Unenforceable Credit Agreements

There is a lot of buzz currently around the legality of credit and loan agreements made before April 2007. The law changed in April 2007, but prior to that, all UK credit agreements (Loans & Credit cards) were bound to conform to the Consumer Credit Act 1974.
Basically, the act states that credit agreements must be set out in a particular way and to contain certain information, for instance the APR must be included in credit agreements and pre-contract information and also notification to the borrower of any variation of an agreement.
What has recently become apparent and successfully challenged, is that some (this figure has been widely speculated to be 70% but there is no easy way of knowing) of the agreements did not conform to the act and are therefore legally unenforceable. There is now a widely used term of Unenforceable Credit Agreements that refer to these potential unlawful agreements.
What this means for the borrower or you, is that under normal circumstances if a borrower defaults on a loan repayment or credit card, then the lender can take the person to court to reclaim the outstanding balances, but if the agreement between the lender and the borrower is unenforceable then the court cannot rule in favor of the lender and force the borrower to repay the balance.
In several reported instances, the lender is aware of this and does not actually take the borrower to court as they already know they would not win so to save costs (and probably publicity), they cancel the debt and write it off.
More information can be found at Unenforceable Credit Agreements.
Article Source: http://EzineArticles.com/?expert=Tom_Greenwood