Do I actually owe anyone anything?

[CardShark]

In Spring 2003 I purchased a TV, the bulk of the value of which was on the store's finance scheme. This scheme allowed me to pay the balance after 6 months interest free or pay a nominal sum after the 6 months for a further 53 months in order to clear the debt, though I would end up paying the best part of double the financed amount if I had done so. I intended on clearing it in full after 6 months but my circumstances had changed and I started to pay monthly which I did for 18 months straight, after which I called the finance company and asked for a settlement fee. They gave me a figure, I paid up and I cleared my debt 2 years after I took the finance out.

Over three years later, in the Summer of 2008, I get a letter from a "debt purchasing" company saying that I still owed money on the account, I tell them to jog on but they're quite insistant. They say that the last payment on the account was in Spring 2005 (which would be correct as that's when I settled it all) and that I defaulted in the Spring of 2008, the date they gave was the date that I would have made my last monthy payment had I still been on it, which I quite clearly wasn't. I called up the original finance company and asked them what was going on, they said that they couldn't help me and that the matter was now in the hands of this debt purchasing company...

I'll say now that while I can prove *all* my payments, I have nothing on paper from the original finance company to say that my debt was cleared... but neither did they contact me in any way between the day I paid my debt off and the date that I would have made my final monthly payment, which is over a 3 year period!

After a couple of phone calls this second company started to leave me alone, no letters or phone calls at all. Then, a year or so ago, it started again - letters stating that I still owe a sum of money and that I really should pay up or else. To my detriment I ignored them and even started ignoring my phone should a number ring that I didn't recognise, I was debt free so they could whistle. The last letter, recieved today, is from a debt collecting agency on behalf of the debt purchasing company, stating that things "may" get properly serious should I not take action.

Now to my question... I have heard that there is a period of time whereby a debt becomes null and void if it hasn't been collected, is this the case? If this is the case then what is this time period and when would it start from? The date of my last payment, Spring 2005, or the date I supposably defaulted, early 2008? As far as I'm concerned, and truly believe, I don't owe a penny to anyone, but can I just tell them to sod off regardless?

Any other advice greatly recieved, I'll be seeing the CAB for a chat on Friday but wanted to sound out here as well

[Steffan]

The Statute of Limitations means that an unrecognised debt is unenforceable after 6 years.

[Steffan]

To add a bit of detail.

Unless you admitted the debt ie said 'yes I will pay it'or made payments that constitute recognition of the debt within the last 6 years you are not liable for this debt.

In the UK as a broad principle debts are unenforceable after 6 years.

Unless signed under deed (mortgages etc).

IMO you are not liable for the debt.

Do not answer the calls: send letters back unopened marked Return to Sender. They will give up.

[CardShark]

Steffan said:

To add a bit of detail.

Unless you admitted the debt ie said 'yes I will pay it'or made payments that constitute recognition of the debt within the last 6 years you are not liable for this debt.

In the UK as a broad principle debts are unenforceable after 6 years.

Unless signed under deed (mortgages etc).

IMO you are not liable for the debt.

Do not answer the calls: send letters back unopened marked Return to Sender. They will give up.

Thanks for your response, Steffan.

So, in your opinion, because I completed my side of the deal in Spring 2005 and haven't made any payments since and have, on all occasions, refuted any debt or monies owed then the 6 years has passed and they have no right to pursue me anymore?

[Steffan]

CardShark said:

Steffan said:

To add a bit of detail.

Unless you admitted the debt ie said 'yes I will pay it'or made payments that constitute recognition of the debt within the last 6 years you are not liable for this debt.

In the UK as a broad principle debts are unenforceable after 6 years.

Unless signed under deed (mortgages etc).

IMO you are not liable for the debt.

Do not answer the calls: send letters back unopened marked Return to Sender. They will give up.

Thanks for your response, Steffan.

So, in your opinion, because I completed my side of the deal in Spring 2005 and haven't made any payments since and have, on all occasions, refuted any debt or monies owed then the 6 years has passed and they have no right to pursue me anymore?

Correct. I think the debt has been sold on and they are a bunch of shysters.

I would not pay it. They will give up.

[PurpleMoonlight]

Steffan said:

To add a bit of detail.

Unless you admitted the debt ie said 'yes I will pay it'or made payments that constitute recognition of the debt within the last 6 years you are not liable for this debt.

