an unincorporated body of persons)—
(a) anything required by or under this Act to be done to or in relation to the debtor or hirer shall be done to or in relation to each of them; and
(b) anything done under this Act by or on behalf of one of them shall have effect as if done by or on behalf of all of them.



[(1A) Notwithstanding subsection (1) above, subsection (4) of section 55A (pre-contractual explanations etc) does not require an oral explanation to be given to any debtor to whom an explanation of the matters referred to in subsection (2)(a), (b) and (e) of that section has not been given orally or in person.]
[(2) Notwithstanding subsection (1)(a), where credit is provided under an agreement to two or more debtors jointly, in performing his duties—
(a) in the case of fixed-sum credit, under section 77A, or
(b) in the case of running-account credit, under section 78(4),



the creditor need not give statements to any debtor who has signed and given to him a notice (a “dispensing notice”) authorising him not to comply in the debtor's case with section 77A or (as the case may be) 78(4).
(2A) A dispensing notice given by a debtor is operative from when it is given to the creditor until it is revoked by a further notice given to the creditor by the debtor.
(2B) But subsection (2) does not apply if (apart from this subsection) dispensing notices would be operative in relation to all of the debtors to whom the credit is provided.
(2C) Any dispensing notices operative in relation to an agreement shall cease to have effect if any of the debtors dies.
(2D) A dispensing notice which is operative in relation to an agreement shall be operative also in relation to any subsequent agreement which, in relation to the earlier agreement, is a modifying agreement.]
(3) Subsection (1)(b) does not apply for the purposes of section 61(1)(a) . . ..
(4) Where a regulated agreement has two or more debtors or hirers (not being a partnership or an unincorporated body of persons), section 86 applies to the death of any of them.
(5) An agreement for the provision of credit, or the bailment or (in Scotland) the hiring of goods, to two or more persons jointly where—
(a) one or more of those persons is an individual, and
(b) one or more of them is [not an individual],



is a consumer credit agreement or consumer hire agreement if it would have been one had they all been individuals; and [each person within paragraph (b)] shall accordingly be included among the debtors or hirers under the agreement.
(6) Where subsection (5) applies, references in this Act to the signing of any document by the debtor or hirer shall be construed in relation to a body corporate [within paragraph (b) of that subsection] as referring to a signing on behalf of the body corporate.

[The Debt Star]

Re: Consumers warned on 'unenforceable debt' claims

they want to have their cake and eat it. oh, they already can, can't they. This is just asking for it be in writing.

[WendyB]

Re: Consumers warned on 'unenforceable debt' claims

The reason I liked it was because at least it may make people stop and think before they go into unenforceability thinking it's easy etc etc, when really it can be quite complex and you have to have a good grasp of what you are arguing. IMO unenforceability is very complex, difficult to prove, evne more so in the current climate, and not for the fainthearted. There is every possibility that credit rating will be trashed, enforcement action/hassle/DCAs will continue chasing, and even end up with CCJs which weren't on the horizon in the first place.

[Ruby]

Re: Consumers warned on 'unenforceable debt' claims

What happens after five years in Scotland and six in England/Wales if you have somehow managed to 'ingore' the DCA's and there is no further communcation from yourself with them? Will the defaults/CCJ's still remain on your credit file?

[The Debt Star]

Re: Consumers warned on 'unenforceable debt' claims

The reason I liked it was because at least it may make people stop and think before they go into unenforceability thinking it's easy etc etc, when really it can be quite complex and you have to have a good grasp of what you are arguing. IMO unenforceability is very complex, difficult to prove, evne more so in the current climate, and not for the fainthearted. There is every possibility that credit rating will be trashed, enforcement action/hassle/DCAs will continue chasing, and even end up with CCJs which weren't on the horizon in the first place.

that was exactly what peter bard was trying to say

[basa48]

Re: Consumers warned on 'unenforceable debt' claims

There is every possibility that credit rating will be trashed, enforcement action/hassle/DCAs will continue chasing, and even end up with CCJs which weren't on the horizon in the first place.

Do you think any of this stops even if you enter a DMP?

Maybe, just maybe not the CCJ - to begin with. But I reckon after a few years on a dmp the creditor will start to get itchy fingers and go for the kill. And with you in a dmp admitting liability it is a dead cert.

At least if you fight and get a CCJ the court fixes the dmp which is difficult for a lender to alter.

[WendyB]

Re: Consumers warned on 'unenforceable debt' claims

that was exactly what peter bard was trying to say

Where? well good on him!!! A man after my own heart....

Do you think any of this stops even if you enter a DMP?

Maybe, just maybe not the CCJ - to begin with. But I reckon after a few years on a dmp the creditor will start to get itchy fingers and go for the kill. And with you in a dmp admitting liability it is a dead cert.

