Tue 3 Nov, 2009
Because of debts on credit cards causing such great problems for UK citizens, it's hardly suprising that a lot of people are looking for any conceivable way to get rid of these debts.
The most usual ways are the old favourites of debt consolidation and debt management programs, with possibly an Individual Voluntary Arrangement or even bankruptcy as a last resort. Lately, however, a new method is being touted when it comes to wiping out card debt: the illegal credit agreement tactic.
The basic idea is to exploit a legal loophole in the consumer credit act that means that unless a credit agreement abides by a list of exact criteria, then it is not valid and so can't be enforced under law. The effective outcome is that any debt accrued under one of these agreements cannot be pursued by collectors, and so does not need to be repaid. There are many companies claiming that it is possible to quickly and easily arrange for your debts to be wiped out like this, but is this realistic?
The first point to note is that only credit agreements signed before April 2007 have the possibility of being declared unenforceable under this tactic. If this condition is fulfilled, there are a few reasons why the agreement may be invalidated, including not being signed by both parties, the Annual Percentage Rate not being distinctly expressed, or copies of the original documents not being available on request.
Specialist lawyers will check over your credit agreement copies for you to see if they are all sound. But here lies the gotcha: you usually have to pay a charge before an expert will even consider your case, whether or not you have any prospect at all of having your agreements declared invalid. If you have a lot of agreements to check, this can make it an expensive and maybe useless exercise.
There's also the fact that some less dependable promoters of this service over-egg the chances of actually being successful, which many unbiassed observers say are not as good as they are being portrayed.
So what's the deal here? Certainly ask your credit card providers for copies of your agreements and look at them yourself, but before taking any further action talk to a free debt advisor. If you think you might have an unenforceable agreement, then find a solicitor willing to work on a no win no fee basis, rather than parting with cash at the outset in the mere hope of leaving your debt problems behind.
Source: Illegal Credit Agreement