The Truth About Unenforceable Agreements
Switch on your radio and it won’t be long before your hear adverts claiming that your loan or credit card can be written off as they are unenforceable. Dozens of companies have suddenly appeared and are promoting this as an easy way of writing off debt.
They argue that the banks failed to comply with the Consumer Credit Act 1974 and that as such the majority of credit agreements prior to 1st April 2007 are invalid. If taken to court they believe the contracts would not be legal and as such the debt would have to be written off.
Whilst a loophole may well exist, the exact process remains unclear and claims of millions of pounds being written off already have not been confirmed.
Senior judges are already requesting clarity on the law, with some arguing that a series of test cases should be heard in the Commercial Court in London to decide if people have valid claim.
Unfortunately (like bank charge claims) this is likely to be a
lengthy process and could see cases placed on hold for many months or
even years if appeals are launched. Of course there is also the
possibility that the test cases could be rejected completely.
Considering how unstable the banking system is at the moment many experts believe it would be unlikely that the majority of credit agreements would be torn up simply because certain clauses were missed. As a result Debt Trust UK does not offer this service and would urge caution when considering this as a method of writing off debt.
Most of these companies charge a large upfront fee (often £500) and also demand a significant lump sum payment (sometimes as high as 20% of the debt cleared) if they are successful. What is also worrying are the warnings recently issues by the Office of Fair Trading (OFT) and Ministry of Justice (MOJ). The following alert was recently released:
Consumer Alert 21st August 2008
The Claims Management Regulator at the Ministry of Justice and the Office or Fair Trading (OFT) are warning consumers to think carefully before responding to businesses claiming that they can arrange for outstanding balances under loan, credit card and other consumer credit agreements to be written off and secure compensation.
Consumers are advised to seek independent advice before using the services of businesses that offer to find ways to render consumer credit agreements unenforceable.
Businesses can only provide claims services if they are authorised and regulated by the MOJ under the Compensation Act 2006. Such businesses may also need to hold an appropriate OFT consumer credit licence.
Consumers may be asked to pay large up-front fees, often up to £500, for the businesses to review their credit agreements. Some businesses are claiming that many of these agreements are completely unenforceable, that consumers can have debts cancelled and claim back thousands of pounds.
Consumers should think very carefully before committing themselves to making claims and handing over hundreds of pounds in advance to do so, even where refunds may be promised if the claim is unsuccessful.
At Debt Trust UK we specialise in writing off debt. There are many ways to do this and by completing our free debt test we will find the best way to clear your credit cards and loans.
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