A reader asked:
I took out countless pay day loans a few years ago. Suddenly they have all come out of the woodwork. I now have a court claim arrive from Lantern – for an old Lending Stream loan.
I have applied to extend the date for defence but am not sure what to put in my defence. There are three other accounts outstanding and I’m guessing once they’ve claimed one they will apply for the others.
Payday lenders don’t often take a customer to court themselves, they tend to sell the debt on to a debt collector. But the general approach to these cases is much the same whether it is the lender or a debt collector suing you.
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Don’t ignore a Letter Before Action
It is already too late for this if you have received a Claim Form. But if you are reading this because you are worried about what might happen in future, then look out for being sent a Letter Before Action, which may also be called something like Letter Before Claim.
This is a letter with various attachments, including one headed Reply Form
This is the last chance to head off a court case being started, and you should not ignore it even if you can’t afford to pay the debt. Read How to reply to a Letter Before Claim and take debt advice if you need help with this.
It is MUCH easier to dispute the debt at this point than in court. And if you start an affordability complaint with the original lender when you get this letter from a debt collector, tell the debt collector on the Reply Form and ask them not to start court proceedings until your complaint is resolved.
Claims about payday loans – points that can help you
My previous article, What to do if you get a Claim Form, has looked at the forms and court process for debts in general. Read that now as an overview.
Make sure you acknowledge the service of the form so you get an extra 14 days to put in your defence.
The procedures for payday loans are the same as for other debts but there are two extra reasons why you may want to defend one of these claims, even if you agree you owe the money:
- you may have an affordability complaint about this loan and other payday loans you had from the same lender that you want to be decided by the Financial Ombudsman;
- you may want to use an unfair relationship defence.
Affordability complaint
For a loan to be affordable, you have to be able to make the repayment without undue difficulty – basically without borrowing more the next month because you had repaid this loan.
So if you were regularly rolling over / deferring payday loans, or repaying one only to borrow again a few days later, your loans probably weren’t affordable. The lender should have spotted you were probably in difficulty and stopped lending.
If you don’t already have a payday loan complaint in with the lender, you should put one in right away if you think the loans were unaffordable. See How to ask for a payday loan refund for details about how to make a payday loan affordability complaint.
You should inform the debt collector of your complaint and ask them to halt (“stay”) the court process whilst your complaint is heard. If your complaint is upheld, the balance that you owe to the debt collector may be reduced or wiped out.
It is better to have your whole case heard by the Ombudsman rather than the last loan looked at individually in a County Court. The Financial Ombudsman Service (FOS) is provided as a customer-friendly, cheap alternative to going to court – that is what it is there for.
Remind the debt collector of FCA rule CONC 7.14.1: (1) A firm must suspend any steps it takes or its agent takes in the recovery of a debt from a customer where the customer disputes the debt on valid grounds or what may be valid grounds.
If the debt collector agrees, you need to confirm with the court that the case has been stayed. Do this before your time to file a defence has run out!
If the debt collector doesn’t agree, then you need to ask the court to stay the proceedings. For how to do this, see Getting some legal help below.
Unfair relationship
You can defend the case on the basis that there is an Unfair Relationship between you and the lender. The Consumer Credit Act 2006 enables a borrower to challenge a credit agreement in court on the grounds that the relationship between the lender and the borrower is unfair to the borrower.
In August 2020 there was a major case that looked at this – Kerrigan v Elevate Credit. There a claims company took a dozen clients cases against the payday lender Sunny to trial.
(NB Don’t approach a claims company and ask for help about your case. The Kerrigan case was VERY unusual. A claims company will not help if you are being sued by a creditor.)
The judge found that long term lending and Sunny’s failure to take account of it in assessing if the loans were affordable was a breach of the FCA’s affordability rules. And that breaching the FCA rules constituted an unfair relationship.
You will need help to file a defence based on this.
Getting some legal help
You need advice rapidly – be careful of the timescales to get your defence in.
It’s not just a case of “what do I write on the defence form”. You may have a lot of subsequent questions, such as “what do I do as the solicitors haven’t replied“, “should I accept this allocation to track“, “how to I apply for the case to be stayed” etc.
