UNENFORCEABLE CREDIT AGREEMENTS

MAY 2009

A letter from Designated Civil Judge Derek Halbert to all Cheshire Consumer Credit Act Claimants and Claims Management Companies and Solicitors dealing with has been posted on the forum Read Here . It states they have sought the agreement of Lord Justice Moore-Bick and Justice Andrew Smith to take a few selected cases to test at the commercial court in London, potentially leaving on stay 100,000 cases with regards invalid CCA's.

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Following a high profile case involving the Rankines (read about this in VIP Legal Beagles ) there has been a massive growth in the marketing of companies offering to 'write-off' or 'clear' your credit card debt or loans, or anything covered by the Consumer Credit Act due to purported ''loopholes'' in the Consumer Credit Act 1974. There are NO loopholes in the Consumer Credit Act, the claims are simply based on lenders failing to comply with statutes laid down.

This ''loophole'' is a valid part of the Consumer Credit Act 1974 known as 127 (3) which was revoked in the 2006 Amendments, however the amendment was not retrospective. Therefore 127 (3) of the 1974 Act STILL applies to consumer credit agreements executed prior to April 2007.

127 (3) reads....

Quote:
Originally Posted by CCA 1974
(3) The court shall not make an enforcement order under section 65(1) if section 61(1) (a)(signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner)



There are many agreements which do not conform to other aspects of the consumer credit act...and also many agreements which have been lost/never made in the first place or mislaid....which also makes the creditor unable to legally enforce the agreement terms.

In the past, and in the main up until the judgment in the Rankines case, section 127 (3) has been used as a defence to claims against debtors by creditors without the correct compliant documentation. This has been useful in cases where creditors have added ridiculous interest rates, top loaded insurances, commissions, and charges and imposed unfair terms on debtors.

Now consumers, claims companies and solicitors have a greater understanding of the Consumer Credit Act, and in particular prescribed terms, and are taking the creditors to court before enforcement action is taken, asking for a declaration of unenforceability, thus forcing creditors to write off the debt. In some cases 'debtors' are also asking to reclaim any payments already made under the agreement (as it legally didn't exist) and asking for interest on top. There is very limited positive feedback on taking this course of action.

There are a lot of moral arguments surrounding doing this, but the overriding opinion seems to be if the creditor companies, with all the resources they have, couldn't get right what boils down to four or five prescribed terms in consumer agreements, it shows the lack of consideration and care offered to their customers and basically deserve all they get. We won't go into the moral arguments here, however Legal Beagles do not condone debt avoidance at all. We use the CCA 1974 and subsequent amendments to get things on a level and FAIR footing between debtor and creditor, and to encourage creditors to remove excessive interest and charges and allow affordable repayments on debt, and to stop bullying from DCA's, Bailiffs and stop CCJ's being applied, Charging Orders and people losing their homes to unfair debts.
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You will probably have heard radio or television advert ising, or read newspaper advertising and articles regarding companies and solicitors who promise to have your debts written off. Some of these companies give a toss about you, most don't and many will charge huge upfront fees in order to have your agreements ''assessed''.

This can be very tempting, after all an upfront payment of £300/£500 with promises to wipe over £5000 seems like a godsend and a way out of debt for many people, especially in the current economic climate.

However if you are tempted by these companies there are some basic checks you should make before handing ANY money over.

1) Word of mouth recommendation - from people you know and trust.

2) Check out sites like Beagles, Penalty Charges, Consumer Action Group, MSE, PAG, CCS etc see what experiences people have had actually using these companies.

3) Check out sites like http://www.whocallsme.com and see what people are saying about calls from these companies and their experiences of using them

4) Does the company have a Consumer Credit Licence ? The Office of Fair Trading: Consumer credit licences

5) Is the company regulated by the Ministry of Justice ? CMR: Claims Management Regulation

6) How long has the company been in operation ? Are they filing accounts and annual returns on time ? WebCHeck - Select and Access Company Information

7) Is the company just an 'introducer' - do they simply collect your details and sell them/pass them on to another company/companies for a hefty commission ? or are they the solicitors who will actually deal with your claim ? ASK THEM before doing anything.

and have a read of our Guide to the Consumer Credit Act > ~~~ Consumer Credit Agreements - A Guide ~~~~ inc. Letters - Legal Beagles which has letters and information to assist you up to the point you may decide you need legal representation.

There is also news of the courts taking a closer look at claims of unenforceability and putting claims on hold. Updates on this will be in the OFT Forum as and when we know more.

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