Why do people ignore debt collectors

Why do people ignore debt collectors? its a question that puzzles me, why? well because often by ignoring the debt collector you are missing out on key evidence of unreasonable behaviour which can sometimes be used against the debt collector.

Also, it can nip a matter in the bud without the matter escalating out of hand. I refer to a recent post i made where i had recieved a silly little missive from a debt collector who in my opinion was simply chancing his arm in the hope i would pay them, pay them for a debt that i never owed in the first place. Here is a link to the post where i set out the issue.

But it makes me think, why ignore something like that? i mean, i have made my point clear to the debt collector why i do not owe the money and therefore he should carry out a proper investigation and should cease contacting me as a result. However, if i had ignored the matter i have no doubt i would have been bombarded with letters, calls etc.

Now i stop and think back to cases such as Harrison v Link and Phoenix v Cresswell, and it is clear that if those people had ignored their debt collectors, and not written back when a letter was sent to them, then it is unlikely that they would have got the results they did.

Here is a very very good quote from the Cresswell ruling

21. Paragraph 14 of Dr Cresswell’s witness statement on page 217C says this:
“I now understand that the claimant has disclosed a default notice to my solicitors. My solicitors have advised me that there are issues with this document as amongst others. The figures make no logical sense. This is an issue that I find confusing considering that the default notice would surely have been issued by a responsible bank who should be accurate with its accounting. It is plausible that HFC Bank served a default notice as they clearly claim, however I have no record of such a document being received and I consider myself to be a meticulous record keeper and so consider this to be unlikely. “
22. I was taken to Dr Cresswell’s file of correspondence which he passed on to his solicitor. He was somebody who wrote letters to the bank and responded to the letters that they sent to him. I have no reason to doubt what he says about not receiving a default notice from the bank. Further it seems to me he would have recalled it. On the balance of probabilities I find that he would have responded to it, for the figures were incorrect. Having seen the correspondence he has written in the past, it seems to me the first thing he would have done is raise the inconsistent figures with the bank. Even today Counsel for the Claimant is unable to explain one of the figures and why it comes, as it does, in the section under Further Action on page 198. The best she can do is to suggest that the bank were requiring a repayment of less than in fact they were entitled to, which I regard as somewhat unlikely.

Now that was a key point as the judge went on to find the Default notice was not served. It is clear however that if Dr C had not replied to correspondence like he did, and been a meticulous record keeper,  then i do believe the judge could have found that the Default notice was validly served.

There was also a case i dealt with called RWC v Legg and in that case Mr Legg had written numerous letters, not templates either, but clear concisely composed letters telling RWC what was wrong with their agreement. When the matter finally came before District Judge Oldham, he was pretty unhappy when we passed him the correspondence file to show that the points were raised for over 2 years and yet the Claimants solicitors were applying on the day of trial for an adjournment for the very reason that Mr Legg ( and me) had been pointing out in our letters for over two years. As you can imagine the adjournment was refused and the claim dismissed. Rightly so in my view too.

However, once aagain without the evidence of the letters i doubt the outcome would have been the same.

I should also make the point that if you ignore the letters and telephone calls etc, then you will give the creditor carte blanche to paint you as a filthy debt avoider before the judge.

 

However, if you can stand up and say i wrote to them and told them that i couldnt afford to pay £xxx and in any event the fact that that the default notice is invalid because…… and they simply ignored me and simply kept calling me over and over, then that paints a much different picture for a Judge doesnt it?

Indeed if we look at what HHJ Chambers said in Harrison v Link

 

In my view, the Claimant rightly complains that, mainly by MBNA but also by the Defendant, he was hounded by telephone calls seeking payment of what was said to be due. The calls were a form of torture oppressively frequent in amount and often without attribution to an identifiable number. I am unimpressed by suggestions that all that the Claimant had to do was to seek a meeting when the position was that those who called him would not listen to what he had to say of his difficulties. Nevertheless I am not entirely impressed by the Claimant’s failure to write a detailed letter in which he set out his position. I sense that the Claimant wished to engage upon his own terms albeit in no negative fashion.

 

Clearly if Keith had ignored the calls, he would have had a spot of bother as the High Court ruling wouldnt have had as much bite in my view without the criticisms of the creditor.

