Default on Barclays loan

[intrigued]

Hi,

Just signed up here and hope you don't mind me posting something I have also posted on MSE but could really use some advice.

I have a dispute with Barclays over this loan account as it should have been cleared and closed off 3 years ago. The Financial Ombudsman is looking into the case at the moment.



Anyway, I received a phone call from Barclays collections the other day telling me that I was behind for September's payment and asked me if I could pay. I said that I could neither afford to nor was willing to whilst the account was in dispute (I realise that I should still make payments to protect my credit file as I have never missed a payment but I honestly can't afford £500 a month that I didn't budget on paying). Anyway he said that they would default me and terminate the agreement so today I received said default notice.

Three questions about this situation:

1. I have never received any letter notifying me that I am in arrears on the account just the call. I thought they had to issue a notice of your arrears before they could default?

2. I thought you had to be at least 2 months behind before being defaulted according to the CCA?

3. Finally, the default notice doesn't state the amount due so does this make it invalid? It states that if I don't comply then the full balance of £5,500 will be payable but under the section of how to remedy the breach it just says "payment of arrears" without any actual amount.

Thanks for any advice!

[Never-In-Doubt]

Re: Default on Barclays loan

I have a dispute with Barclays over this loan account as it should have been cleared and closed off 3 years ago. The Financial Ombudsman is looking into the case at the moment.

If the FOS are dealing, let them finish first before doing anything else....

Anyway, I received a phone call from Barclays collections the other day telling me that I was behind for September's payment and asked me if I could pay. I said that I could neither afford to nor was willing to whilst the account was in dispute (I realise that I should still make payments to protect my credit file as I have never missed a payment but I honestly can't afford £500 a month that I didn't budget on paying). Anyway he said that they would default me and terminate the agreement so today I received said default notice.

Are you sure it is a full default notice served under s.87 of CCA1974 or is it a threat or default warning notice? If you last paid in September then no way on this planet can they have defaulted you - i'd check what they sent you, and also confirm the last payment date....

1. I have never received any letter notifying me that I am in arrears on the account just the call. I thought they had to issue a notice of your arrears before they could default?

They have to follow a process, read my cover note in this section and all will become clear...... See here: ---> viewtopic.php?p=114#p114

2. I thought you had to be at least 2 months behind before being defaulted according to the CCA?

You have to be at least one missed payment late - or you're not in arrears, so cannot be defaulted as you've not breached anything to remedy...

3. Finally, the default notice doesn't state the amount due so does this make it invalid? It states that if I don't comply then the full balance of £5,500 will be payable but under the section of how to remedy the breach it just says "payment of arrears" without any actual amount.

A default notice shows the arrears to pay, to bring the account back to order. So if you had a £10k limit and were £1k in arrears, the default notice should say pay £1k by (14 days) in which case no default would be registered (if you paid in 14 days) - the purpose of this is to stop rash defaults being issued, so that you have been given ample opportunity to bring the account back into status.

However, it may well be that they defaulted you using the whole balance, if they terminated the account first - usually they terminate at default notice point so still, this seems a bit fast....

[intrigued]

Re: Default on Barclays loan

Hi Niddy,

Thanks for the response. I'll answer your questions below. I should probably point out that this issue relates to a business loan but as I was a sole trader I believe it is exactly the same as a personal laon and still regulated by the CCA.

The letter says:

Type of agreement: Loan
Account number: XXXXXXXX

DEFAULT NOTICE

Served under section 87(1) of teh Consumer Credit Act 1974.

Important - you should read this carefully

A breach of the above agreement has taken place.

The provision of the agreement breached: the requirement to make regular loan payments.

Nature of the breach: Failure to make monthly repayments.

To remedy this breach you are required to take the following action on or before 05-11-2010: payment of arrears.

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.

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.

1. With effect from the date shown above the Bank hereby terminates the agreement and demands immediate repayment of the full amount outstanding which is £5545.08. Daily interest charges of £2.36 will continue to accrue (assuming no change in the interest rate) from the date shown below until full payment is made.

2. The Bank may take steps to enforce any security specified in the agreement.

3. If you have other borrowing facilities with the Bank some or all of them may be terminated or full payment called for.

4. Credit balances on any of your accounts with the Bankmay be applied towards discharge of your loan and some or all of your accounts may be combined.

[intrigued]

Re: Default on Barclays loan

(continued)

5. Court proceedings to recover monies owing to the Bank may be taken against you in due course.

6. The bank intends to register details of your account with credit reference agencies and may pass the debt to one of its recovery agents with a view to taking action for repayment.

This may seriously affect your ability to obtain credit.

[There is then a section explaining what to do if having difficulties making repayment]

FOR AND ON BEHALF OF BARCLAYS BANK PLC

XXXXXXXX
MANAGER

Date 13 October 2010

[intrigued]

Re: Default on Barclays loan

At the moment only the September payment is behind although the October payment is due around about now. As you can see I actually have no idea how much I'm in arrears for and this is the first letter I have had notifying me of it.

I am also thinking about requesting a copy of my agreement and checking for enforcability. I've gone back through all my paperwork and managed to find a copy of the form I signed when taking out the loan. I have three individual sets of paperwork which are stapled to gether.

The first consists of 2 pages and is titled "Pre-contract information" and details the amount of the loan, interest rates, number of payments etc etc but no signature.

The second consits of four pages. The first two are titled "terms and conditions" and has 9 items relating to fees, events of default, set-off etc. The next two are my copy of the fixed-sum loan agreement. These contain exactly the same information as the pre contract information and again no signature.

The final set of documents consists of two pages which is basically a standing order form that I have signed. This does also make reference to a signed "bank copy" of the Credit Agreement/Facility Letter so I guess I should request a copy from them?

PS Apologies for the very long posts!

[Never-In-Doubt]

Re: Default on Barclays loan

Well that default notice is not right cos it should be dated and also should clearly show the arrears amount - as well as the full amount, if they are reclaiming it....

I'd be writing to them querying this, or at the minimum contact your caseworker at FOS and send them an update... In any case, I can't offer too much help until the FOS have finished.

I linked you to a default notice above, you could have said "yep, its the same as that" - as they are all the same!