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Readers Questions

  1. Nathan

    Hi

    I wondered if you could help provide some clarity on a situation I have.

    I have cuureny got a Moratorium in place, due to expire this month, I am still exploring solutions and hope to get another Moratorium in place as soon as this expires. Do you know if they are still extended for 6 months?

    Another issue I have is I was contacted by a sheriff officer on Friday past advising he has some court correspondence for me from Walker love acting for Lowell. The account in question has been in default since 27th May 2015.

    I received a letter back in November from Shoosmiths apparently advising court action that had been raised and served on me was paused. There was no court documents served on me in relation to this matter to start with. They have my address etc. also as have sent previous letters through the post.

    I was under the impression that the debt would have become prescribed after 5 years?

    So that would have been in March 2020?

    The sheriff officers advised me during our telephone call he will get the paperwork out to me this week.

    How would I proceed with a response?

    Assuming it will be a claim for small claims as I have not had any other documents in relation to the matter other than a letter from Walker Love asking me to contact them.

    Thanks for reading and look forward to hearing your thoughts.

    1. Scottish Adviser Post author

      Hi Nathan

      Yes you will be able to apply for another Moratorium after your current one expires (you can read the Scottish Government announcement about this here.).

      In term of the Lowell debt, there was obviously disruption to the courts and also the work Sheriff Officers normally do, so it may have been you didn’t receive earlier paperwork. It may be no Court paperwork was served as the case wasn’t proceeding at that time.

      The main thing the Court will want to know is you have been served with the Court Summons now.

      It will be a Simple Procesure Action, rather than a Small Claims one, as this is the procedure now used.

      If you think the debt has been prescribed, that is in those five years the debt was not relevantly acknowledged, by you making any payments, you can defend the action by completing the summons and returning it to the Court before the final date for a response.

      A hearing date will then be set and you will need to be ready to defend the case.

      There is, however, a problem. Most consumer credit contracts have a clause in them that say the Governing Law for the Contract is English Law, rather than Scots Law.

      The Solicitors may, therefore, argue that in terms of when the debt becomes Statute Barred, the relevant period is not 5 years, but the 6 years contained in the English Limitations Act 1980.

      There has, unfortunately, been previous cases on this point where it has been argued and the Scottish Courts have held that the English Law and 6 year period can apply, even when the borrower lives in Scotland.

      The case where this was decided was PRA Group v Reilly.

      The case isn’t binding on other Courts so they may take another view, however, as it is a written decision, it will be highly persuasive on other Sheriffs, so if you do want to argue the debt was prescribed and they go down this route, I would seek advice from my local advice agency or law centre.

  2. Graeme T

    My wife took out a student loan in Scotland in 1996. In 2014, when we lived in London, she was contacted by Erudio Student Loans advising her that she had to start paying it, however she advised was not earning over the threshold. She raised queries about it at the time, but heard nothing further. We have since lived in Cyprus, the Midlands, and 2 years ago settled back home in Scotland. In November a CCJ appeared on her credit report. She has now been advised by a legal firm she contacted that the loan was purchased by a debt collectors and they have raised the CCJ. The legal firm took a payment of £299 and have now advised that the CCJ has been removed, but that she has to pay back £3200 and they won’t accept payments of £50 a month.
    At no point has she received any written correspondence from either the legal firm, nor the debt agency. The debt collection agency (Drydens?) say she should have attended court in London for the CCJ even though we were unaware of it and have not lived there for 5 years.
    Should this debt not have been statute barred/prescribed? Surely if she’s had no correspondence in nearly 7 years there is more we can do?
    Can you advise where we should even start clearing this up?

