Default removal

[Smith12345]

Hi all,
I had a Halifax default put against my name and debt sold on to PRA for a loan.
i missed two payments in 2022 - Jan missed , feb and March paid then missed April and paid May. By May 17 I had a default against my credit report and debt sold.
now I’ve been told to re look into this because I had only missed two payments and not three, is this correct?

[R0b]

Hi,

I'm not sure there is a specific law that prohibits defaults being issued after 2 missed payments, but the general rule is between 3 and 6 months of continuous non-payment which is based on guidance issued. Typically, a default will happen when the relationship has effectively broken down.

Can it be said that 2 missed payments meant the relationship has broken down? Probably not, but if there is no rule or law that prohibits a default notice being issued, they could do that after 1 missed payment if they wished.

You may want to have a read of the Principles for Reporting Arrears guidance which can be found using the link below. The guidance also says that before a default notice can be reported, they should give 28 days notice. IF they haven't done that, then you could argue that a default should not have been reported in any event.

https://www.scoronline.co.uk/key-documents/

[Smith12345]

Hi Rob,

I was hoping that the guildlines were more than just that, I missed the payment in January but then paid in February and March so at the point of them starting the default notice I was around £300 behind on a £13,000.00 loan.
I can’t remember ever receiving a default notice but then we live on a new build estate and there was large periods of time were no one was receiving post.
what do you think my chances are on getting this overturned? I’ve read on several websites that it’s three months consecutive missed payments before a default notice is issued.
They also received another payment on may 2nd which they state I was in default from the 17th May

[R0b]

Well, the guidance is based on an agreement with certain bodies and trade associations and its members, so if Halifax is part of one of those organisations (I assume they are) there may be an argument to say they shouldn't have reported the default since there wasn't actually a breakdown in the relationship at the time to justify issuing or reporting a default.

You could make a formal complaint to PRA as the new creditor or the debt based on Halifax's past actions, then take it to the Financial Ombudsman to decide, though I am unsure what options there will be since the contract is now terminated and I don't believe the FOS has the power to reinstate a contract.

Regulated creditors have to comply with FCA rules, particularly the Consumer Credit Sourcebook (CONC). CONC 7.3 covers defaults and arrears, perhaps CONC 7.3.14 talks about proportionality and not to use disproportionate methods. This is a rule rather than guidance and so it would have been a breach of Halifax's regulatory duties in the way it acted.

https://www.handbook.fca.org.uk/handbook/CONC/7/3.html

Section 140A of the Consumer Credit Act 1974 may be of assistance in that there was an unfair relationship based on the way Halifax exercised it's rights to issue a default notice, contrary to CONC 7.3.14 and any other relevant matters that you would want to raise.

https://www.legislation.gov.uk/ukpga...9/section/140A

The points I have raised are not the typical everyday type defences that someone in breach of an agreement would argue in their defence. It would be sensible to try and at least seek some initial legal advice as to the prospects before considering going down that route. If you submit a formal complaint, that should stall any legal proceedings because FCA rules says that creditors should not start proceedings until the appeals process has been exhausted.

What I am trying to say is, you need to do as much evidence gathering as possible to build up a picture that the way Halifax has acted, was in bad faith, unfair and/or contrary to their own regulatory obligations. Based on what you have described, my personal view is that a default shouldn't have been issued but you need to convince the FOS or a judge to think the same way.

It would be sensible at this stage to submit a subject access request to Halifax about the account including all notes, correspondence and aything else they hold on file about you.

As an aside, I personally don't have much sympathy with the excuse that you are living on a new build and not receiving post. There are other means of receiving communications or at least updating your creditors/service provides that there is a postal issue and either redirect your post to email only or to another address where post can be accepted. It's easy for someone to say that they didn't receive the post because of no postal deliveries but some responsibility should be taken if you have sat there and done nothing to try to resolve it or find alternative means - I'm sure that would be something raised by PRA if this ever came to court and you may need to explain yourself with evidence. Of course, if you have exhausted all of those options then I can understand your frustration.

[Smith12345]

Hi Rob,

thank you, yes my main argument is that I feel it was unfair while they might say the relationship had broken down I was still paying them after the first miss payment in January.
Ive since paid off PRA last year so well before the agreement was due to end and I believe I even told Halifax at the time I was struggling due to the energy crisis and my partner being off on maternity leave but they still proceeded with the default.
the post not being received was me explaining why I don’t remember receiving the notice, I do know I spoke with them over the phone several times.
i have already asked PRA group to make a complaint and I’ve also done the same, I also have a bank account, savings and mortgage with Halifax so would have hopefully a long term customer would have been treated a little better.
thanks for all your advice Rob I really appreciate it.