In the UK as a broad principle debts are unenforceable after 6 years.

Unless signed under deed (mortgages etc).

IMO you are not liable for the debt.

Do not answer the calls: send letters back unopened marked Return to Sender. They will give up.

Almost 100% correct.

The 6 year law, and it is law not opinion, only applies to the ability of a creditor to take legal action against the debtor.

The debt would still exist though, and the debtor is still liable for it, so the creditor can continue to contact the debtor requesting payment for as long as they like. Of course, the debtor can continue to ignore them for as long as they like too!

[CardShark]

Cheers, PM

So you're of the same opinion that the 6 years would have started from Spring 2005 as well?

And they have no legal right to collect any money from me (quite apart from the fact that, as far as I'm concerned, the debt has already been settled in full) but they can still ask me for it? Would this have any effect on my credit rating?

[Steffan]

PurpleMoonlight said:

Steffan said:

To add a bit of detail.

Unless you admitted the debt ie said 'yes I will pay it'or made payments that constitute recognition of the debt within the last 6 years you are not liable for this debt.

In the UK as a broad principle debts are unenforceable after 6 years.

Unless signed under deed (mortgages etc).

IMO you are not liable for the debt.

Do not answer the calls: send letters back unopened marked Return to Sender. They will give up.

Almost 100% correct.

The 6 year law, and it is law not opinion, only applies to the ability of a creditor to take legal action against the debtor.

The debt would still exist though, and the debtor is still liable for it, so the creditor can continue to contact the debtor requesting payment for as long as they like. Of course, the debtor can continue to ignore them for as long as they like too!

Interesting point. In law we agree the debt cannot be pursued.

IMO the debt therefore does not exist, legally.

The Creditor cannot sue for the Statute Barred debt. The debt cannot be recorded as owed by the Creditor.

Therefore IMO the debt no longer exists.

It ceases to exist legally under the statute of Limitations on the 6 year rule. Therefore IMO it no longer exists legally. From that point the Creditor has no legal rights to pursue the debt.

I would be interested to hear your arguments.

Since the debt cannot be recorded or pursued in law IMO there can be no effect on the Debtors credit rating whatsoever.

I also think a recorded letter to the credit agency pointing out the debt has been paid in full in any event and is statute barred will stop the nonsense.

Or, it does not, a formal written recorded complaint to the Agency concerned copied to the Consumer Credit Office should do the job.

Constant harassment for an unenforceable statute barred debt would IMO constitute unlawful harassment under the relevant legislation.

That should shut them up.

[costsmonkey]

Interesting debate.

The Limitation Act simply provides a defence to a claim after a certain period of time (and the time periods differ depending on the subject matter of the claim). It does not actually stop a claim being advanced and/or legal proceedings being commenced in respect thereof.

In practical terms, however, I would have thought it is unlikely that an experienced creditor would commence legal proceedings after the expiry of the limitation period since they would be aware that the Limitation Act would provide an absolute defence to the claim and if the debtor took the point, the proceedings would be struck out and they may possibily be ordered to pay the debtor's legal costs.

I do not, however, think it can properly be said that once the limitation period has expired, the debt no longer exists. The debt clearly does still exist, payment simply cannot be legally enforced.

The point is probably best illustrated by analogy. If a car is damaged in an accident and the owner wishes to claim compensation from the other party, the Limitation Act provides that legal proceedings in respect thereof must be brought within 6 years of the date of the accident. If that deadline is missed, the other party will have an absolute defence to any claim that may subsequently be brought and the claim will fail. It does not, however, mean that the car is no longer damaged because clearly it is.

In OP's case it may be arguable when the limitation period expires. It appears that the original contract was intended to run until 2008. All will depend upon the date of the alleged breach of that contract and it may be as late as 2008. If that is the case, the Limitation Act will not help.

On a practical level companies buy debt for a fraction of their true value and, as far as I can see, then try and bully the debtor into paying the full sum, thereby making a substantial profit on those that they do manage to collect. That offsets the small loss they sustain on each debt they cannot collect. They rarely want to deal with a dispute on the facts or take things to Court and if their bullying tactics do not work, the usually give up.

If I was the OP I would write to them making it clear that he believes that the deby was fully discharged in 2005 and then stand his ground.