I am not a solicitor and I can’t help you with how to handle your case. Good places for support include:
- National Debtline 0808 808 4000;
- a local Law Centre;
- your local Citizens Advice. They can get help from the Expert Advice team nationally for complicated cases such as an unfair relationship defence;
- for help on the internet, the Legal Beagles “Received a Court Claim” forum is good.
And think about the bigger picture
If this debt is your only problem, then fine, defend the case and try to make sure you don’t get a CCJ.
But if you have a lot of other problem debts that you have been ignoring then being taken to court for a CCJ is a good point to look again at the whole picture. With aCCJ on your credit record, it will be much harder to get credit, more expensive to get car insurance and more difficult to get a new private-rented tenancy.
If your whole situation is unmanageable, you may do better to take the decision to go bankrupt or have a Debt Relief Order. (You should avoid an IVA unless you have assets to protect such as a house with equity or a car you own worth more than £2000).
CCJs can be included in bankruptcy or DROs and the debt will be cleared.
Big jump in CCJs in 2019
How much will my score change if…
Could a Debt Relief Order help you?
Mike Anderson says
My experience was with a company based in Bellshill Scotland who were sold on a debt from a payday company. I was sent a court initial summons inviting both parties to put their car forward in writing to the court before a set court date.
Upon reading the court papers sent to me I realised that the signature on the agreement form was written in type and not my signature. I replied to the court and told them I was not sure if I took this loan out and therefore required evidence in the form of a signed agreement. The court agreed and told the company to produce same. Because of the nature of selling on debt they clearly would be unable to produce this. I even said a copy of a recorded conversation with same which they would never get within the time allowed. My advice is do not ignore any court papers because I know know these companies sold debts do not have access to original agreements signed therefore they legally cannot pursue the debt without it. They go on people ignoring the court papers and then it will be automatically granted and then they can hound you for years and also use things like wage arrests to get it all back plus costs. Don’t ignore it go for them head on and ask them via courts to produce as much evidence as possible and you will find they won’t even respond. My conclusion was the Sheriff threw it out.
Sara (Debt Camel) says
Great advice not to ignore court papers – or if you are in England and Wales not to ignore a Letter before Claim/Letter before Action (see https://debtcamel.co.uk/letter-before-claim-ccj/ which shows what one of these looks like and how you may want to respond).
I can’t comment on the fact the Sheriff threw the case against you out as I am not a Scotish Law expert. For online loans there is usually no need for a physical signature. But it is quite right to ask debt purchasers to produce the Consumer Credit Act agreement for the debt and other documents. See https://www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx.
If you had other payday loans from other lenders, have you looked at whether you could get a refund?
Emma says
Hi, Can you help? I received an email back saying I was entitled to Redress however there are no funds, the debt is Unclebuck Finance, I was given a CCJ for this and have been paying, but they say any adverse reporting on the CRAs will be removed, will this include the CCJ? Or is there a way i can now contest this CCJ?
Sara (Debt Camel) says
Are you paying UB for the CCJ?
Paul says
I have am being chased for a debt for wage day advance who obviously are now in administration. I emailed them about un affordability just as they want bust so it never progressed.
Can I use this as a defence still to dispute the debt?
I have had a letter of claim and requested documents but have not received anything.
Sara (Debt Camel) says
did you not get an email from the administrators?
Paul says
I got an email saying that the debt had been passed to lantern for collection. I didn’t get anything else and didn’t get round pursuing it any further.
Sara (Debt Camel) says
big mistake.
Unless you have something from the administrators to show the loan was unaffordable I think you will find it hard to defend the claim on those grounds. I suggest you talk to National Debtline on 0808 808 4000 and/or post on Legal Beagles forum for help https://legalbeagles.info/forums/forum/legal-forums/court-claims-and-issues
Neil says
Hi Sara,
I’m being pursued for outstanding payday loans which I’d defaulted on back in 2013, the main one being Pounds toPickrt who have passed it in to debt agency, this one really does annoy me as I paid almost 10k in fees over numerous years before I defaulted owing £950. Is there anything you can suggest I csn go to try to get this sum written off. Just seems so unfair I’ve paid so much but can’t pursue them for it being unaffordable.
