PPI & Uninforcables

MARTIN LEWIS MONEY SAVING EXPERT

The Verdict

The High Court trial, held at the Manchester District Registry Mercantile Court, involved eight separate claims by consumers against lenders to determine certain legal principles of when a credit card debt can be deemed unenforceable.

Even if unenforceable, a lender can often demand payment and register non-payment with a credit reference agency which can hit your credit score. It cannot, however, seek a court order to ensure payment.

Judge Waksman said last week in his ruling:
• Lenders do not have to provide an exact copy of the original agreement. They simply have to provide “a reconstituted version” which may be from sources other than the signed agreement” under Section 78 of the Consumer Credit Act.
• As a result, he says lenders will usually be able to supply copies even if not within the required 12 working days.
• He also agreed with an earlier ruling in October that stated even if a lender cannot provide a copy, the debt is only unenforceable until a copy is provided. And, even while temporarily unenforceable, it does not stop the lender from reporting non-payment to credit reference agencies or from sending letters demanding payment. In any case, he said the lack of credit agreement alone does not mean the relationship between lender and consumer is “unfair”.
• Where an agreement has been “varied” (eg, where the interest rate has risen), a copy of the original and the varied terms must be produced.

Source:
Martin Lewis Money Saving Expert

Consumers have been told by a claims firm they have little chance of getting debt wiped out by challenging a credit agreement.

And even if successful, a landmark court ruling means it’s likely to leave claimants severely out of pocket. The news will be a blow to thousands of borrowers lured into trying to get debt cleared by the multi-million pound claims management industry.

Yet critics argue debt-avoidance is immoral where you have legitimately borrowed cash and have been treated well by your lender.The industry regulator has previously warned against believing the “misleading” marketing slogans used by many ‘ambulance-chasing’ firms that sometimes suggest success is “easy”.

Now even some claims firms, which make a living by encouraging consumers to make all sorts of claims and then take a fee, admit the debt clearance process could be a waste of time and money.

Some firms charge fees up to £500 just to consider your argument, before even deciding whether you have a case. The chief argument used by these companies is that lenders may be forced to cancel debt if they cannot provide a copy of the original credit agreement or if they made an error on that form.

Daniel Goldberg, from claims company Challengeyour.com, which does not charge an upfront fee, has lifted the lid on the practices of some of his rivals. He says while some claimants are successful, the many promises of wide scale write-offs are wildly exaggerated. Goldberg adds: “Only in very few cases is debt write-off possible. Many of the claims being put through are not working. Even if an agreement is unenforceable, a judge can override this.”

Challenge your believes you’ve most chance of getting debt wiped out when payment protection insurance (PPI), to protect your repayments, has been missold. The British Bankers’ Association says that everyone else pays through higher charges when a consumer gets their debt cleared.

Out of pocket

A major development last week means that even if you are successful in getting debt cleared, it could have a disastrous affect on your ability to secure cheap credit, or any borrowing at all, in future.Lenders that have agreed not to chase customers for debts usually still inform credit reference agencies of borrowers’ failure to pay, which badly hurts their credit record.

This practice was unsuccessfully challenged last week in a landmark High Court test case by a man who owed £15,000 on a loan. He was seeking an injunction to prevent Royal Bank of Scotland (RBS) adding black marks to his credit file for non-payment while it was unable to provide him with a copy of the loan agreement.

He claimed this made the debt unenforceable while the paperwork was missing.

Judge Flaux said while “the absence of the statement may be a technical non-compliance, the claimant has suffered no prejudice as a consequence”.

RBS has since found the agreement meaning the £15,000 balance needs to be paid.

Chris Busby, partner at law firm Eversheds, says: “Ceasing repayment of loans will have an adverse impact on credit ratings, which may result in otherwise lenient payment plans being withdrawn.”

Source:
Martin Lewis Money Saving Expert