Action over buying and selling consumer credit debts dismissed for absence of proof

Govan Law Centre (GLC) has successfully defended an ordinary cause action at Glasgow Sheriff Court for an alleged consumer credit debt of £7,500.

Cabot Financial UK Ltd claimed it had purchased the debt from OPUS Credit Card (a trade mark of SAV Credit Ltd) in September 2011. The defender had no recollection of ever having this credit card, and had no paperwork in relation to this credit agreement.

The action was defended on the basis the defender was not due the debt. The pursuer was called upon to lodge in court the original regulated consumer credit agreement, a statement of how the debt was accrued and a copy of the assignation agreement of the debt. They failed to do so, and agreed to dismiss the action against our client with no expenses.

GLC’s Mike Dailly said: “This case raises wider issues in relation to the general practice of the buying and selling of consumer debts in Scotland and the UK. Court actions are being raised when the purchaser of the debt would appear not to have proof of the legal constitution of the debt – that shouldn’t happen.

“We are also concerned that debts are being pursued which have ‘prescribed’ and been extinguished in law. If you are being pursued for an old debt you should take advice from a local law centre, advice agency or solicitor as to your legal rights and liabilities.”

In Scotland, consumer credit debts can prescribe and become unenforceable in law where no payments have been made for five years, and where the debt has not been subject to court or other legal proceedings, or been “relevantly acknowledged” by the debtor. The relevant rule is set out in section 6 of thePrescription and Limitation (Scotland) Act 1973.

“Relevantly acknowledged” is defined by section 10 of the 1973 Act to mean where the debtor performs the obligation (e.g. by making a payment arrangement) or writes to the creditor and admits the obligation exists. A relevant acknowledgement means the five year time period begins again.