By ignoring the contact from the creditor, in my personal opinion, you are missing out on critical evidence that could be used in Court with an allegation of an unfair relationship. Now im not suggesting that a person should engage in letter writing when the letters have no merit, but if the creditor were to write to me and say ” you have not replied to our recent correspondence……” then i would write back and say “thank you for your letter, the contents of which i note. I wrote to your company on xxxxxx and attach a copy of my letter for your urgent attention. May i ask for a reply to that letter, at which point we will be able to move the matter forward, however until my concerns are addressed it is impossible to move forward.” or words to that effect. That is what Dr Cresswell did in his case, what Keith did in his case, and what Mr Legg did in his matter, all three of which had favourable outcomes in court and all ended up with criticism of the creditors for not addressing the individuals concerns.

So it does trouble me when i see people saying “im just going to ignore that letter” on many of the internet forums, as i take the view it is better to write back setting out the basis of your dispute at an early stage rather than just ignoring the matter . Anyway thats the end of my Saturday morning rant, time to go to the pub….

The pitfalls of the seemingly unenforceable credit agreement.

I quite often see clients who are challenging their credit agreements for credit cards, loans and hire purchase and there is one theme which is developing rather worryingly with these cases. That theme is the argument that the credit agreement is unenforceable because the prescribed terms are missing.

Technically, it is a correct point, if a debtor has made a request under s77,78 or 79 Consumer Credit Act 1974 (as amended) and the agreement was live at the time of the request, then the lender has an obligation to send a true copy of the agreement ( but not a photocopy of the original) and this was recently addressed in Emma Carey v HSBC Bank Plc as to what is and what is not compliance with the aforesaid sections.

The Court of Appeal also addressed s78(1) in a case called Kotecha v Phoenix Recoveries. Kotecha was about a credit card however, but nonetheless it gives guidance on what the creditor must provide when a valid request was made.

So often clients receive the copy agreement and either the creditor has sent a poor copy of the original agreement in a microfiche but sometimes without the original terms or with part terms and conditions or they sent a reconstitution of what was said to be the original agreement. Now when the original signed application form / agreement is sent to the debtor and there are part terms or no terms, then technically the agreement could be unenforceable because of a breach of section 77,78 or 79  Consumer Credit Act 1974 (as amended) and likewise if the reconstitution is inaccurate and misstates the prescribed terms, or for example like in Harrison v Link Financial Limited before HHJ Chambers QC sitting as a judge of the High Court, the lender sends a set of terms purporting to be from 1998 with a registered address from 2001 then you can pinpoint errors within the documentation which would leave the creditor unable to enforce the agreement but only until he remedies that defect. The problem with those sections of the Consumer Credit Act is that they are suspensory and can come back to bite you, why? because the creditor can remedy the s77,78 or 79 breach even on the day of the trial. As much as i find that galling, it is true sadly as can be seen in Harrison v Link Financial Limited. Link via MBNA had made numerous failed attempts to comply with the relevant provisions yet they had botched it up over and over, it was pretty spectacular really, it was like “heres a true copy, no heres a true copy, no we got that wrong too but honest this one is really the right one” now to me, when i read Carey v HSBC bank Plc it seems quite clear that Judge Waksman expected a bank, a sophisticated financial institution, to be able to accurately reconstitute the agreement without any difficulty. It does however seem that those expectations are misplaced as most of the lenders i deal with seem to struggle with the basic information purposes of the 1974 Act.

Anyway, i have digressed slightly, so the breach of s77,78, or 79 does bar enforcement while the breach continues. But if the lender puts right the breach you are in trouble if youve gone to court only reliant on those sections.

The biggest problem is that people need to look past s77,78 or 79 and think back to when they took out the agreement!! this is far more important than s78 in my view. It is surprising how many people i see that have all their arguments lined up on section 78 for example but have not even thought about the other potential issues that could lead to a far stronger argument for obtaining a declaration the agreement is unenforceable.

Now i dont want to sound like i am dismissing the importance of s78 Consumer Credit Act 1974 as it is a powerful tool, indeed if one looks at Cabot Financial Limited v Bachellier s78 Consumer Credit Act 1974 was the winning provisions as  the judge was not satisfied that the Claimant had complied due to the numerous errors within the documents.

