Thanks to both for your comments. Various lengthy conversations have been quite unfruitful. It seems they are keen to place the onus on me to prove I closed the account. In their glorious system the account was 'transferred to recoveries' in January 2006 - not closed. Since it was with the recoveries team this is their reason as to why no statements etc went out and why there has been no attempt to contact me.

They do not accept that I closed the account and think all my stories of cutting up cards, requesting the balance be transferred etc etc are mere figments of my imagination.

They insist cheques are legal and valid for 6 years and so I have not a leg to stand on there with the cheque being old - a quick google search does seem to support this theory which is rather a shame and I am still in denial about!

They also seem incapable of saying anything other than the charge was valid as there was no money in the account and that consequently the default is valid. I was also under the impression that an account had to be in arrears for a certain amount of time (more than a month) before a default could be applied. Since prior to that the blooming £3 that was supposed to be transferred and wasn't - was still in there & so in credit - there was only 1 month before the default was slapped on. Seems quite harsh - particularly without any letters to let me know.

I had hoped to resolve this over the phone as I know the written route is going to take forever... but that is my next attempt.... any other thoughts also welcome! Thank you!