    1. Scottish Adviser Post author

      Hi Graeme

      There is actually alot to this and I think you, or your wife rather needs specialist advice, which can look into the history of this debt.
      See here for a list of Local Advice Agencies that may be able to help.
      What makes this complex is first this will have been an old mortgage style student loan, as it predated 1997.
      Second, the way these normally work is they become due for payment the April after you complete your studies, although you can defer payment if you don’t earn enough (currently the amount is £30,646).
      You have to defer every year, and if you don’t, the debt becomes due. If you don’t pay it, like any debt the Student Loans Company, or the Company they sold it to, can hold you in default and take you to Court and get a Court Order.
      The reason these debts don’t become Statute Barred normally, is because you defer them each year, so the 5 year prescription period (Scotland)/ 6 year England starts running each time you defer each year, as this constitutes a relevant acknowledgement of the debt.
      If you don’t defer, they will pursue you for the debt and ultimately try and get a CCJ if you live in England or a Decree in Scotland. If they are successful, this is a relevant claim and the period the debt will last in Scotland is 20 years, or England 12 years.
      If you don’t defer and don’t pay anything to the Debt for 5 years in Scotland or 6 years in England and they don’t obtain a Court Order within 5/6 years, you could argue the debt is Statute Barred.
      As I say there is a lot to this and I don’t know enough about your wife’s circumstances to give personalised advice.
      Another thing about Mortgage Style Loans is if you don’t get into arrears, these debts are written off when you are 50 years old, or 25 years after you took the last loan out (whichever is earliest) providing you took the last loan out before you were 40 years old (or when you are 60 years old, if your last loan was taken out after you were 40).
      See in Paragraph 12, Schedule 2 of the The Education (Student Loans) Regulations 1998.
      The questions I would have are was the debt already Statute Barred prior to 2014. Had your wife been deferring it? Had she made any payments? Either would constitute a relevant acknowledgement and start the Statute Barred period running again, so the Loan would not likely be Statute Barred.
      However, if she had been deferring it prior to 2014, could it have been written off because her age under the 1998 Regulations?
      Obtaining a CCJ would have interrupted the running of the Statute Barred period and started it running again, so if this was obtained in 2016, it wouldn’t be Statute Barred now.
      However, they have now removed the CCJ? I am not clear why they have done that.
      Are they intending to reapply for another Court Order (arguably it should be in Scotland now as this is where your wife now lives)? If they do you wife should get specialist advice.

      Unfortunately, I can’t give you a clear answer, but hopefully have drawn your attention to a number of questions that need to be answered and issues that further advice should be taken on.

  3. Alexander

    Hi I have a query re my PCP car finance – if I use the option of a time order can this include the final balloon payment( approx £5,000) that is owed to legally own the car as well as the arrears of £1500
    Finance company threatening to take back the car

    1. Scottish Adviser Post author

      Hi Alexander

      It can actually include the full amount owing, so can include the balloon payment.

      Where you are going to struggle is over what period you are offering to repay the full amount back and at what rate.

      Traditionally, the aim was always to try and repay the full amount within the original term of the agreement, so if it was intended to end in November 2023, you would ideally propose to repay it by then.

      However, that is not to say the court wouldn’t allow longer, but I would say you have to be Conservative here. I wouldn’t expect a Court to allow another 3 or 4 years longer than was originally intended.

      The Courts also might be more lenient in the current climate because of the Lockdown, and show more flexibility than they would have normally.

      However, equally the lender will make the argument that the car is a depreciating asset and the longer they have to wait, the more it will lose value, so if you later default on any agreement, they will lose more money than if they were able to take the car now and sell it.

      Also if they can show they have already shown forbearance and allowed payment breaks, they may make the argument to the Court they have already went to significant lengths to support you and ultimately if the agreement is still not affordable, they need to be allowd to bring it to an end and minimise their loses.

      These, I suspect are the arguments you will face, so to persuade the Court to allow you to keep the car and more time to pay, you need to persuade the Court on balance that would be fair.

      Courts make hard decisions daily, even ones that may seem unfair, but equally where they believe on balance Consumers should have more time, they will usually try and accommodate that.

      My point is, ask yourself first can you really afford this car and can you genuinely repay the finance within a reasonable period of time, taking into consideration how long the original agreement was for and when it was intended to end.

