Loopholes clear couple’s debts

The following article is from the BBC.  If you don’t want to read the whole thing then in a nutshell it tells how a couple did thier own research into the Consumer Credit Act and had £100,000 of debt wiped out.  And the truth is you could do this too!

‘As more people find themselves in debt, one couple found loopholes in their credit agreements to avoid paying tens of thousands of pounds. But a High Court judge had the final word.

Amanda and Basil Rankine ran up debts of £120,000 after their mortgage advice business collapsed and they found themselves unable to afford their monthly payments.

Their debts were spread over 13 credit cards, four loans, car finance and an overdraft. They decided to study the Consumer Credit Act and contacted lenders claiming they had found mistakes in their credit agreements.

The Act lays down the rules which companies have to follow when they advertise or sell credit.

“I studied the Act and decided that there were things that didn’t match so I put together a bit of a letter to HSBC, thought I had everything correct, and sent it off,” Mr Rankine told the BBC’s Panorama programme.

“They wrote back, and after a few months said we’re prepared to write balance off.”

The Rankines, from Rugeley in Staffordshire, looked at all their credit agreements and identified potential loopholes.

These included whether the correct annual percentage rate (APR) was used, whether the forms had actually been signed and if the lenders had kept a copy of the paperwork.

In this way, they managed to have a number of their 13 credit cards and loans written off, to the tune of £37,000, including the sum from HSBC.

Sir Roy Goode, an eminent commercial lawyer who was instrumental in drafting the Act, said the rules relating to credit agreements were “extremely complex”.

“So any slip that is made entitles the consumer to refuse to pay unless the court gives leave to enforce the agreement,” explained Sir Roy.

Mr Rankine said: “Now more people challenge agreements, and more people will realise… the law is there so they have a choice. Challenge or repay at their level, or challenge and repay at your level.

The couple decided to take their remaining creditors to court over loopholes they believed they had spotted, and in an attempt to set a legal precedent that may benefit others. But the case was dismissed by a High Court judge, who said the couple were wriggling out of debt.

Despite the judgement, a legal technicality – which meant the lenders could only claim the money back while the court proceedings were going on – meant the couple still managed to get most of their debts frozen.

Warning

That took their total debt clearance to £100,000, leaving more than £20,000 outstanding. However, a legal bill of £100,000 left the Rankines back where they started.

At least they were now earning enough to manage the legal costs. With some irony, they are paying it back through consultancy work on the Consumer Credit Act.

They don’t accept they lost the case and they say they would prefer to be paying a legal bill than paying a debt they thought was unlawful.

The Rankines did their own work in scrutinising their credit agreements, but a whole industry is emerging online of companies claiming to get debts written off, and securing compensation, by rendering credit agreements unenforceable.

In August the Office of Fair Trading (OFT) and the Ministry of Justice (MoJ) urged people in debt to consider the consequences before using the services of these businesses.

“Consumers should think very carefully before committing themselves to making claims and handing over hundreds of pounds in advance to do so, even where refunds may be promised if the claim is unsuccessful,” the OFT and MoJ wrote in a joint consumer alert.

People struggling with loans are advised to seek free and impartial advice from organisations such as their local Citizens Advice Bureau.’

‘The Consumer Credit Act 1974 lays down rules about how consumer credit agreements and consumer hire agreements must be documented. There are also rules about how and when copies must be given to the borrower or hirer.

The detailed rules on the documentation of agreements are set out in the Consumer Credit (Agreements) Regulations 1983, as amended in 2004 (the Regulations).

The 2004 regulations and further amendments can be found on the Office of Public Sector Information website.

In addition, there are rules about the information to be given to borrowers before entering into a regulated agreement – see pre-contract information – and during the lifetime of the agreement – see post-contract information.

The Consumer Credit (Agreements) Regulations

The Regulations apply to all regulated consumer credit agreements and consumer hire agreements, including modifying agreements.

In particular, the agreement must contain certain financial and other information. This must be set out in a specified order, with sub-headings, and shown together as a whole. The information must be of equal prominence, and easily legible.

In the case of credit agreements, the required information is:

* nature of the agreement
* parties to the agreement
* key financial information (including the amount of credit or the credit limit, the duration of the agreement, the APR, the total amount payable, and the amounts and timing of repayments)
* other financial information (including a description and cash price of goods or services, any advance payments, the total charge for credit, the rate of interest, how and when interest charges are calculated and applied, the order of allocation of payments, and variable rates and charges)
* key Information (including default or other charges, any security provided by the borrower, and prescribed statements of the protection and remedies available to the borrower), and
* a signature box, and other form of consent where applicable.

Both the borrower and the lender must sign the agreement. A copy of the executed agreement must be given to the borrower, either when he signs it or within seven days. A further copy of the unexecuted agreement may also need to be provided. If the agreement is cancellable (because it was signed off trade premises), notice of cancellation rights must be included in the copy agreement, and must also generally be sent by post or email to the borrower within seven days.

If the above requirements are not met, the lender can only enforce the agreement against the borrower by getting a court order. Local authority trading standards services or the OFT can take enforcement action against the lender, using powers in Part 8 of the Enterprise Act 2002.’

Just think…if you could wipe out all those debts without having to declare youself bankrupt or entering into an IVA, would you do it?

Don’t kid yourself…IVA’s cost money and bankruptcy, although it does not have the social stigma attached to it that it once had it will still kick your credit rating in the unmentionables and put it down for a very long time.

There is another way…legal and permanent.

You could wipe out all those debts or at least put yourself into a great bargaining position with your creditors…after all they would prefer to recoup some money and not the big fat zero if you go bankrupt.