July 2001 - Small Business News

2. QUESTIONS & ANSWERS TO YOUR REQUESTS (ukp = UK pounds)

QUESTION

The relevant figures are all UK pounds:

My friend has been charged 110.00 costs for a late payment on a store - name removed - credit statement. The 15.00 monthly payment was due on 28th May, none had been late before and it was not in arrears at the time. The payment was made on the 8th June, the same date on which the court claim - previously a summons - was issued from the county court. She had actually made the payment before the court claim was received, and was, according to that, agreeing to the 70.00 solicitor and court costs if it went through. However, she was then charged an extra 44.00 for more court fees. The account consisted of numerous items - mostly baby clothes - although the - name removed - account had been used previously and had laid dormant for some time before she went on this spending spree and she can't remember when she started using it again exactly. It all seems rather unreasonable and has almost doubled the amount she has to pay. Can she do anything about it?

Outstanding store card balance: 177.24 @ 29.8 APR

Court claim fee: 20.00
Solicitor fee: 50.00
Judgment fee: 40.00

New balance: 287.24 - taking aside any errors in the information supplied

ANSWER

Note: Before reading this answer, do take into account that all the facts may not have been available but the essence of the situation is there and should serve as a guide in similar situations.

I assume that the 15.00 per month was an agreed payment to pay/settle an account that was in arrears and not a case of missing the ‘minimum monthly fee’ that we all have a choice of paying. If so, the fact that goods were purchased on the card would be a simple conclusion to the speed of the stores debt action – albeit heavy in my estimation. That said, there are a number of issues here that are certainly worth looking into.

First, I would have thought that the store would have cancelled, or at least suspended the card and therefore stop any new debt potential.

Second, the store immediately resorted to a court claim when it should have contacted the debtor by letter or telephone, and given that the late payment was paid immediately it would also have been the most cost effective way for the creditor.

Third, the increase in debt - court and solicitor fees – is simply negligent. The creditor has the responsibility to take the required action – in this case a simple call or letter – with the county court judge ensuring that this has been the case – i.e. sight of copy of letter sent.

Forth, the timing of the court action - if dates are correct – is fast by any standard and this implies a system of obtaining court judgment as the one and only purpose of the debt agency dealing with the creditors overdue cases.

On the creditor side, they may have felt that continuing with the court case, after they received the non serious overdue payment, was a necessary step as they believed that the debtor would continually default on payment arrangements – although I don’t see that in this case.

If I am wrong with my assumption, and the store card has never been in arrears, the action of the creditor is unlawful and the debtor must apply to the court to get the judgment ‘set aside’: making the creditor reapply to the court for the whole debt and fees – which I doubt that they would. Calling your local county court office is the first step. If no action is taken the county court judgment will be on your credit record for six-years.

3. LIMITED COMPANY DIRECTOR & COMPANY SECRETARY

In our last newsletter our article on: "SOLE TRADER OR LIMITED COMPANY?" stirred a response from one reader who said, "Your article re Limited Companies states that a limited company must have 2 directors. This is incorrect. A limited company may have 1 director but must have a secretary who may or may not be a director."

I replied, "First and foremost, yes, I submit to the technical point. As I don't doubt you know, the vast majority of company formations have two directors with one acting as the director/secretary. As such, we don't look to confuse the reader: good/bad editorial?...

So, do you need two directors... no, one is all that is required if you are a 'Single Member Company' - ones self as the sole director. However, a sole director cannot also be the company secretary, therefore, someone must act in this position. As there are no formal qualifications required for the post of company secretary just about anyone can be the secretary. That said, an inexperienced secretary can still be prosecuted for failing certain duties - filing documents to Companies House - and the sole director cannot hide behind a poor secretary as the director is ultimately responsible for the company secretary's actions. Director and secretary Requirements