Default Re: Me V Bank - defective DN and unfair relationship defence.

[toomanycalls]

Hi All,

I have a current court claim against me with a Bank Loan (post 2006), after falling behind with payments last year. In Mar they issued a default notice only allowing 14 days and no time for service but also claiming the full amount of the loan not just the arrears. I paid the arrears but after three weeks and then some reduced monthly payments untill they terminated the agreement in July. Since then I have paid nothing.

My intention is to put in a defence that draws the bank to the fact they have issued a defective DN but issue proceedings on the back of it, after me clearing the arrears in question but them refusing to accept reduced payments thus creating an unfair relationship. I need to get the defence done by the middle of next week to allow for me to get it posted but haven't done this before so could do with some help please.

I'm just beginning to draught out the defence and the DN stuff has been covered in detail before so I'm al-right there but could really do with some pointers and opinions with regard to the section 140 unfair relationship stuff.

[Lord_Alcohol]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

Thought this might be of interest, from the ICO technical guidance on filing of defaults for the credit industry (which is the reference currently used by Experian);

Para 4: The term ‘default’ on credit reference files is used to refer to the situation when the relationship between the lender and borrower has broken down. A record showing a series of payments as six months in arrears when this does not reflect the real payment history should not be used as an equivalent of a default.

Para 9: The term ‘default’, when recorded on a credit reference file should be used to refer to a situation when “the lender in a standard business relationship with the individual decides the relationship has broken down

Para 33: Notices to comply with Sections 13.7 of the Banking Code5 and 7.5 of the Lending Code6 should provide adequate warning. A notice of intention to file a default can be sent with a formal default notice served under Section 87 of the Consumer Credit Act 1974.

Para 42: Lenders are faced with difficult decisions when considering recording defaults which are disputed by the customer. It is not our role to arbitrate in disputes between borrowers and lenders. However, when we consider complaints, we will conclude, where there is clear and sufficient evidence that a default has not occurred, that it is likely that the lender has not complied with the data protection principle which requires that personal data are accurate.

Para 43: If we conclude that there is a genuine, reasonable and unresolved dispute between the borrower and lender, then we are likely to find that personal data have been processed unfairly if a default has been filed.

As the Tech Guidance refers to the Lending Code (which the big names subscribe to), it's worth looking at this;

http://www.lendingstandardsboard.org...endingcode.pdf

And especially;

Para 40: Subscribers can give CRAs default information about a customer’s debts if:

• the customer has fallen behind with their payments;
• the amount owed is not being disputed by the customer; and
• the customer has not made a proposal that satisfies the subscriber for repaying the debt following the subscriber’s formal demand

(My underline above)

Para 41: But, in all cases, the customer must be given further notice of the intention to disclose the information at least 28 days before the disclosure is made (for example, when a default notice or formal demand is given). At the same time, customers must be given an explanation about how default information registered against them may affect their ability to obtain credit in the future. This notice will mean that customers have 28 days to try to repay or come to some arrangement with the subscriber before default information is passed to the CRA.

Para 42: For the purposes of the second bullet in paragraph 40, a customer dispute is relevant if it refers to the amount of money owed by the customer and is genuine, reasonable and unresolved.

So, any lender adhering to the Lending Code must send a notice of intent to file a default at least 28 days beforehand. Moreover, both the Lending Code and the ICO both state that no default should be filed where the amount is disputed.

It seems to me that banks are trying to outdo each other in seeing how many regulations and codes they can break and still get a judge to award a money order. But anyway there it is in black and white, so maybe useful in seeking compensation under S13 of DPA.

HTH

[Lord_Alcohol]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

Because you are in breach of contract, arent you? you stopped paying thus defaulted.

According to the ICO, a default should only be recorded when the relationship between creditor and debtor breaks down permanently. If a DN is served and the breach is remedied, that "breach of contract" you mention is taken as not having occured (S89).

If the DN is so bad that it cannot be complied with, then the creditor has also breached the contract as it was regulated and he fails to observe the regs. As there is no Debit Reference Agency where the debtor can record this breach on the creditor's debit file, there is bias in the relationship which should become the focus of S140.

Moreover, where the creditor's definition of default is unsupported by the contract, the regs and the ICO, it is very odd to blame the debtor so comprehensively for "breaching the contract".

So he can place a marker of default even if he dont issue a default notice

Perhaps, but he nevertheless must;

1. Serve a notice of intent to file a default (usually carried within the DN itself), giving 28 days notice
2. Record a default which is fair and lawful (Principle 1 of DPA)
3. Record a default which is accurate (Principle 4)

It is approved by the ICO that 6 consecutive missed payments are when the creditor can place a D on your file to indicate you have breached the terms of your contract.

No, this is not the case. It is after 6 consecutive missed payments that the creditor can serve a notice of intent to file a default. The creditor may not just apply a D on any credit file without first serving this notice.

