Consumer Credit Litigation: Basic Guide
Basic Introduction to Consumer Credit litigation
- 1 Consumer Credit Litigation: Basic Guide
- 2 Now for the Initial Steps:
- 3 Requesting Information
- 4 Establishing that they have a right of action to the debt.
- 5 Establish that the balance they are claiming is correct
- 6 Establish that the Credit Agreement is valid
- 7 Establish that they sent a default notice in the proper format
- 8 Other Factors
- 9 For Credit Agreements Made After April 2006, Or For All Credit Agreements After April 2008.
- 10 Final Stages 1:
- 11 Final Stages 2:
- 12 Appearing at Court.
Consumer Credit Litigation: Basic Guide
You walk into the court room. The entire room hushes, as the eleven men of the jury all look at you. GUILTY! They think! Judge John Deed scowls…
Ech, not quite. People have a very warped sense of what a civil trial is. For a start, unless you’re dealing with very very very large amounts of money, no jury. Second, no court room. You’ll go into a nice office room, with a judge whose job it is to take into account the fact that you are a litigant in person, i.e. a normal bloke or lady who doesn’t have much experience of Law. The “trial” will be informal, involve lots of looking at law textbooks by the judge and solicitors, and at worst you’ll end up with a county court judgement for essentially the same amount of money as the claim (give or take a hundred quid).
Since almost all claims include collection / penalty charges, IT IS VERY RARE THAT THEY WILL GET THE FULL AMOUNT OF ANY CLAIM.
And, I’ll give you some further hints… a heck of a lot of people who go to court actually win! And even if you lose, the Judge WILL NOT order you to pay more than you can afford. And HE/SHE WILL NOT order you to go to jail, or punish you in any way…
Just look on it as a nice day out in your local town… it aint as scary as DCA’s would have you believe, and the Judge is really a nice person who generally doesn’t like the Claimant very much. After all, the Judge used to be a law student, and law students know something about debt… and tequila, but we won’t go there!
Now for the Initial Steps:
First, I would like you to take a deep breath… litigation is a lengthy process. It’s important not to get ahead of yourself, trying to write a defence before you have any information… you need to gather information at the first stages, it is also important to realise that it’s quite often a waiting game… there will be weeks where you are not doing anything in relation to the claim. That’s normal. Don’t expect to be working on it every minute. Don’t get ahead of the game.
Second, we need to know roughly how much money the account is, and whether the account was sold to a debt collection agency.
Third, you should call the court, and get the date that (a) acknowledgement of service is due and (b) the defence is due.
Fourth, if you sent a credit agreement request, you should check that the credit agreement request was received and signed for... recorded delivery is not always signed for. If it was signed for, or the check / po cashed, then no worries... otherwise, send a new one special delivery.
Fifth, you need to get information, so you will send the letter I post under this thread by special delivery. Hint here, all letters you should type but not hand sign.
Sixth can you scan the letters you've recieved so far, removing personal data and so on.
Can you post on your thread:
(1) was a default notice received (and scan the notice),
(2) Was a notice / letter before action received (and scan it)
(3) Was the account assigned to a DCA?
OK, so that letter was a little scary, wasn’t it? All those requests for information. There is a reason for that. The more you know about the debt, the more holes in the claimants’ case you can find. Some of the information is more important than other bits, but any or all of it might be the bit that saves you a fortune!
There is a second reason for “the letter”. It is a clear sign that (a) You are getting advice from consumer action group or someone who knows what they are doing, (b) you know your rights and (c) that you are going to vigorously defend the case.
Even if you chose to try negotiation, you will be doing so from a stronger position. And, if it comes to court, you will be able to defend properly.
Now, to conclude the advice, your immediate actions (in order) should be
1. Call the court, and find out the date acknowledgement of service and defence are due
2. Make sure you acknowledge service... you can do at the MCOL site (Money claim online). I would suggest selecting that you will defend the entire claim, and not submitting a defence / counter claim yet.
3. Check that the credit request letter was received and signed for; if not send it special delivery.
4. Send the letter in the last post, special delivery.
From now on, the rule is that you TYPE and don’t write any signature and that you send all letters special delivery (unless otherwise stated).
Finally, I would remind you that litigation takes time, and that you shouldn’t get ahead of the game. First, you find out information. Then you compare that information to their claim. Then, when you find every possible hole, and only then, do you draft your defence.
And remember, Consumer Action Group is here to help at any stage. Many people here have been through the same things as you, you won’t be judged, and we are here to help.
If you have any concerns or problems, please post them so we can help you.
Hope this helps.
Establishing that they have a right of action to the debt.
If the original creditor is the claimant, they almost certainly have a right of action to the debt.
If the DCA is the company that is suing, then, they must fulfil certain technicalities:
- They must have sent you a notice of assignment.
- They must have a Document (or deed) of assignment.
A notice of assignment must be served upon you in order for a DCA to have a claim to the debt.
This Notice of assignment must be absolute (that is they must have all the rights and duties of the contract) in order to sue in their own right.
If the notice of assignment is not absolute, you have every right to object if any case that does not include both the original creditor, and the DCA.
