Clearing Credit Cards & Loans
Over the past 12 months dozens of claims companies have suddenly appeared and seem to offer an alternative method of clearing debt. They claim that most credit agreements (prior to April 2007) are unenforceable and It is certainly tempting to give them a call when it appears that your credit card or loan could be wiped completely.
At Liberty we are sceptical of these claims and do not work with any such companies. We would also recommend people think carefully before contacting them and would urge you not to pay any money up front.
The Office of Fair Trading (OFT) and Ministry of Justice (MOJ) have recently issued warnings about these claims companies and the Citizens Advice Bureau (CAB) recently issued the following advice:
Beware bogus offers to get debt written off, warns Citizens Advice (17-02-2009)
National charity Citizens Advice is warning people who owe money on credit cards and loans to be wary of advertisements offering to wipe out all their debts.
The warning concerns companies claiming they can get debts written off and win compensation by challenging credit card and loan companies over whether some credit agreements can legally be enforced. A rash of such advertising has recently appeared in newspapers, on local radio and on the internet.
Misleading claims wrongly suggest that the vast majority of credit agreements are unenforceable that credit card debt can be written off within a few weeks, that a positive outcome is guaranteed, and that the company can write off all outstanding debts, get all previous payments returned, and allow people to keep any goods purchased. Some advertising suggests wrongly that it costs nothing to make a claim.
Firms typically charge around £500 up front to check one credit agreement, with no guarantee that they will be able to make a successful challenge. Where people have several debts, the fees can quickly mount up to several thousands of pounds and people may then be sold a ‘no win, no fee’ agreement to take legal action that can cost them even more.
Cases reported by Citizens Advice Bureaux include that of a couple paying off debts of around £20,000 on terms negotiated by a free debt advice service. Having seen the claims made in one advertisement, they were on the verge of handing over £1275 to get all their debts checked.
The CAB explained they could do this for free, and in fact only one minor debt was likely to be unenforceable. The CAB commented that if the clients had acted on the advertisement they would still have to pay their debts but would have spent £1275 for the privilege of being told this.
Citizens Advice Head of Consumer Policy Sue Edwards said:
“These ads appear to offer an easy way out to people who have credit debts they are struggling to pay. But many credit agreements do meet the legal requirements and therefore can’t easily be challenged as unenforceable. A CAB adviser can check for free if there may be genuine grounds for a challenge.We would urge people in debt to think very carefully indeed before spending money they are unlikely to get back and can ill afford on a ‘solution’ that in many cases will just make their debt problems worse. Usually if something looks too good to be true that’s because it is.
If you are struggling with debt and want honest advice then we can help. We are an established company with experienced and highly regulated staff.