Not quite sure where this is going. I would have thought a bad DN carrying the notice of intent to file a D must be viewed in the same way as the DN itself, as the error in the default amount or time to pay may render the D inevitable and the creditor in breach of DPA principles 1 and 4, for which S13 of DPA can be used to seek compensation.

[Pumpytums]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

And there hangs a tale.

I had a OC sell off an account I would imagine they claimed the tax back against the shortfall.

They then bought it back, and carried on like nothing happened nice way to clean money that. I wonder if they paid the tax back that they claimed as a loss the previous year.

Pumpytums

[New_Age_Biker]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

One other point, if the OC has sold to a DCA, then sets your balance to zero, takes back the account (because of a faulty DN), what then happens to the zero balance he has stated?

Alan

perhaps very Tax efficient

[Algee]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

One other point, if the OC has sold to a DCA, then sets your balance to zero, takes back the account (because of a faulty DN), what then happens to the zero balance he has stated?

Alan

[Algee]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

pt

If an invalid DN is reissued, should it have the current date (giving you the 14 days from service) or the original date? If the original you can never rectify it, because you would already be out of time. If the current date, and you satisfy the notice, by paying arrears, then the creditor is unable to satisfy section 89 CCA, because what has been done, cannot be undone.

I accept that late payment markers could be left on with the CRA's, but you may have had several years of Default being registered, which until you have had a compliant notice issued (according to the Lending Code), should not be entered.

The ICO refers to the Banking/Lending Code, and assumes that the creditors issue compliant default notices, and abide by those codes.

Alan

[diddydicky]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

Agree with most of that. However with your crf you didn't pay so if the info is accurate then they are within their rights (perhaps obligations) to report it.

Many of us are past caring about the crf though as it is beyond repair and the 5/6 years credit free will do us good.

M1

there is a difference between reporting missed monthly payments and entering a note on the CRA files that the debtor has defaulted on a £12,000 loan (for example)!

with a few months missed payments the debtor may have a chance to raise finance to clear the whole debt

with a defaulted £12K loan he has no chance!!

[Pumpytums]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

Pt quick question,
if a debt buying DCA marks your file with a D for 6 missed payments AND the OC marks your credit file with 6 missed payments for the same account what would that mean?

I also have a D for missing 2 payments?

Correction I just checked it was 1, that seems rather harsh.

Pumpytums

[pt2537]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

mystery

The creditor can report non-payments, but how can he get away with giving you a Default status following the issue of an invalid DN?

I have informed one of my OC's that their DN was invalid. They say they will re-issue, so I asked them what they intend to do about the trashing my file for the past 4 years. Their reply, so far, is to offer me £200, which I have rejected.

My point is that they are fully aware that they have slipped up, and to repair the damage could cost them a lot in damages.

Alan

Because you are in breach of contract, arent you? you stopped paying thus defaulted.

So he can place a marker of default even if he dont issue a default notice

Its often thought that the accrual of the cause of action is from when the creditor issues the default notice, it is no, see Glass vs Swansea City Council, which states it is from when he could sue that the cause accrues, and a creditor could sue you for arrears when they become overdue and thus that is also when he can mark your file that you have missed a payment,

It is approved by the ICO that 6 consecutive missed payments are when the creditor can place a D on your file to indicate you have breached the terms of your contract.

[Pumpytums]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

I agree Mystery,
but and it's a big one the creditor should make sure the information recorded is accurate and updated regularly. Only one of my creditors does this bless them.

If it's not correct (or never happened) and they refuse to sort it out then I believe, sometimes the only recourse is via the county court.

Pumpytums

[Algee]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

mystery

The creditor can report non-payments, but how can he get away with giving you a Default status following the issue of an invalid DN?

I have informed one of my OC's that their DN was invalid. They say they will re-issue, so I asked them what they intend to do about the trashing my file for the past 4 years. Their reply, so far, is to offer me £200, which I have rejected.

My point is that they are fully aware that they have slipped up, and to repair the damage could cost them a lot in damages.

Alan

[mystery1]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

Agree with most of that. However with your crf you didn't pay so if the info is accurate then they are within their rights (perhaps obligations) to report it.

Many of us are past caring about the crf though as it is beyond repair and the 5/6 years credit free will do us good.

M1

[Pumpytums]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

Thats a good point, you receive a DN it tells you the amount due is X and after 14days the full balance will become due. You generally take this as correct, especially if you receive a termination notice or letter demanding the full balance.

Currys= debtor
Vogue driver = creditor

Its like going to Currys putting your Range Rover vogue through the window at 5am to get your IPAD2 early, that was pre-payed for then complaining when you get done for burglary. An IPAD2 technically did belong to you but you jumped the gun and tried to get it early you were mistaken 5am should have been 5pm. I'm sure Currys would let you off? Would the defence well I thought it was the right time and as they were not open I sought my own solution to get is wash? How about if an employee of Currys was outside telling you the time was wrong but you carried on?