Further, if the notice of assignment is not correct, that is it includes unlawful charges or incorrect data, it spells your name, account number, address, or any other detail incorrectly, it is likely to be invalid.
Lastly, in your disclosure request, you have already asked for a copy of the document of assignment. I would suggest that, if a DCA were to fail to provide such a document, there would be no case to answer since they would have no clear right to the debt.
These are maybe technical points, but they are vital points – no notice of assignment = case struck out.
Establish that the balance they are claiming is correct
Did you notice all the requests for statements of charges, transactions, payments in the letter?
The purpose of those questions was to give you a secure basis on which to work out what the actual debt is. Did the DCA / Creditor calculate this right?
Now, I hate to say this, but mathematics is important. Thank the big fella in the sky my old mathematics teacher didn’t hear me say that. When you look through the statements you should look for:
- Unexplained charges, interest payments, or “adjustments”
- Check that each interest charge is correct,
- Check that each payment you made is registered.
No 3 is a good reason to submit the S.A.R. to your bank you’ve been intending to for weeks:) and, as a bonus, you’ll be able to reclaim bank charges!
The clear question is: do you owe what they say you owe? It is especially strong if they fail to produce statements at any point over the last 6 years before the default. They have to prove that what they are claiming is correct. Missing statements introduces doubt; you are the defendant, and doubt is good.
Check all the figures, and do the maths to work out interest payments.
I would suggest you counter claim for the difference, and check and default notice did not include such charges!
Establish that the Credit Agreement is valid
If they fail to provide a signed credit agreement, and the agreement was made before 2004, in most cases (i.e. not an overdraft agreement, or a non-commercial agreement) you have a completely open and shut case. You’ve won.
Sometime after 2004, if they attach proof of ID to you agreement, and it was online, then that may be enough. This is why you should never send proof of ID other than a copy of their own letters or statements! Post it and ask in the thread below, anyway.
If they send you an agreement that was signed by yourself, or which you believe may be enforceable, I would suggest posting it in
I would also suggest that you spend some time reading the thread, but I warn you – the debt action Group marathon is to read all 8,000+ posts, a challenge only those with the highest stamina can manageJ Then again, if you read it, you’ll probably know more about consumer credit law than most qualified solicitors:) That, and by then you’ll have the healthy law student attitude of “needing” half a bottle of tequila…
Establish that they sent a default notice in the proper format
The following information must be contained in the default notice:
i A description of the agreement sufficient to identify it
ii The name and a postal address of the trader
iii The name and a postal address of the customer
iv A statement that the notice is a default notice served under section 81(1) of the Consumer Credit Act 1974
v Details of the part or parts of the agreement which, according to the trader, the customer has breached
vi Details of the nature of the alleged breach of the agreement specifying clearly the matters complained of
vii If it is possible for the customer to put the matter right, details of what he is required to do in order to achieve this, and the date before which he is required to do so. This date must be at least seven days after the date of service of the notice, or
viii If it is not possible to put the matter right (for example, where goods have been damaged beyond repair), details of the amount (if any) required to be paid as compensation and the date before which it should be paid. This date must be at least seven days (fourteen, if after 1st October 2006) after the date of service of the notice.
Point to note
The date of service of the notice is the date on which the trader either delivers or sends the notice by post to the customer. Where a notice is sent by post, allowance should be made for delivery time when calculating the date by which the breach must be remedied.
Where any action is required under vii or viii above, the following statement must appear immediately after:
IF THE ACTION REQUIRED BY THIS NOTICE IS TAKEN BEFORE THE DATE SHOWN NO FURTHER ENFORCEMENT ACTION WILL BE TAKEN IN RESPECT OF THE BREACH.
The following statement must appear immediately before the specification of the action to be taken by the trader:
IF YOU DO NOT TAKE THE ACTION REQUIRED BY THIS NOTICE BEFORE THE DATE SHOWN THEN THE FURTHER ACTION SET OUT BELOW MAY BE TAKEN AGAINST YOU [OR A SURETY]
The words in square brackets are to be omitted or deleted if it is not intended to take any action to enforce any security
Further, there is provision in the consumer credit Act 2006 for a “default information sheet”, although the OFT has not implemented that yet.
- Was there any Payment Protection Insurance, and if it was viable, did they remind you about it at the time you first informed them you were ill/unemployed (if relevant).
- Was the PPI miss-sold? Was PPI charged for but not actually part of the agreement?
- What is the interest rate? If greater than 50%APR, and for credit agreements BEFORE April 2007, this might constitute an “extortionate credit bargain”. Or it might not, since each case is determined on its own merits. Ask in your thread for more details.
- Did they give adequate warning before taking you to trial? The pre-action protocols specify 28 days…
- Did they ignore/reject reasonable offers? An offer that is in line with CCCS/ C.A.B. guidelines should not normally be ignored, and that may be a reason to fight any costs.
- Are you unemployed? Most income-related benefits are inalienable. That means, the court can’t claim them. Ask questions on your thread.
- If you haven't paid, or sent written acknowledgement in the last 6 years (5 for scotland), the debt is probably statute barred. Ask in your thread for details.