However, as cases like HFO Capital Limited vs Roland Wegmuller show, you should look beyond s78 and consider whether the agreement was properly executed from the outset. I see arguments that “the prescribed terms were missing from the s78 reply therefore the agreement must be unenforcable musnt it?” well no actually that isnt the case at all. Yes it would in my view constitute a breach of s78 Consumer Credit Act but there is no mention of the original agreement at all. Did the original contain the prescribed terms? if it did not and it was executed before 6th April 2007 then theres a darn good chance the agreement is unenforceable.Using the Wegmuller case as an example to reinforce my point, Roland was attacking HFO for their non compliance with s78 Consumer Credit Act, which was a valid point, but when my firm got instructed,i asked Roland about the signed application form that had been produced. He preceded to tell me that he recalled the document in detail. He said that the application fell out of a sunday news paper and he completed it, and returned it to the creditor. He went on to recall what was on the reverse stating that there were no terms and conditions anywhere and his evidence was believed.

The Creditor had all kind of issues too, as the terms they had produced referred to the “Card carrier” and the card being attached etc, so no way could they have been provided with the application form when Roland signed it, that would be impossible as you could never get a credit token before you signed the agreement could you? how would they know what name to put on the card for example before you fill in the application form. Clearly when all the facts were put together and when Rolands recollections were added to the mix, it confirmed that the original agreement was unenforceable, irrespective of whether the creditor could put right the section 78 breach.

This is often where the difficulties arise, as i have seen a few cases on the internet forums where people have fought the creditor under s78 arguing that the copy isnt a true copy, yet when the creditor puts right the errors and the debtor is asked “hang on a moment, when you signed that application were those terms and conditions supplied” and the response is yes or i dont remember, then to me that is an accident waiting to happen. If that sort of case were taken to court then i dont think i would fancy getting involved lol.

The problem with unenforceability arguments is that the debtor cannot simply put the Creditor to strict proof that the original agreement was properly executed (enforceable) . That is not how it works unfortunately, the burden is on the creditor to establish there was an agreement which it seems can be discharged by showing that the money was borrowed and spent and that the debtor was repaying etc. The burden then shifts to the debtor to raise his argument as to why the agreement is unenforceable. It is not good enough it seems for the debtor to ask the creditor to prove it, or to say i dont remember signing anything in a vague sense, what is required it seems certainly after the Carey v HSBC case is for the debtor to make a positive assertion as to what he signed, much like Roland Wegmuller did. In HFO services v Kirit Patel, an appeal case in the County Court, HHJ Platts said that where a debtor wishes to allege the agreement is improperly executed, the debtor must state why, each breach of the Act or Regulations must be pleaded. It then shifts the burden onto the Creditor to prove the agreement was properly executed.

This is the point that most people miss, even  when defending , the burden is on the Defendant to say why the agreement is unenforceable and a distinction must be drawn between saying the copy the creditor has provided now has no prescribed terms and the agreement when i signed it did not have those terms and conditions with it because it had ……..

It is important to look beyond the section 77,78 and 79 issues when dealing with unenforceability and look at the state of affairs as they were when the agreement was made. It is often difficult to recall what the agreement was way back then but it is important to get as much detail down on paper as you can. For example, in one matter which i am aware of, the bank didnt have the original agreement but was adamant that the banks records were correct and that the customer had gone into branch X on X date and signed an agreement. The bank however didnt reckon on the client being an astute record keeper, and he produced his diary to say he was in the House of Commons no less on the day the bank claimed he was some 300 miles away agreeing to a credit card. The bank conceded that there was never a signed agreement when the evidence was disclosed.It clearly was impossible for the bank to maintain that contrary to the overwhelming evidence, the debtor still signed a credit agreement in a branch of the bank when he was 300 miles away. Clearly the banks records became questionable and i would not like their chances of winning in court when the only record they claimed to have of a debtor signing an agreement was demonstrably wrong.

 

It is however very important to get all the facts together and not to focus on one single strand such as s78 as it can come back to bite you on the backside if you do. As i have said in previous interviews with the press, the devil in these cases really is in the detail .