      If you think you can make a good case, put your best offer forward first, but make sure it is realistic.

      Also, before it gets to Court, try negotiating with the lender or their solicitors and see if you can come to an agreement that can avoid the Court action being raised in the first place. This is preferable.

      Also they will likely want to see an income and expenditure, so I would complete a budget you can share with them (and the Court if it goes that far) see here.

      However, my best advice is contact your local advice agency (list here) and ask them if they can help you. It is likely going to improve your chances with the lender and the Court if an Independent agency is assisting you and can verify the information you are providing in any negotiations.

      Finally, some Lenders will insist on getting a Court Orderfirst and rather than agreeing to a Time Order, will say they will agree if you agree to a Time to Pay Direction instead. The difference is they still get the Court Order and Voluntarily agree to let you keep the car providing you make the payments. However if you miss payments, they will take the car back. They don’t need to go back to Court to do this, so prefer this as it is a stronger position for them to be in.

      I would always recommend a Time Order first as it avoids the Court Order and if you miss payments they still need to go back to Court to take the car,so you can make representations to the Court. However, sometimes that may not be possible, so the Time to Pay Direction allows you to keep the car and maybe the best outcome you will get.

  4. John

    Hi

    Am I still liable for a council tax debt thats over 20 years old. I received a letter a few days ago regarding an unpaid amount of £68 Council tax from a company called Walker Love saying we owe money from over 20 years ago. I’d appreciate any help you can give. I am from Scotland. This is really stressing me out. Thanks for reading this email.

    1. Scottish Adviser Post author

      Hi John

      In theory you could be. A Council Tax debt will normally last 20 years, but the 20 years can still running again everytime a payment is made to the account, or the Council make was is known as a relevant claim by executing a wage arrestment or a bank account arrestment, or carrying out another form of Diligence.

      I would contact the Council or the Sheriff Officers and say you want to dispute the debt if you think it has become Statue Barred and request evidence from them of when the last payment was made.

  5. Mr Smith

    My Moratorium was registered on 19th October 2020, i received the charge for payment from Sheriff officers that day also. I could not see a date that the earnings arrestment had been obtained, i assume it would not have been that same day as it stated i had 14 days to pay in full.
    There is a date of 9th November that i assume was when the arrestment was obtained, so definitely after i had registered the Moratorium.
    After contacting the sheriff office they have stated they do not have the authority to lift it and they are no longer involved with the case, strange? As you say it will fail anyway as i am not employed by the address it was sent. The Sheriff office is now ignoring my emails as to why they cannot undo there actions. I will wait for the outcome from the SMASO.
    Thank you for your advice with this

  6. Mr Smith

    Thank you for that and for the quick response, very much appreciated, so I have received a copy of the arrestment today to my home address through the post, the address they sent the arrestment to i am not employed by, also i contacted them to ask why it was served during the Moratorium there reply was as follows:

    We thank you for your recent email, however do not have the authority to withdraw the Earnings Arrestment. We would suggest that you make direct contact with our instructing agent regarding this matter. We have returned all documentation back to them and no longer have any involvement in this case.

    I have made a complaint to SMASO as I am not happy with there reply, do you think it was justifiable?

    Thanks again!

    1. Scottish Adviser Post author

      Hi Mr Smith

      Basically, they may have thought you worked there and took a chance not realising your relationship is not an employment one.
      Also, I suspect they never checked to see if you were on the Register of Moratoriums, this is common, though they should.
      The law is clear. It is not competent to execute diligence whilst a Moratorium is in place, so their actions had no legal authority to do what they did as the Moratorium stops that.
      It is their responsibility, therefore. They are Officers of the Court and must act lawfully when executing their duties. By serving a wage arrestment whilst you had a Moratorium in place they acted wrongly.
      The Arrestment will fail as you are not an employee, but make sure you also don’t get lumped onto your debt the expense of them carrying out the arrestment.
      Hope it work out. I am hopeful SMASO will resolve it.