For Credit Agreements Made After April 2006, Or For All Credit Agreements After April 2008.
This is a completely incomplete body of law. It related to the new unfair relationships terms of the Consumer Credit Act 2006.
And it is broad.
In short, it includes anything done or not done by the creditor. At all times, the creditor is to behave fairly and reasonably. Exactly what is fair and reasonable is in question.
- Did they breach, at any stage, any code of conduct?
- What procedures did they put in place to check your credit worthiness before they entered the agreement?
- What procedures did they use when you first informed them of the problems?
- What procedures did they use to collect money
- Was it fair and proportionate to take court action? Did they comply at all stages with the Pre-action protocols?
- Did they reject offers that you made in good faith, that were reasonable?
- Did they harass you, sending rafts of letters, fail to pass on details of your debt.
- Did they fail to send a copy of the Credit Agreement within time limits?
- Was there anything else that is unreasonable?
The burden of proof rests on the creditor in claims under the unfair relationships test.
In short, I would advise everyone to record ALL PHONE CALLS to DCA’s and creditors, and keep records of all correspondence.
Final Stages 1:
If there are holes in the DCA’s Case
I would suggest posting these holes, and asking what next, in your thread.
At this stage, you will need to write a defence and / or counter claim
I can’t give general advice on this; post all your information on your thread, and if possible write a draft defence people can check over.
If there aren’t any holes in the DCA’s case
If there are no holes in the DCA’s case, I would suggest that the most reasonable course might be to offer a limited settlement to the claimant. I would suggest that, if you were to offer a settlement based on your ability to pay, and within the guidelines expenditures of the national debt line or CCCS, then you would be able to include your offer as an argument against costs.
If you can’t pay a court judgement
If you can’t pay a court judgement, you can apply for a variation order or in some cases a time order. I would suggest that you post a question on your thread.
Final Stages 2:
What will happen after you submit your defence?
Step 1: The court will order a stay of 28 days. This will be effective until 33 days after the stay is sent by the court, and it is for the claimant to decide if he/she wants to proceed.
Step 2: If the Claimant decides to proceed, he will inform the court, and an allocation questionnaire will be sent out. At this stage, they will change your court to your local court. You’ll need to fill out the allocation form, and should ask questions on your thread. There several different allocation forms, so I would suggest writing out the headers of the form i.e. a, b, c, d, etc.
Step 3: A court appearance. This may be an application hearing, a case management hearing, or a trial.
I would always suggest sending a general letter asking the opponents to suggest some procedure for negotiating an amicable settlement to the issues… because that way, if the judge asks did you offer a settlement, you can say you tried to negotiate one, but it was not possible.
I can’t give general advice about stage 3: exactly what it will consist of depends heavily on each case, and each judge.
However, I can give you some basic advice:
Appearing at Court.
Before the appearance:
- Make sure you know where to go.
- Make sure you follow any court orders (i.e. about sending relevant info to the court / To the claimant)
- Ring up the court, and ask who you are to report to, and where to go. This will likely be the usher.
- If you want a friend to be with you, it is best to write to the court a week before (send a copy to the claimants’ solicitors) and ask permission from the court for this. Also, make sure to ask the judge before the trial, and the opponents’ solicitor simple court etiquette. There should be no objection.
- Your friend shouldn’t speak, except quietly to yourself, unless you have asked everyone else present (and especially the judge) if that is permissible. If the judge says no, make no objection – he/she is entirely within their rights. Highlight that it is because you are inexperienced in law, and feel he/she would “help put your case more clearly”.
- I would suggest writing a skeleton argument, explaining exactly what your case is. Make notes. Make sure you have all necessary documentation, ordered for easy reference.
On the day
- Dress smartly, have a nice hair cut, etc.
- Make sure you turn up at least 30 minutes before the case.
- If the opponents solicitor talks to you, and asks if you are willing to discuss the case, say “no, but I am willing to listen to you”. Listen quietly.
- Don’t believe everything the solicitor says to you. He/she will probably play mind games.
- Then wait quietly for the case to begin.
In the court room.
- Shake the judges and solicitors hand if offered, say “Good Morning / Evening sir/madam” to the judge, smile, be a nice personJ
- Be polite, and respectful to the judge. Address him/her as “Sir” or “Madam”.
- Be polite to the solicitors.
- If you don’t understand, ask questions.
- If you don’t agree with anything the opponents’ solicitor says, be calm and state your points politely.
- It is worth giving a copy of your skeleton arguments to solicitors and judge before the case begins. Say something like “Since I’m not a lawyer, I felt that preparing this would ensure help me to clarify the main areas in dispute.” it will put the opponents at an immediate disadvantage –most cases at this level aren’t going to have skeleton argumentsJ
- Take notes of what the judge says, if possible, or ask a friend to take notes.
Most importantly, be respectful to the court. Don’t demand, humbly suggest. Use moderate language at all times. Don’t annoy the judge. Act reasonably, politely, and calmly at all times.
Whatever happens, come out and have a pint in the pub or a cola if you prefer. Realise if you select Cola, it is sure proof you would make an inadequate law student.
And come back to the forum to gossip about your fun day out