Sara (Debt Camel) says
I am sorry but you should have made a claim to the administrators. It is now too late.
When did you last make a payment to this debt?
What is the rest of your financial situation like at the moment? Who were the other payday lenders you are now being pursued for?
Neil says
Hi Sara,
I did try to pursue a claim a few years ago but because they were based in Malta, tried a few different ways of claiming but nothing worked.
It’s been years since I paid anything towards it, because of what I’d already paid out I loath giving them another penny.
Also have Lending Stream, SafetyNet Credit & everyone’s favourite Loans2Go.
Fair to say it would be a struggle to afford to pay much each month to all these debts, I really want to be debt free but can’t afford much way things are just now.
Thanks Neil
Sara (Debt Camel) says
Pounds Till Payday were Malta based.
Pounds To Pocket were a brandname of QuickQuid and were UK based.
Which are you being contacted about?
Lending Stream, SafetyNet Credit & everyone’s favourite Loans2Go.
All those lenders are still in business. Have you made claims to them?
Neil says
Sorry my mistake it’s was pounds to payday & tried the company, claims companies & FCA & got nowhere.
I’ve not tried claiming against any of them, some are quite recent within last 2 or 3 years & only one I’m actually paying is the Loans2Go which is extortionate. Lending stream loan I didn’t have for very long it was only a few months but as I had so many others to juggle it just became too much & then I ended up out of work. I thought after all this time they would’ve been written off. I’ve seen your template for Loans2Go it’s PtoPayday I really wanted to do something about as I’d paid so much & lending stream as they knew I had so many other loans going on when they took me on. SafrtyNet is quite small amount so can be sorted but not without having to pay all the others, that’s what’s stopping me, it’s just so wrong P2P still want money after all I paid!!!
Regards Neil
Sara (Debt Camel) says
What date was your last Pound To Payday loan? When did you last make a payment to it?
Which debt collector is it with?
Does it show on your credit record?
Neil says
It was back in 2013 last loan or rolled over loan & payments & it’s ResokveCall chasing payment, I’m quite sure it’s in my credit record but will have to double check when I get a minute
Sara (Debt Camel) says
ok let me know when you have checked.
Neil says
Hi Sara,
These are not showing on credit records except Loans2Go which shows as United Kash as I’ve been paying small amounts to them.
Sara (Debt Camel) says
Ok then first I suggest you talk to National Debtline on 0808 808 4000 about the debt being statute barred. If they think it may be, they have a template letter you can send.
The other thing you can do is find out who ResolveCall are collecting on behalf of and then send them a request for a copy of the CCA agreement for the debt. National Debtline can also provide a template letter for this request. But this is a more complicated route than statute barrinng,, so it may be better to try that first.
Neil says
Hi Sara, thanks for the advice, I’ll try that out & see how I get on.
Regards Neil
Craig says
So after 6 years of denying lending stream finally admitted wrong doing and refunded me all interest of loans I’ve paid completely ignored fact I’ve paid a ccj thanks to this to tm legal services where do I stand getting ccj that should not exsisted removed and refund of the ccj I paid??
Sara (Debt Camel) says
go back to Lending Stream and ask them to refund the CCJ costs and to arrange to have the CCJ set aside.
Tyler says
Hello Sara
I have an old payday loan with Fernovo and recently recieved a letter saying they are looking at starting court proceedings in 7 days.
It was a £300 loan, which i repaid £487 before i lost my job and stopped making paying.. so are chasing me for £113.
Will the 100% cap still apply if they start proceedings or would this increase further with court fees? Thank you
Sara (Debt Camel) says
Was this your only loan from them?
Have they previously sent you a Letter Before Claim/Action?
What is the rest of your financial situation like at the moment – are you in work? Do you have other debts you aren’t paying?
Have you had other payday loans and high cost credit in he past?