If you say so. But I personally have always found that when I've made payment plans it's all gone smoothly till the debt was paid off, providing I stuck to the plan. Perhaps I'm just lucky.

[basa48]

Re: Consumers warned on 'unenforceable debt' claims

Where? well good on him!!! A man after my own heart....





If you say so. But I personally have always found that when I've made payment plans it's all gone smoothly till the debt was paid off, providing I stuck to the plan. Perhaps I'm just lucky.

If they were small debts and you had a reasonable amount to pay, yes they are good. But personally I have many large debts (3 lenders from £4-10K) and not a penny to pay with. Plus I have two secured loans (that will finish in 2 years) and a large OD. My salary no longer covers all our expenses. We shop for discounts (we can eat nothing else) do not drink or go out, we have an 8 yo car and no holidays for 4 years. My ideal DMP would be for the lenders to pay me !!!

No one would accept me on a DMP so I really have no choice. My debts built up over 10 years and I sold all my endowments to service them for the last 4 years. I work 2 jobs, 10 hours a day, 5 days a week for 45 years and all I see is bankers getting mega bonuses and the govt cutting my child benefits (from 2013) and screwing any chance of them getting university education. Don't even mention my kids affording a home when the immigrants take them all on state handouts!

Me angry ?? YOU BET I'M ANGRY!!!

[WendyB]

Re: Consumers warned on 'unenforceable debt' claims

Been there, done that. Not doing it any longer, but only because we don't have anything left to sell. Haven't had a holiday for 5 years. Always shop for discounts. There is always too much month left at the end of the money. Our mortgage and council tax takes about 40% of our salary every month. My OH works at least 45 hours per week and I work a minimum of 43.5. Although we only have a couple of (relatively) small debts now, which we're up to date with, no arrears on anything, and our credit files are not as trashed as they one were. Haven't got any CCA debts, apart from our car finance, which is up to date anyway. But even if it wasn't, I wouldn't go down the CCA route, unless I was taken to court and it was the only defence I had. And even then I'd try not to let it get to the final hurdle. I certainly wouldn't deliberately stop paying and then hope to use unenforceability as a defence when they took me to court. Because I think its an absolute minefield, very difficult to get to grips with, and I couldn't afford a barrister, much less in the current climate, the risk of losing and having costs awarded against me. The only thing we have left is our house, which we have struggled, at times, to keep, and no way would I ever risk losing it, if costs got awarded against me.

My origianl point was, people have been too easily led, by one thing and another, into believing that CCA is the best thing since sliced bread, when the reality is quite different and not without major risks, which is why I think the report is a good thing. Not perfect, but a start.

[The Debt Star]

Re: Consumers warned on 'unenforceable debt' claims

Where? well good on him!!! A man after my own heart....

In about a hundred posts OTR

[The Debt Star]

Re: Consumers warned on 'unenforceable debt' claims

Haven't had a holiday for 5 years.

Yes, I know the feeling, as I'm sure do many others here. Its not so bad for ourselves but when the kids miss out then it hurts most. Especially when their friends go away to Disney or whatever. Plus the 'tell us what you did over the holidays' or 'what did you get for Christmas' questions by tecahers when they go back to school.

Always shop for discounts.

Yes, like Red Mountain Coffee and Sainsburys Basics Cornflakes. If ever anyone wants a good reason why not to fall into debt, then this is it.

My OH works at least 45 hours per week and I work a minimum of 43.5.

yes, work your way out if you can, absolutely, and when both partners (if you have one) can work as well it really makes a difference. our problem is that the other half has been unemployed since June and on one salary, when you have a mortagge, tax, debts, utility bills, food etc, it becomes unbearable

Haven't got any CCA debts, apart from our car finance, which is up to date anyway.......But even if it wasn't, I wouldn't go down the CCA route, unless I was taken to court and it was the only defence I had.

This is what makes me angry because on CAG posters were encouraged to CCA creditors and stop paying. One post I remember quite well I read by one poster that the DCAs would regard him as a "muppet" if he continued paying while the account was in dispute, and see him as a soft touch. I, like many others, followed this kind of advice and stopped paying on a CCA dispute. I am now fairly well embroiled in compliocated arguments with the OC and involving the FOS but it hasn't stopped the OC from instructing wretched lowlife scumbag DCAs from threatening me with court etc.

I do think though that a debtor whsould assess each case on its merits and very carefully. If there is no CCA, then we do know that the debt is "unenforceable." We also know that the principle is still a debt. However, unless and until a creditor gets a declaration of enforceability from the court then the consumer is within his rights to withhold payments. But of course the charges and interest will apply if the court finds for enforceability, which it will in current climes.

In my experience, sending an SAR is far better because it can lead to some unexpected reslts in the consumers favour; eg PPI, unlawful charges, no DN sent etc.