Over the last few years, up to 75% of loans and credit card agreements taken out prior to April 6th 2007 have been found to be legally unenforceable.

Basically, if your credit or loan agreement does not comply with consumer protection laws, it is in effect an unfair credit agreement, and not worth the paper that it’s printed on. In effect, it is null and void.

Loan and agreements must comply with the terms set out in the Consumer Credit Act 2006. If you took out a loan or credit card prior to April 6^th 2007, there is every chance that your credit agreement has flaws in it that make it legally unenforceable. If that is the case, then you can effectively have your debts wiped clear without affecting your credit file.

According to the Consumer Credit Act, all loan and credit agreements must conform to a very strict list of requirements which determine whether or not your credit agreement is legally enforceable by the lender.

These requirements include:

The lender must provide all of the relevant information in the credit agreement.

1. The lender must provide an agreement in the specified format allowing correct execution of the loan.
2. The lender must use the correct method of calculating the APR or total amount repayable.
3. The lender must to provide copies of the original loan agreement or any supporting documentation.
4. The lender or their representatives must sign the original documentation.
5. The lender must disclose any commissions or payments that they either received or paid in the original document.
6. The lender cannot inadvertently include an ancillary product in the credit agreement.

No brilliance is required in law, just common sense and relatively clean fingernails.

John Mortimer

If you acquired a loan or credit card that does not conform strictly to the above requirements, then your credit agreement will be deemed unenforceable, meaning that it will effectively be torn up and you won’t have to pay the outstanding balance on the agreement. Potentially unenforceable credit agreements apply to credit card agreements, unsecured loan agreements, store card agreements, hire purchase agreements and secured loan agreements.

How to Challenge an Unfair Credit Agreement

You can begin the process of challenging the terms of an unfair credit or

agreement by contacting a specialist claims company who will be able to advise you on whether or not you have a valid case. The company will investigate your credit card/loan agreement and establish whether or not you have grounds to prosecute the lender for issuing an unfair credit agreement. Before you do that, draft a letter to your credit card company, requesting a copy of your credit agreement. Your credit card company is obligated by law to respond within 12 working days, as long as you include a payment of £1. If they do not comply, your outstanding balance can be effectively wiped clean.  You can base your letter on the following draft:

Original Creditor:

Account No:

***************

Dear Sir/Madam

With reference to the above credit card debt, I would be grateful if you would send me a copy of the credit agreement and a full breakdown of the account including any interest or charges applied. I wish to challenge the legality of this credit agreement.

I understand that under the Consumer Credit Act 1974 [sections 77-79], I am entitled to receive a copy of any credit agreement and a statement of account on request. I enclose a payment of £1 which represents the fee payable under the Consumer Credit Act 1974.

I understand a copy of any credit agreement along with a statement of account should be supplied within 12 working days.

I understand that under the Consumer Credit Act 1974 creditors are unable to enforce an agreement if they fail to comply with the request for a copy of the agreement and statement of account under these sections of the Act.

I look forward to hearing from you.

Yours faithfully

It is very important that you do your due diligence and shop around for the best specialist claims company that you can find, as there are companies out there who charge very reasonable fees and have stronger track records than others.

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