Unenforceable Credit Agreements

Unenforceable Credit Agreements- What are They?

You may have heard the term ‘unenforceable agreements’ or ‘unenforceable credit card agreements’ quite a lot recently.You may know that it is possible to claim that you agreement is an unenforceable agreement and have the balance written off. But what are unenforceable agreements exactly? It is all based on the 1974 Consumer Credit Act. (CCA) This act states that in law certain terms and conditions must be contained within the agreement. If they are not or the agreement is not signed, then the agreement is unenforceable.

The term unenforceable means that the agreement cannot be enforced and therefore no further repayments need be made once the agreement has be declared unenforceable.  You may be wondering why only agreements taken out before 2007 can be claimed. This is because after that time there is discretion allowed by the judge as to whether or not the agreement is enforceable whereas before 2007 there is no such allowance and even a court cannot enforce the agreement. Credit card, store card, HP, car finance and loans can be checked or audited to see if any breaches of the 1974 Consumer Credit Act can be found in the agreement.

The process is quite simple but somewhat time consuming. You will need the backing of a solicitor who is proactive and this can be found by using a CMC or claims management company.

First a true copy of your agreement will need to be obtained from your lender. They have 12 working days to reply. If they fail to do so or send a copy of terms and conditions (which is not the agreement) then they are ‘defaulted’. The case is passed to a solicitor who issues proceedings against the lender. If your agreement is sent back it is then audited to check for any breaches in the 1974 CCA.  Once these are identified it is then passed to a solicitor who prepares the case for court. You will be given free ‘after the event’ insurance to cover any costs which you case my need.

The first stage takes about eight weeks. The second stage which aims to have the balance written off take longer and very much depends on the response of the lender in question. No cases have gone to court because if the lender loses a precedent will be have been set. So they won’t risk this.  But many have been settled out of court or written off before court proceedings have been issued.

The best advice is to shop around and gather as much information as possible. The law is constantly being tested in court and changing all the time. So you will need to be patient and also be prepared for changes in the law which affect your case.

There is no need to consider IVA or Bankruptcy before you have had your agreements audited for unenforceability. It is good, in my experience to tell your lenders that you are having your agreements audited and offer them a token payment of a few pounds a month if you can afford it. They are often more willing to accept if they know you are having an audit.

It is the first step to a debt free life.

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