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Is there a legal way to write off your debts?

Recent changes to the Consumer Credit Act of 1974 have changed the ways that lenders and providers of credit must deal with consumers. There are a lot of websites and online advisors at the moment who are marketing the fact that these changes may have resulted in some consumers being mis-sold credit products in the past such as credit cards, HP payment plans, loans and payment protection insurance (PPI) policies.

  • In very general terms, if this means that you were mis-sold a credit product then you can take action against the credit company that sold it to you in the first place. If this works then you could well see your existing current debts written off. This is based on the fact that a mis-sold product may well be legally unenforceable which means that the credit card company or lender cannot expect you to continue with your agreement or cannot enforce its terms any longer. So, will it work for you?

    The one given here is that you must have entered into your agreement with the credit provider before April 2007 to qualify for this kind of deal. This does not, however, mean that everyone who took out a new credit card, personal loan, HP agreement or credit insurance policy before this date will actually qualify or will have been mis-sold to at all. But, some may so it may be worth looking at if you have a lot of debts to sort out.

    The first thing to do here is to get some advice. There are a whole host of different companies out there that will offer you help here but you do need to be careful who you deal with. Given the fact that this kind of potential debt solution is common knowledge now a lot of companies have jumped on the bandwagon and some will be more effective (and reputable) than others.

    The problem here is that all of these companies will charge you for the help that they give which is not a great option if you are already heavily in debt. Most will have an initial fee and/or a fee per credit product that they look at to see if you qualify in the first place. If you are interested in taking this route then you may be better off looking at a company who will refund your fee (minus their administration charge usually) if it turns out that you don’t have a case.
In most cases the specialist companies here will look at the terms of your original agreement to check if it complies with the legal obligations of the Consumer Credit Act. If it doesn’t then you can ask them to contact your lender with a view to having your debts written off. If the lender agrees then that is that. But, many won’t and, if you want to take this further, then you may need to take them to court.

Your specialist company will be able to help you out here. Some, for example, have in-house lawyers and some retain lawyers to do the court work for them on an ad hoc basis. Again, it may be worth your while looking for a ‘no win, no fee’ option here if money is tight and you don’t want to have to pay costs if your case is not won.

This could well be a way for many people to see their debts written off but do go into this process with an open mind if you decide to try it out. It is unlikely that many, if any, of the major high street lenders and big players in the field will have mis-sold their products in this way although many smaller companies may have made mistakes here. So, do some research first and try to find out what your chances of winning are before you commit to any checks in the first place.
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