Debts – why, how & when to ask for the CCA agreement

The Consumer Credit Act (CCA) gives you the right to be sent a copy of your credit agreement and a statement of your account for most loans, credit cards, catalogues, store cards and Hire Purchase agreements.

CCA agreements are important! If a creditor can’t find it then:

1. you can’t get a CCJ for the debt; and
2. you may decide to stop paying the debt.

Sometimes asking for a CCA agreement is a good idea, but not always.

When should you ask for a CCA? And when shouldn’t you?

Sometimes a CCA doesn’t apply

In the following situations, there is no right to ask for the CCA agreement, so don’t bother:

• debts where there already is a CCJ (if you have just found out about the CCJ you need to look at your options for “setting it aside“, not send a request for the CCA agreement0;
• overdrafts (but do ask if a lender combined your overdraft with other debts into a single amount);
• tax debts or many household bills;
• pre 2008 loans for more than £25,000;
• mortgages.

Court action

If the creditor is seriously threatening court action, always ask for the CCA agreement.

BUT if you have been sent a Letter Before Action/Claim (this is a formal letter with attachments including a Reply Form), use the Reply form to request the CCA, don’t just send the template letter as described in this article.

AND if you have been sent a Claim Form (N1) by the court, the case has already started. At this point it is urgent that you also submit a defence to the claim, you cannot just send off the CCA request. Talk to National Debtline or post on the Leagal Beagles forum about what to do asap.

But when you already have a CCJ for a debt, it is too late to ask for the CCA agreement as the creditor doesn’t have to send it.

Contacted about a debt that is not yours

If a debt collector says you owe money but you don’t recognise the debt, you should send them a Prove It! letter saying you dispute the debt. Here the CCA is only part of the picture. You may get sent a copy of the CCA in answer to this – if the name and address on the agreement are yours and you did live at that property at that point, it is good evidence. But keep focussed on the fact that what matters is proving who the borrower is.

It’s too early

It shouldn’t be your first thought if you are having trouble paying a debt to the lender – you need a payment arrangement or a debt management plan. The original lender can usually easily find the CCA so it just wastes your time asking for it.

Asking for the CCA normally only works if your debt has been sold to a debt purchaser – unless the debt is very old.

It’s statute-barred – or may be soon

If you haven’t been paying a debt for years and you aren’t being hassled by a creditor, you need a good reason to ask for the CCA agreement. It may be better to wait and see if you are contacted and then ask for the CCA, as then the debt is more likely to be statute-barred.

But when you are contacted about a very old debt, you should think first if the debt is statute barred, Talk to National Debtline on 0808 808 4000. They have a template you can send to the creditor saying the debt is statute-barred. This is simpler than asking for the CCA agreement.

But if the creditor comes back with a reason why it isn’t statute-barred, then your next step should be to ask for the CCA agreement.

Hoping to settle debts

If you have a windfall such as an inheritance and you have had a lot of debt in a DMP for several years,  settlement offers are a good idea.

But think about asking for CCA agreements before you make these offers. Because you don’t need to pay them anything if they can’t produce the CCA.

Wanting to reduce the time a DMP takes

This is a very good reason to ask for the CCA.

But if it’s very early in the DMP it can be better to make an affordability complaint first. Especially if the debt hasn’t been sold to a debt collector yet.

Thinking about bankruptcy, a DRO or an IVA

Where insolvency (DRO, IVA or bankruptcy) looks necessary, it can be a waste of time asking for CCA agreements, unless not paying those debts would make the rest manageable.

How to ask for your CCA agreement

There is a template letter to ask for your credit agreement in this National Debtline factsheet. That factsheet also has a lot of information about CCA agreements and if you have any problems with one, talk to National Debtline.

This is not the same as templates asking for a copy of your personal information or making a Subject Access Request. If you want to find out if the debt is enforceable, use the specific CCA agreement wording in this template.

Some points to be careful about:

• ask the current creditor for the CCA agreement, not the original creditor;
• you have to send a cheque or a postal order for £1;
• send the letter recorded delivery, keep a copy of it and the postage receipt.

Also read the rest of this article first! You need to know what you will do if the lender sends you the agreement and what if the lender doesn’t.

What happens if they don’t send the CCA agreement?

If you don’t get a copy of your CCA agreement within 12 working days of asking, the creditor can’t enforce the debt in court until they do send it to you.

It’s very common for it to take more than 12 days to find the CCA esepcially if the debt collector has to ask the original lender. Don’t get excited because the 12 days has passed, it means very little in practice.

I suggest waiting two or three months before you decide they can’t find the agreement and decide to stop paying them.

“Legal but not enforceable”

The letter from the creditor saying they haven’t found it yet should be clear that the debt is no longer enforceable but it still legally exists.

The creditor can ask you to pay the debt but the creditor can’t do anything if you don’t. They can’t hassle you to pay it. A polite letter every 6 months or a year is fine – frequent letters, texts or phone calls aren’t. This isn’t usually a problem in practice.