  7. Mr Smith

    I wondered if you could help? I received a Charge for Payment order from Sheriff officers on 19th October 2020 giving me 14 days to pay outstanding. As I am not in a position to pay in full I registered a Statutory Moratorium on the same day for some breathing space

    I have since been sent a wages arrestment

    should the Moratorium have stopped any further action?

    Thanks in advance for any advice, it is very much appreciated and I hope to hear from you soon

    1. Scottish Adviser Post author

      Hi Mr Smith

      If your Moratorium was active they were not allowed to execute another wage arrestment during the live period of the Moratorium.
      They should have checked the Moratorium register, but if they didn’t, they should lift the arrestment and refund any money taken immediately.
      They should also remove any fees attached. The best thing to do is check the register for your Moratorium and send them a print out from it.
      You can check it here.
      Ascertaining the date the arrestment was executed should be easy as it is on the Schedule of Arrestment your employer was sent.
      If you are having difficulties finding your name on the Register, email the Accountant in Bankruptcy, they should be able to confirm whether it was registered or not.
      If the Sheriff Officers refuse to lift the wage arrestment, make a complaint to their professional body the Society of Messenger at Arms and Sheriff Officers (SMASO).
      If they have arrested your wages whilst a Moratorium was in place what they have done is illegal.
      Ultimately if you don’t get a resolution, and I am sure you will at the SMASO stage if not before you can complain in writing to the Sheriff Principal of your local Sheriff Court. Mark your email for the attention of the Sheriff Clerk. Visit the Scottish Courts website to find details of your local Sheriff Court.
      If the Moratorium was not active they may have been allowed to arrest your wages. However, there are ways of getting wage arrestments lifted. See here.
      Also Moratoriums are only temporary so you should seek advice from your local advice agency as soon as possible to find a permanent solution.

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  9. Lee

    Hi

    I Work in United Arab Emirates (UAE) and took out a UAE loan. I was made redundant due to Corona Virus and Oil prices.

    I can not settle the UAE loan, so believe they can hire a UK solicitor to chase the debt

    My wife is the homeowner and the house is in her sole name. My question is can our house be repossessed for my debt? If the mortgage is not paid then understandably it can be repossessed.

    Everything has been paid and is ok in life, but unfortunately due to the sudden loss of employment due to Corona Virus things are going to Spiral out of control and I am not going to be able to pay outgoing’s.

    My main concern is the house for my wife and 3 kids. As I have a low payment mortgage, we can manage to pay this and I am seeking new employment.

    The downside is if the UAE register me with Interpol, I can never leave Uk without potentially being arrested due to UAE debt, regardless of the amount and face deportation back to UAE and possibly Jail. Theey pay Interpol millions to register it as fraud, which is not legal, but UAE way of doing things.

    Any advice on mortgage would be useful as my wife is the sole owner, but we are married and living together.

    I certainly never thought I would be in this position for sure and find it upsetting.

    1. Scottish Adviser Post author

      Hi Lee

      I am sorry to hear your situation.

      The debt is potentially recoverable in the UK and I have dealt with a number of UAE Loans in the past.

      Basically, they would need to register the debt for enforcement in Scotland and there are international laws that allow them to do this. They would need to employ UK lawyers, but I am aware some UAE Banks do this.

      In terms of it being catergorised as fraud, I cannot comment on this or Interpol, as I have never come across this before. Certainly if you were to return to the UAE, you could be subject to their laws.

      However, in regards to how the debt is recovered here, it must be done in accordance with Scots Law.

      The basic principle is no one can be held liable for your debts. There are a number of exceptions to this rule if you die, but I cannot see your wife’s house being affected by any of these if the house has been in her sole name for more than 5 years.

      If you were even made bankrupt or signed a Protected Trust Deed, your wife’s home should not be affected.

      I would recommend getting personalised advice as soon as possible, as this debt is potentially recoverable and as you cannot settle it, it’s best to get ahead of the curve.

      I have a number of links on my site that can direct you to where you can obtain advice.

      I hope this helps.

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