Edited by costsmonkey on Tuesday 22 November 16:49

Edited by costsmonkey on Tuesday 22 November 16:50

Edited by costsmonkey on Tuesday 22 November 16:51

[Steffan]

costsmonkey said:

Interesting debate.

The Limitation Act simply provides a defence to a claim after a certain period of time (and the time periods differ depending on the subject matter of the claim). It does not actually stop a claim being advanced and/or legal proceedings being commenced in respect thereof.

In practical terms, however, I would have thought it is unlikely that an experienced creditor would commence legal proceedings after the expiry of the limitation period since they would be aware that the Limitation Act would provide an absolute defence to the claim and if the debtor took the point, the proceedings would be struck out and they may possibily be ordered to pay the debtor's legal costs.

I do not think it can be properly said that once the limitation period has expired, the debt no longer exists. The debt clearly does still exist, simply payment cannot be legally enforced.

The point is probably best illustrated by analogy. If a car is damaged in an accident and the owner wishes to claim compensation from the other party, the Limitation Act provides that legal proceedings in respect thereof must be brought within 6 years of the date of the accident. If that deadline is missed, the other party will have an absolute defence to any claim that may subsequently be brought and the claim will fail. It does not, however, mean that the car is no longer damaged because clearly it is.

I agree.

From the debtors point of view (if in fact the OP is a debtor he says he paid in full) to prevent the nuisance of malingering agents chasing statute barred debts I would recommend a written complaint.

In my experience the OFT/Consumer credit agencies will always side with the individual in such a case.

I find they are effective in stopping this sort of nuisance.

The credit agencies, bailiffs, and raft of debt chasers cannot afford complaints being upheld by the authorities, which this would be.

They will give this up IMO.

[CardShark]

costsmonkey said:

I do not, however, think it can properly be said that once the limitation period has expired, the debt no longer exists. The debt clearly does still exist, payment simply cannot be legally enforced.


In OP's case it may be arguable when the limitation period expires. It appears that the original contract was intended to run until 2008. All will depend upon the date of the alleged breach of that contract and it may be as late as 2008. If that is the case, the Limitation Act will not help.

On a practical level companies buy debt for a fraction of their true value and, as far as I can see, then try and bully the debtor into paying the full sum, thereby making a substantial profit on those that they do manage to collect. That offsets the small loss they sustain on each debt they cannot collect. They rarely want to deal with a dispute on the facts or take things to Court and if their bullying tactics do not work, the usually give up.

If I was the OP I would write to them making it clear that he believes that the deby was fully discharged in 2005 and then stand his ground.

It is a concern of mine as to when the 6 year clock started to tick from. My last payment was early 2005, more than 6 years before the first contact from the debt purchaser, however their letter stated that I defaulted early 2008. There was no contact what so ever from the finance company between 2005 and when I "defaulted" in 2008. I'm also concerned as to if a debt still exists (which it doesn't!) if I'm not legally obliged to pay it would it still affect my credit rating?
On the point of them buying the debt cheap, they had actually sent me a couple of letters saying that if I paid them what would have been approx 33% of what I "owed" they would call it quits. TBH, despite their "generous offer" it actually pissed me off even more!

[PurpleMoonlight]

CardShark said:

It is a concern of mine as to when the 6 year clock started to tick from. My last payment was early 2005, more than 6 years before the first contact from the debt purchaser, however their letter stated that I defaulted early 2008. There was no contact what so ever from the finance company between 2005 and when I "defaulted" in 2008. I'm also concerned as to if a debt still exists (which it doesn't!) if I'm not legally obliged to pay it would it still affect my credit rating?
On the point of them buying the debt cheap, they had actually sent me a couple of letters saying that if I paid them what would have been approx 33% of what I "owed" they would call it quits. TBH, despite their "generous offer" it actually pissed me off even more!

The 6 year limitation commences from the last time you acknowledged the debt. Acknowledgement can be in many forms, but usually is a payment against the debt, an offer of payment against the debt, or an acceptance of the debt with no offer of payment.

In your case, it would appear you have not acknowledged the debt in the the last 6 years so you can rely on the Limitations Act.

[PurpleMoonlight]

I would also suggest that you get a copy of your credit record from Experian and Equifax so see if anything adverse has been recorded. Creditors don't always play fair, and if there is you will need to take steps to corect it.

It's costs £2 each.

[PurpleMoonlight]

Oh, one last thing.