In any letters or emails asking for payment, the creditor should mention that the debt is unenforceable. Here is what I suggested to a reader who was getting letters that left off this important fact: “Debt collector can’t prove it’s my debt but wants payment”

Here are some more implications of the debt being legal but not enforceable:

• if you claim a PPI refund, this may be set off against the balance you still owe.
• the debt can still be sold to another debt collector. Make sure you keep all the CCA agreement letters or emails so you can just tell the new creditor you asked for the CCA agreement on dd/mm/yy and you won’t be paying anything to the debt until it is produced.
• you may be able to leave the debt out of an application for a Debt Relief Order so it won’t count towards the maximum debt limit. Talk to your DRO adviser about this.
• see below for the effect on your credit record.

“So I can just stop paying?”

If you want to stop paying the debt, then you could stop after 12 working days. But many CCA agreements are produced in the next few weeks. So, unless you can’t afford the monthly payments, I usually suggest not stopping it immediately. Leave it a couple of months.

If the debt is in a DMP you will have to tell the DMP firm to stop paying it. Send them the letter from the creditor saying they can’t locate the agreement.

You may find the idea of not paying scary. If you do, talk to National Debtline about this debt and the rest of your financial situation. It helps being able to talk to a friendly expert!

There is a small chance that the CCA agreement could be found much later. This seems to be rare – if the debt collector hasn’t found it in the first few months the chances of it turning up later are very low.

“The creditor hasn’t said it is unenforceable”

Occasionally, a creditor will tell you they can’t produce it, but you are still legally liable for the debt. This is true, but worded carefully so many people may be misled.  If they cannot produce the CCA agreement, the debt is unenforceable in court.

Sometimes the creditor goes into a lot of detail about how you have been paying, so the debt isn’t statute-barred. Also true but also irrelevant. You weren’t suggesting the debt was statute-barred.

In this sort of situation, tell the creditor that you are not disputing whether you are liable for the debt or whether it is statute-barred, but you would like the creditor to confirm that the debt is currently unenforceable as they have not produced the CCA.

If the creditor persists with this 9which is unusual), make a complaint and then send the complaint to the Financial Ombudsman. Here is the story of a case involving an old HSBC debt, where HSBC had to pay compensation for not admitting the debt was unenforceable.

“What about my credit record?”

Is this debt still showing on your credit record? Check all three credit reference agencies to make sure.

If it isn’t there, it will never reappear, whether you pay it in full, in part or just stop paying.

A debt marked as defaulted will drop off 6 years after the default date:

• it will not drop off sooner because the CCA cannot be found;
• the date will not be changed so it drops off later;
• the balance is not normally be set to zero because the CCA cannot be found.

When the debt does not have a default date, if you stop paying now, a default will be added and it will then drop off in 6 years. Not good news! Read What should the default date be? and ask the original creditor to add a default date back years ago.

A default will NOT be deleted if the CCA can’t be found. And you shouldn’t want that to happen – it would mean the record would stay on your file for ever if you stop paying.

The whole debt will NOT be deleted if the CCA can’t be found. The debt still legally exists, even though it is unenforceable in court, and the creditor is entitled to report your credit history accurately for it.

“Should I offer a low settlement amount?”

Some people decide to offer a low settlement amount. I don’t think this is a good idea. You don’t need to do this! Not paying them anything is a perfectly good response in most cases! It is very rare for a debt to resurface later.

A lot of creditors simply reject the low offer, even though you think it is sensible. They know that if they refuse you may decide to give them more. You cannot make a debt collector accept this low offer or complain they are being unfair if they don’t.

If you really want to make a settlement offer, stop paying them for a few months and then make the offer. That shows they can choose between your low offer and nothing.

The only time when you should try to get the debt settled is if it will still be showing on your credit record in a year or two when you want to apply for a mortgage. Then getting the debt marked as satisfied will help your mortgage chance a lot. But if the debt is no longer on your credit record or is dropping off soon, there is no need to do this.

What if they do send the CCA agreement?

How can you tell if it is right?

You have to be sent a “true copy” of the agreement – this doesn’t have to be a photocopy of the original agreement.  It must be legible and it must include:

• your name and address when the account was opened;
• the creditor’s name and address when the account was opened;
• the terms and conditions of the account at that time, including the cost of credit (the Annual Percentage Rate), when you have to make payments and your cancellation rights; and
• any other documents that were mentioned in the Terms and Conditions.

It doesn’t have to have your signature on it. If you opened the account online you may have signed it “digitally” and there is no document with your physical signature – this is perfectly legal.

If you aren’t sure what you have been sent is correct, ask National Debtline about it or you could post about it on the Legal Beagles forum.

This may sound complicated but it normally isn’t, Usually either the creditor admits they can’t find it or what they sends you is fine.

What should you do when the CCA agreement is found?

This depends on why you were asking for the CCA agreement.

If the creditor has started a court case (you have been sent a Claim Form) then you may have hoped that the CCA agreement could not be found. But now you have it, that is not a possible defence so think if you have another defence. Talk to National Debtline about your options.

If you were planning on making settlement offers to some debts and were hoping the lack of a CCA agreement could get this one settled very cheaply, that has been ruled out and you need to proceed with a more substantial offer.

If you are fed up with having to pay this old debt for many more years, look at your alternatives.  If you have more luck with some other debts turning out to be unenforceable, can you now pay more to this one? Or is it time to look at insolvency or other options?

Summary

In summary, asking for the CCA agreement is an uncertain process that can take months.  If you have a lot of debts, make sure you are looking at the bigger picture, as well as thinking about the individual debts.

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