So What's All This About Unenforceable Credit Agreements?

Have you heard about it? Have you seen the posters on the bus shelters and listened to the adverts on your local radio station? Companies springing up all over the place offering to write off your debts for you. Do you believe it? Have you dismissed it as nonsense...it can't be correct...it's too good to be true...where's the catch?
Here are the facts.
The Consumer Credit Act 1974 is the Act which regulates consumer lending, e.g. credit cards and unsecured loans, up to the value of £25000. You will have seen references to this Act on any credit agreements that you may have. This Act was updated in 2006 with a view to making this type of lending fairer to the consumer, i.e. you and me. The 'unfair relationships test' was introduced, allowing the testing of any agreement between you and a lender and the terms of it relating to interest rates, early redemption penalties, the lender's communication with you and the like to be scrutinised.
As a result of these changes, it has come to light that many credit agreements which were signed before April 2007 may not comply with the law and therefore may be unenforceable.
An important point to note is that this indeed, is a change in the law itself and not merely a loophole.
So, that should answer the question. It is absolutely correct and factual and perfectly feasible that, if you have unsecured loans, credit cards, or PPI insurance that was added to a loan you took out, you could be free of them within a matter of months as they could be written off completely and for good after a legal process is completed.
Let me talk about the companies that are offering to carry out this process for you. An initial fee for each credit agreement would be charged, anything up to £1000, with promises to carry out varying levels of service to determine whether your agreement is unenforceable. A process is then undertaken to determine whether your credit agreement is unenforceable. Sometimes this can simply take the form of submitting your agreement details into an online form and a response coming back within minutes to tell you if your agreement is unenforceable. Other companies will take a different approach, carrying out an investigation resulting in the production of a lengthy, in depth report which states the areas of your agreement that comply with the Act and the areas where it may not. I know which I would rather have. If your agreement is actually enforceable and you are stuck with it, not every company will refund your initial fee so, do your research!
If your agreement is unenforceable, it then completes a legal process over a period of months before the debt can be written off completely. On completion of this legal process, some companies will charge you a back end fee after the debt is written off. So, it's almost as if the company is saying that they will get you out of debt, but will then get you back into debt after they have relieved you of your burden! These back end fees can be as much as 30% of your initial debt amount. To me, this highlights the sheer greed of some of the companies that are now in the marketplace to carry out this process for you.
There is one more thing to be aware of. It is possible that your lender may contact you offering to reduce or even write off your debt if you accept the proposal from them there and then. This may sound like an excellent proposition however, if you accept this offer, you would become liable for the lenders' legal costs! The lender may well not tell you this up front! Beware of wolves in sheep's clothing!
That said, there are indeed companies out there who will carry out these processes for you in a fair and ethical way, providing good value for money and a transparent service. If you want to find out more, please visit www.unenforceable-credit.com or contact me for more information.
This article is for information purposes only. Further advice with regard to individual circumstances should be sought from a professional.
I am a Financial Adviser, Estate Planner, Entrepreneur and Dog Lover. I firmly believe in building multiple income streams and doing some good to others in the process. I have various projects that I am working on, the first of which is my blog about Dog Ownership and Experiences http://wealthstrong.biz/dogblog
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