“Unenforceable debts – is it still possible to make a claim?”

Published: 09th February 2011
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About 2 and a half years ago there was a massive stir in the industry as a number of claims management companies sprang up overnight promising anybody who had a loan or credit card that was taken out before April 2007 that they could actually be paying unenforceable debts and that it would be easy to get these written off. So what exactly were these companies referring to by ‘unenforceable debts’ and where have these companies disappeared to?

The whole concept of unfair credit agreements and the fact that unenforceable debts could simply be written off came about as a change in the Consumer Credit Act in 2006, which gave people the right to challenge their credit agreement if they believed it to be unfair in any way. Claims companies jumped on this small piece of legislation and exploited sections 77-79 of the act, assuming that millions of credit agreements could be legally deemed ‘unenforceable debts’ and a billion pound industry was created almost overnight.

It seemed too good an opportunity to miss and even though some companies were charging up to £495 per credit agreement check ("audit"), thousands of hopeful claimants submitted their details in the hope that theirs were unenforceable debts. Although there are no official figures, it is believed that up to half a million people put in a claim in the hope of having their credit agreement deemed unenforceable and therefore avoid repayment.

Unfortunately for those who handed over upfront payments to have their credit card and loan agreements checked for ‘unfairness’, events have not been favourable to those seeking to have their unenforceable debts written off. The OFT has recently published a guidance on sections 77, 78 and 79 of the consumer credit act which clarifies what happens if a lender cannot produce a copy of the credit agreement – one of the major factors in many claims companies arguments for winning this type of claim (if they haven’t got a copy of the agreement, what can they enforce (?) was the main argument).

The crux of the matter is the OFT have clarified that just because a lender cannot produce a copy of the agreement, this does not mean that your credit agreements suddenly become unenforceable debts. What they have said is that lenders have 12 days to produce your credit agreement, in return for a fee of £1, and if they cannot produce this then the debts become unenforceable. The OFT’s interpretation of ‘unenforceable debts’ is that creditors can still pursue clients for the money that’s owed, interest can still be applied and your credit rating will be affected if payments aren’t met.


Do you have unenforceable debts? Clear your unenforceable debts with the help of debt advisors of UK Money Solutions. All the staff at UK Money Solutions have a common goal which is to provide best debt management solutions.

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