I find it make things much clearer to put things into daft situations gives a different spin on it.

We saw this term in the CCA in Pumpkins thread cant remember which one now as the thread went bye bye which basically said providing both the creditor and debtor agree,terms can be changed/added inside an agreement which makes sense.

With regards to the arrears changing generally in my experience once they send a DN no more arrears notices are sent so they cannot add any more or in fact charge any more interest as per S86D Failure to give notice of sums in arrears. Technically they can argue that the full balance is now due but it's not if the DN is invalid. But they have said on their termination notice/ letter "from monkeys are us LTD" that it is. And as you said DD the creditor has taken away the debtors right to pay monthly instalments which I assume you have accepted.

If you actually paid the arrears would they not now need your permission to add a term back in that allows monthly payments after they terminated? Seems right. If you failed to pay said arrears they would be quite within their rights to demand them via enforcement but not the full balance.

So we are not talking about the dreaded UR thing it's more the debtor accepts that their right to make monthly payments has been removed.

very interesting

The thing that needs to be said is if a creditor trashes your CRF it can have catastrophic consequences to the debtor. Want that highly paid job working for the MOD, Financial sector, accountancy law, management the list goes on forget it. Want a new lease on an apartment, a new mortgage, a phone contract and this will amaze you pay for you bus/train pass by directdebit probably not. So pretty much your life is screwed for 6 years you are stuck as you are. How much is a big D worth on your CRF I would say potentially negative £120,000+. Makes you think doesn't it.

Pumpytums

[diddydicky]

Re: Default Re: Me V Bank - defective DN and unfair relationship defence.

"A bad notice cannot be remedied at trial or within 14 days of trial without leave of the court to allow the matter to be stayed

One point on this, if the arrears are paid then that would leave the Claimant needing to discontinue and pay the debtors costs of the action as he would have no cause of action"



Hi DD,
I think what PT was getting at if a creditor goes to court for enforcement and the DN is proven to be defective. The Claimant can then request a stay issue a new DN. After 14days they could then request the stay is removed and off they go again. However if the Defendant pays the arrears on the new DN (providing its correct) the Claimant would be left with no right of action the DN is satisfied.

Problem is if you then don't keep up payments on the agreement the Claimant could then issue a new DN and off we go again.

"A bad notice can be remedied during proceedings, as the arrears remain payable thus the cause of action remains and is not extinguished by the defective notice"


Another thing if proceedings are issued (I assume this is pre allocation) I don't under stand how a new DN can be issued at this stage. As the POC would be wrong, as they cannot claim the full balance until the DN expires.

Does PT mean that technically they could claim the arrears at court but not the full balance? But if you cough up then again the DN would be satisfied hence no cause of action.

I'm confused again.

Pumpytums

thanks yes i take your point

problem being (back to square one) WHAT amount do they put in the new DN if they alter it at court(or 14 days before)? if they put the ORIGINAL amount of arrears- then the payment of those arrears by the debtor would not satisfy s89 and bring the situation back to the status quo (as if the breach had never occurred ) because

a/ By then the creditor would have trashed the debtors CRA files

b/ The "terminated " agreement- if it is now to be stated was never terminated and was still alive - would then have many more months arrears -(the time in between the creditor terminating on the back of the faulty DN and the court hearing would be VERY many months .......... so the debtor could not bring the situation back to a point as if the breach had never occurred..by paying the amount claimed in the DN .....since he would still be (very) many months in arrears and therefore still in breach of the agreement



alternatively- if the creditor alters the amount in the new DN to reflect the old arrears PLUS the arrears accrued to the court date - then his claim that the debtor was in breach of the agreement ( with respect to the arrears built up since the original faulty termination would be an untruth - since if the creditor did not terminate the agreement- then at least he certainly "amended" the terms of the agreement (which the debtor did not disagreee to) when he told the debtor that monthly payments were no longer acceptable and that he must pay immediately in full............

if, in the case of puympytums- the court held that pumpytums had voluntarily terminated the agreement then a court- to be even handed- would also find that in this case the CREDITOR voluntarily gave up the right/cancelled the term of the agreement requiring the debtor to make monthly payments-

since pumpytums could not reverse her decision- without the creditors agreement- then how, in this case could the creditor reverse THEIR decision without the agreement of the debtor

the result being that if the debtor accepts the creditors proposal to alter/deleter a term of the agreement- then it would need the debtors consent for the creditor to re instate it

if the debtor refuses- how else is the agreement ever to be enforceable by means of a DN - since the debtor would never be in breach of any term or condition requiring him/her to make monthly repayments