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DSSW is authorised by the Ministry of Justice to provide claims management advice.
DSSW is fully licensed by the Office of Fair Trading to provide debt management and credit broking advice.
Debt Solutions Southwest Ltd is a debt management business based in the South West of England, providing a full debt management and credit advisory service to individuals and businesses.
Why could my credit card debt be unenforceable?
What laws cover the question of unenforceability?
Does this apply to all credit cards?
Does this apply only to credit cards?
Being technical, what laws cover the question of unenforceability?
How do you help me to have my loan agreements declared unenforceable?
This doesn't sound too complicated, couldn't I do this myself?
If my card debt is wiped clean, or I have the debt reduced, will this affect my credit rating?
If I ask you to help me, what are my chances of success?
How long does the process take?
What happens if creditors contact and harass me after I have signed up with you?
Why could my credit card debt be unenforceable?
When you entered into the arrangement to acquire your credit card you should have signed a formal loan agreement with the credit card company (or lender). The lender is obliged by law to provide you with a true, legible copy of your executed agreement if you request it. If they cannot provide the agreement, they are unable to recover the debt. If the agreement has been improperly executed they also cannot recover the debt.
What laws cover the question of unenforceability?
The law on credit card debts being unenforceable is covered in the Consumer Credit Act 1974 (The Act) and its associated Regulations of 1983.
Does this apply to all credit cards?
Yes, it applies to all credit cards entered into before 7th April 2007.
Does this apply only to credit cards?
No, it applies to all personal loans entered into before 7th April 2007. All personal loans need to be supported by properly executed agreements containing all the prescribed terms. But, from our experience, credit card agreements are more likely to be defective than other personal loan agreements.
If the lender can provide me with a copy of my agreement does that mean the debt is automatically enforceable against me?
No it doesn't. The Act and Regulations are very strict about agreements and say that not only should an agreement be provided to you, but also the agreement must have been written in a very specific way, been executed (signed) in a certain way and contain specific ‘prescribed terms’. If the agreement does not meet these strict standards, the agreement will also be unenforceable against you.
So, if my agreement is provided to me and it does contain all the prescribed terms, is it now definitely enforceable against me?
No, not necessarily. There are other things the lender should have done when entering into the agreement with you, like providing copies of the agreement to you and advising you in writing that the agreement is cancellable. If it hasn't done these things, it might mean that the agreement is only enforceable if a court decides it is. In these cases we would seek to have the debt compromised (or reduced) because lenders will seldom wish to take a chance with the court.
Also, the lender might have charged you unlawful penalties and costs that we could be reclaimed, thus reducing the amount you need to pay.
Being technical, what laws cover the question of unenforceability?
The law on personal loans and credit card debts being unenforceable is covered in the Consumer Credit Act 1974 and its associated Regulations of 1983. Although a new Act was introduced in 2006, which changed the law on enforceability of agreements, it does not apply to agreements entered into before 7th April 2007 (when the 2006 Act came into force).
What happens if I have a pre-April 2007 card, but I have spent money on it since April 2007? Can this post-April 2007 debt still be found to be unenforceable?
Yes, for cards acquired before 7th April 2007 it doesn't matter when you have used them, it only matters when the arrangement (or agreement) was entered in to.
How do you help me to have my loan agreements declared unenforceable?
We will do the following:
- a) Help you get your agreements from the lenders.
- b) If the lender cannot produce the agreement, it is unenforceable against you.
- c) If the lender does provide the agreement, check it thoroughly to see whether it contains all the prescribed terms and has been properly executed as laid down in The Act. If it is defective, ensure it is unenforceable against you.
- d) If the agreement is not defective, work on your behalf to reduce your debt by negotiation, or having unfair charges removed. This could lead to what is known as a 'full and final settlement' of the debt for an amount less than you owe.
This doesn't sound too complicated, couldn't I do this myself?
There is nothing to stop you trying to do this yourself. Also, you can access assistance from the Ombudsman Service and/or the Citizen Advice Bureau. If you do it yourself, be aware that this is a complex area of the law and most non-legal people find it very difficult to reach a successful conclusion, especially when the lenders blind them with obscure legal facts, fiction, evasion and jargon. Our principal is a Barrister-at-law with many years experience in debt management.
If I challenge the validity of my agreement (to have my credit card debts wiped out) will it affect my credit rating?
If you are not in default with your cards already, and you wish to protect your credit rating, you should continue to pay the minimum payments on your cards. If you do this there will be no adverse defaults on your credit record, despite the fact that you are challenging the legal validity of your cards. Should you decide to stop paying the minimum amount on the cards once we advise you they are unenforceable, the lenders could post adverse reports on your credit file. If your case is legally settles in your favour, negative reports can be removed from your credit files.
If my card debt is wiped clean, or I have the debt reduced, will this affect my credit rating?
It should not. Both a complete elimination of your debt, or a full and final settlement means you have legally settled the debt and is the same legally as paying it off in full. If this does result in an adverse default on your credit rating through error by the credit references companies, we will show you how to have this removed.
If I ask you to help me, what are my chances of success?
A large percentage of credit card agreements are unenforceable either because the lender cannot provide a copy of the agreement, or because agreements are defective. The percentage varies from lender to lender and with how old the agreement is. Agreements entered into after 2004 are more likely to be enforceable, while we cannot usually legally challenge agreements entered into after 6th April 2007. However, even where agreements are not defective, we usually manage to have some of the debt reduced, depending on your financial circumstances.
What will this cost me?
If you use our services, we will charge you an up front (audit) fee of £395.00 for the first card and £150.00 for each card thereafter. This covers all the admin and legal work involved in establishing whether your agreements are enforceable against you and/or negotiating with the lenders to have the debts eliminated or reduced. Once we have had the debt eliminated or reduced we charge you a success fee of 15% based on the amount we have saved you.
How long does the process take?
You should allow for between eight and 12 months. It should be quicker than this, as there are set times laid down by law on how quickly the lender must provide the agreements and other information requested. Unfortunately, in practice, lenders drag their feet (especially when they can't find the agreements!) and the process goes on longer than it should.
What happens if creditors contact and harass me after I have signed up with you?
There are strict guidelines laid down by the Office of Fair Trading stating that lenders must obey borrower's instructions to deal direct with the borrower's authorised agents and not with the borrower and how lenders should behave when collecting debts. If the lenders ignore your instructions or disobey the OFT guidelines we can report them to the OFT and they can be disciplined. Usually, a couple of letters from us will keep them honest and they will leave you alone.
If you have eliminated a lot of my debt, I will have to pay you quite a large success fee. (For example, if you saved me £20 000 I would need to find £3 000.) How am I going to find this money?
Obviously, to pay only £3 000 to eliminate a £20 000 debt is a great result for you, but you still need to be able to come up with the £3 000. This is something you need to consider carefully before you engage us. If you are unable to pay the money in a lump sum, we will usually arrange generous payment terms for you.
If the lender offers me a full and final settlement for less than I owe, can I pay this off over time?
Usually not. Lenders will sometimes offer you a compromise of your debt, which is a full and final settlement of the whole debt for less than the amount you owe, but they will expect you to pay the reduced amount immediately. The other deal that lenders will consider is a freezing of all interest and charges and a payment of the amount currently outstanding over a long period.