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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I have a credit card debt dating back to 2005 with MBNA. My

Resolved Question:

I have a credit card debt dating back to 2005 with MBNA. My financial situation worsened and since i have not paid towards the debt. The debt has been passed onto to aktiv kapital to collect the debt, then to tempus solutions and now a law firm has lodged a small claims case at the local county court.

MBNA originally offered a reduction to clear the account. I have since offered a comparable amount but aktiv kapital refuses to agree or negotiate.

What are my options?
is the credit agreement enforcebale as it dates back to 2005?
should i get a solicitor?

Thanks
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

may I ask the last time you made a payment towards the credit card account approximately please?

Customer:

april 2012 for £206

Joshua :

thank you. Can I ask how much is outstanding on the account?

Customer:

£6933

Joshua :

Thanks. How much do you think you could afford to pay? Do you have any other debts?

Customer:

i have other debts such as mortgage and credit cards for my spouse. I have offered the claimant £2500 which is near to the original offer of £3300 from MBNA.

Joshua :

thank you. Do you know if the agency has purchased the debt from the credit card company always simply acting as the credit card company's agent?

Customer:

its purchased. i have a letter confirming this.

Joshua :

thank you. Finally, is the figure of £6933 near to the actual amount owed against the account or have significant numbers of fees and other charges been added? If such charges have been added, roughly what is the total amount of the same?

Customer:

the balance at last payment was 6304

Customer:

aktiv kapital are asking for £7261.59

Customer:

6933 is what MBNA last asked for.

Joshua :

thank you.

Joshua :

Initially, the position is simply one of negotiating with the debt collector however, from what you say, they have now elected to issue proceedings against you. there is nothing preventing you from continuing to negotiate in the meantime however agencies will typically be less receptive to offers once proceedings have been issued

Customer:

Yes i have made several offers. they have not negotiated.

Joshua :

it is possible to make an offer of settlement at any stage prior to the hearing. Now proceedings have been issued, an offer to settle can be made using something known as a part 36 offer. This is a process whereby you make an offer and if the claimant fails to obtain a higher figure in court, then even if they are successful, costs will be awarded against them. Accordingly, part 36 offers can be a useful negotiating tool. in order to make a part 36 offer, you can do so by writing to them under cover of a letter dated " without prejudice save as to costs".

Joshua :

beyond this, it is a question of your defending such part of their claim which you consider lacks merit. you should have received a response back from the court which requires you to respond within 14 days. You can acknowledge service which will double the time to 28 days. You can either admit the claim, admit part of the claim or defend the entire claim

Customer:

ive rad that a CCA from 2005 may not be enforceable, is this true

Joshua :

in order to demonstrate that you have a defence against the claim, you would need to be able to show that some of the money being claimed was not incurred by you or is unfair such as charges that have been applied to your account

Joshua :

There was a period in the late noughties where challenging credit agreements was very popular and in many cases successful. This was largely founded on s78 Consumer Credit Act which states that a lender must produce a copy of the original signed credit agreement to the borrower on request. In many cases the lender could not because they havd not kept a copy or had lost it and this led to many many thousands of agreements being declared unenforcable.

Joshua :

However the party ended in 1999 following a big case in this area (Carey v HSBC Bank [2009] EWHC 3417 (QB)) and the judge concluded that a creditor can satisfy the provisions of section 78 by providing a ‘reconstituted version’ of the original agreement. That copy must contain the name and address of the debtor as it was originally, but it can provide that information from whatever source it has. It does not have to come from the original agreement. Nor does the ‘reconstituted’ document have to be Consumer Credit Act-compliant as to form, as at the date the agreement was made. Furthermore, even if the creditor is in breach of section 78, that did not give rise to an unfair relationship which could render the agreement unenforceable under section 140A of the Act.

Joshua :

This has virtually brought to an end the possibility of having agreements declared unenforceable based on technicalities unfortunately since the above case.

Customer:

i thought this ruling was not retrospective

Customer:

sorry just saw the date 1999.

Joshua :

Unfortunately so. claiming credit agreements is unenforceable has not been possible for quite some time now.

Joshua :

if however, you can shave and unlawful charges interest and other amounts have been added to the claim, you can consider a defence in respect of such sums and at the same time can consider part 36 offers which will be considered by the creditor because it costs them money to bring small claims actions which they cannot recover as the small claims track does not allow for recovery of legal fees

Joshua :

*shave and = show that. apologies for the typo

Joshua :

is there anything above I can clarify for you?

Customer:

Okay so you dont think there is any merit in having the documentation sent to me by aktiv kapital scrutinized by a solicitor?

Customer:

and what constitutes an unlawful charge ?

Joshua :

in terms of being enforceable, providing they can supply a copy of the credit agreement you signed or a reconstituted copy, this has been held to be satisfactory in terms of discharging their obligations under the consumer credit act and unfortunately as you say, having the same reviewed is unlikely to be of any merit at this point

Joshua :

what you can do however is ask the debt collection agency to supply a full breakdown of your accounts which they are claiming against you for and you can challenge them on any sums which either you do not accent were incurred by you or constitute charges which are unfair. A charge which is unfair will be an amount which exceeds the true cost of a breach of condition on your part to the credit card company

Joshua :

for example, a £30 fee for failing to make a payment would likely constitute an unlawful penalty which is unenforceable in law

Joshua :

is there anything else above I can assist with?

Joshua :

Is there ahything above I can clarify for you any further?

Customer:

i hoping for a silver bullet

Customer:

was*

Joshua :

I wish I could provide you with one. Unfortunately the golden years of writing off credit agreements is behind us following the above case but ideally you will still be able to argue down the amount demanded using some of the above arguments.

Joshua :

There are of course potentially other options you could consider such as an IVA or in an extreme case bankruptcy but I presume you would not want to consider these measures unless absolutely necessary which presumably they are not given the amount of the claim

Customer:

thats true

Joshua :

is there anything above I can help you with any further?

Customer:

no thats about it

Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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