“Unenforceable Debt” Claims Company Warning

21st October 2010

The Office of Fair Trading (OFT) has warned consumers that companies which claim to be able to use sections 77/78/79 of the Consumer Credit Act 1974 to wipe out their debts are misleading them.

A guide has been produced by the OFT as to how consumers can exercise their right to request information under this Act. For a fee of £1, consumers may request information which will allow them to confirm the details of the original agreement, view the new terms of the agreement (if they have changed) and see how much is still owed.

If a lending company subsequently fails to provide this information then the debt becomes “unenforceable” as the lender can no longer get a court judgement against the borrower, take back hired items or items bought on credit, or take anything used as security (like a car) when the initial agreement was made.

“Unenforceable” however does not necessarily mean that the individual can escape from the debt. The guide makes it clear an individual still owes the money to the lender, interest can still be added to the loan or hire purchase agreement, default charges could be added and a failure to pay may negatively affect their credit rating.

“Unenforceable” is also not a permanent status for the debt. If the lender is later able to produce the appropriate paperwork the debt will once again become fully enforceable.

As such the OFT are suggesting that anyone worried about an unmanageable debt level should seek advice from appropriate sources of debt advice rather than relying on the misleading information provided by some claims companies.

A full range of debt solutions exist in Scotland to deal with debt problems of any magnitude. The Debt Arrangement Scheme, debt management plans, a trust deed or even sequestration (bankruptcy) are all appropriate in certain circumstances.

Trust Deed information website Trust-Deed.co.uk, urges people to avoid claims companies promising to write off their debts. Such companies typically charge large upfront fees with no guarantee of success. There are also several stories of such claims companies ceasing to trade after accepting huge sums in upfront fees.

For further Trust Deed or Protected Trust Deed information please visit our forum where we have a wealth of free advice from experienced industry experts.

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