The original creditor cannot wash their hands on this. If they have sold on an debt that does not exist it is their responsibility to resove that mistake.

Make a formal complaint if they refuse, and if they still don't, escalate the complaint to the Financial Ombudsman.

[CardShark]

Excellent, thanks for your advice guys!

I'll still pay a visit to my local CAB for a face to face chat about it, but at least it looks like things are balanced in my favour. I'll keep this thread updated

[costsmonkey]

PurpleMoonlight said:

The 6 year limitation commences from the last time you acknowledged the debt. Acknowledgement can be in many forms, but usually is a payment against the debt, an offer of payment against the debt, or an acceptance of the debt with no offer of payment.

In your case, it would appear you have not acknowledged the debt in the the last 6 years so you can rely on the Limitations Act.

No disrespect but that is not right.

The limitation period (in this case 6 years) runs from the date of the alleged breach of contract. The fact that the breach (in this case, non payment/debt) has or has not been acknowledged is immaterial.

A Limitation Act defence will depend entirely upon the date of the alleged breach of contract and that, in turn, will depend entirely upon the terms of the contract itself. Since the contract was originally intended to run until 2008, it is not possible to express a definitve view on the limitation issue on the basis of the information currently posted.

Whilst a Limitation Act defence would be helpful since that would put an end to the matter, it is not essential if OP can satisfy a Court (in the unlikely event that proceedings are commenced against him) that the Claimant (alleged creditor) has failed to prove (on the balance of probabilities test) that at the sum remains outstanding, since the claim will then fail in any event.

Although I have a working knowledge of contract law and the operation of the Limitation Act, I am not so well up on debt purchasing. However, I believe that credit companies, and indeed some banks, sell debt for as little as 10p in the pound and sometimes less. The buyer can therefore afford to offer the debtor a substantial discount on the full sum owed and still made a sizeable profit on the transaction. Indeed, that is what they seem to have tried to do in this case.

I know even less about credit rating matters but believe that if the creditor does register the debt with a credit rating agency, it is open to the alleged debtor to notify the agency that the debt is disputed. I believe that the agency will then ask the creditor to prove the debt within a specified period of time and mark the entry accordingly until they have done so. If they fail to respond satisfactorily within that period, the entry is then removed. It is certainly a good idea for OP to keep an eye on his credit rating, as suggested.

I stand by my view that if OP notifies the dept purchasing company that the debt was discharged in 2005 and stands his ground, it is likely that they will eventually get fed up chasing it and give up. I think it is highly unlikely that they will actually commence legal proceedings against him in an effort to recover the alleged debt. I agree it would also be prudent to write to the original finance company, if possible, notifying them of the position and asking them to liaise with the debt purchaing company and to send a copy of that letter to the debt purchasing company. I doubt if they will actually talk to each other (unless the debt purchase company wants to hand the alleged debt back and get a refund of the purchase price from the otriginal finance company) but it might encourage them to stop chasing OP.

Having said all of that, OP's plan of visiting a CAB is a good one and I would be interested to hear what they have to say.

Edited by costsmonkey on Wednesday 23 November 15:13

Edited by costsmonkey on Wednesday 23 November 15:14

[CardShark]

costsmonkey said:

No disrespect but that is not right.

The limitation period (in this case 6 years) runs from the date of the alleged breach of contract. The fact that the breach (in this case, non payment/debt) has or has not been acknowledged is immaterial.

A Limitation Act defence will depend entirely upon the date of the alleged breach of contract and that, in turn, will depend entirely upon the terms of the contract itself. Since the contract was originally intended to run until 2008, it is not possible to express a definitve view on the limitation issue on the basis of the information currently posted.

The contract was origonally supposed to run until 2008 (as in that's when my final monthly payment would have been had it gone full term) but if I paid it off in 2005 and stopped my monthly payments then surely that could be classed as breaching/defaulting if it was thought that I still owed money and that I should still have been paying my monthly fees? And if I didn't owe money then the contract would be complete. The fact that there was absolutely no contact between the original finance company and myself at all after my last payment also seems at odds with them thinking that I still owed something, wouldn't they have chased it up earlier? The first I knew of any "debt" was a good few months after Spring 2008 and that was from the dept purchasing company, not the finance company.

