In these times of financial uncertainty and rising debt problems, many people are becoming anxious aout how much they owe on credit cards. In the good times, credit card debt might have been an expensive annoyance but it was just part of life. When times are harder, these debts can become a real problem.
What would you say if you found out that your credit card debt could be written off at a stroke, with no cost to you and no damage to your credit rating?
A number of companies and websites have sprung up recently promising to do exactly this. Just what are they offering?
Consumer Credit Act 1974
The issuing of credit is bound by strict guidelnies under consumer credit legislation. If a credit agreement was made that didn’t fully comply with the law, it could be classed as ‘unenforceable’ and so the money owed on the credit card would effectively be written off, and the card account canceled as if it had never existed.
Reasons why this might happen include:
- No APR stated on the credit agreement
- Credit agreement not signed by both borrower and lender
- Credit limit increased between agreement being signed and credit facility issued
- Copies of the original agreement not available
At this point, you may be thinking that your credit card worries were over, but as with most things, if it looks too good to be true then you need to take a second look.
The first problem with this idea is that, despite what the adverts may imply, many if not most credit agreements are perfectly valid, and trying to challenge them would be futile and possibly expensive. Indeed, the Office of Fair Trading have recently gone on record as saying that many companies were making overblown claims on how successful such challenges could be.
Secondly, most of the firms offering these services charge an upfront fee just for checking your agreement to see if there’s a chance of making a claim. One has to wonder why such a fee is necessary if, as their adverts imply, the chances getting the agreement canceled are so high.
Thirdly, even if problems are found with the agreement, it’s not necessarily the case that the debt will be cancelled. The banks won’t simply roll over without a fight, and you may find that the legal costs will outweigh the original debt even if you’re successful in having the agreement judged unenforceable.
This is especially the case if you decide to go it alone rather than using a specialist solicitor – the banks’ legal departments will tie you in knots, at great cost in money, time, and stress.
Worth a Try?
This is not to say that there’s no point in even considering checking your credit agreements for errors. If you can find a company of solicitors with real experience in this field, who will operate on a no-win no-fee basis, with a guarantee against court costs, then you may have nothing to lose.
Just don’t let the prospect of having your debt cleared tempt you into parting with money up front with no guarantee of success.