I've also posted this on moneysavingexpert.com and the opinion there also seems to be that the 6 year clock started from my last payment in 2005, hopefully I'll get someone good at the CAB for more opinion/advice.

Once again, cheers all for your input

[sanf]

PurpleMoonlight said:

Oh, one last thing.

The original creditor cannot wash their hands on this. If they have sold on an debt that does not exist it is their responsibility to resove that mistake.

Make a formal complaint if they refuse, and if they still don't, escalate the complaint to the Financial Ombudsman.

...This.

The debat about statue of limitations is interesting, however according to the O/P the account was settled in full, as such there is no debt.

The original lender CANNOT just absolve themselves of any responsibility especially when a disputed debt is being discussed. I'm going on the fact that the O/P is being completelt truthful and so the debt was full settled in 2005.

When a debt is sold to a purchaser you as the debtor are entitled to recieve a changed of ownership letter letting you know the debt has been sold. This may well have been the 1st letter you got from them, but check it. Ignoring them is the worst thing you can do.

1) Tell the debt collection agency chasing you that the debt is being disputed with the purchase company they are working for - as such as per the OFT regs they cannot chase for the debt while it is in dispute.
2) Speak to the debt purchaser - possibly even right to them, I would suggest sending a copy of the bank statement that shows the final payment leaving your account. Tell them you are disputing the debt and THEY should refer back to the original creditor. (Purchase will actually pass back certain accounts that are uncollectable - it's called recourse and they get a refund from the seller)
3) Speak to your original creditor - on the face of it this is their mess-up - you have payed in full and as such there is nothing for them to sell. Again show them statement with the payment leaving your account, and then make sure you get a written letter from them acknowleding this. This is THEIR mistake not yours, and if they don't deal with you properly, make sure you speak to a collections manager and tell them you will start a FOS complaint. This normally gets their attention. If the complanit is deemed a proper complaint it will then be investigated by FOS, fo doing this they will charge the original creditor something like £130.

Please just make sure all your facts are correct - you seem sure which is good, so on the face of it there is no debt outstanding at all.

[DavidHM]

CardShark said:

The contract was origonally supposed to run until 2008 (as in that's when my final monthly payment would have been had it gone full term) but if I paid it off in 2005 and stopped my monthly payments then surely that could be classed as breaching/defaulting if it was thought that I still owed money and that I should still have been paying my monthly fees? And if I didn't owe money then the contract would be complete. The fact that there was absolutely no contact between the original finance company and myself at all after my last payment also seems at odds with them thinking that I still owed something, wouldn't they have chased it up earlier? The first I knew of any "debt" was a good few months after Spring 2008 and that was from the dept purchasing company, not the finance company.

I've also posted this on moneysavingexpert.com and the opinion there also seems to be that the 6 year clock started from my last payment in 2005, hopefully I'll get someone good at the CAB for more opinion/advice.

Once again, cheers all for your input

CostsMonkey is right, and so are you... the answer, as ever, is "It depends." In this case, I'd say that the issue is when the breach occurred. I wonder if they are alleging that you didn't pay an "administration fee" or some such gubbins in 2008 and this is what has triggered the alleged "default." Of course if they advised you that your account was settled, failed to take the money and then failed to contact you, I'd suggest that the debt was never owed in the first place but there is room for debate until all the facts are known.

[sanf]

costsmonkey said:

I know even less about credit rating matters but believe that if the creditor does register the debt with a credit rating agency, it is open to the alleged debtor to notify the agency that the debt is disputed. I believe that the agency will then ask the creditor to prove the debt within a specified period of time and mark the entry accordingly until they have done so. If they fail to respond satisfactorily within that period, the entry is then removed. It is certainly a good idea for OP to keep an eye on his credit rating, as suggested.

Pretty much spot on

However - the default would only stay on file for a period of 6 years. This is NOT linked to stat barred laws, it is actually just a co-incidence. So in theory had their been a problem and the original creditor registered the default in 2005, then it would be long gone by now. In this scenario the debt purchaser CANNOT re-register a default.

If however for some odd reaseon it wasn't done until 2008 - then it will still be there. In this scenario the dept purchaser will take over ownership of the default only for the period of the 6 years that is left.

This means there are plenty of stat barred debts still outstanding, which are being chased and actually paying where there is no record of the debt on the CRA's at all. As more than 6 years has elapsed.

So check your file and make sure it is all correct.