Unfair Credit Agreements in a Nutshell

Published: 28th September 2009
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In the UK, over the last 5 years as much as 70% of unsecured loans and credit card agreements that were obtained prior to April 6th 2007 have been torn up because were found to be legally unenforceable by the issuing credit card company. In effect, if your credit card or secured/unsecured loan agreement does not comply strictly with UK consumer protection laws, it is effectively an unfair credit agreement, and can be rendered null and void in court.

Any agreement for credit or personal loans must comply strictly with the terms and conditions that have been stipulated in the Consumer Credit Act 2006. Basically, if you were issued a loan or credit card prior to April 6th 2007, chances are that your credit agreement has significant inaccuracies that make it null and void as far as legalities are concerned. If you are able to prove that that is the case, then you can have your outstanding credit card balance wiped clean without affecting your credit report.

By law, all loan and credit agreements must conform strictly to the Consumer Credit Act which determines whether or not your credit agreement is legally enforceable by the provider of the credit card or loan. You can take your creditors to court to have agreements declared improperly executed and so irredeemably unenforceable.

These requirements include:

1. Your lender must provide all of the relevant information that is specified in the credit agreement.
2. Your lender must provide an agreement in the specified format allowing correct execution of the loan.
3. Your lender must have used an accurate method of calculating the APR or the total amount that is repayable.
4. Your lender must provide copies of the original loan agreement within 12 days upon payment by yourself of £1.
5. The lender or their representatives must have signed the original documentation.
6. The lender must disclose any commissions or payments that they either received or paid in the original document.
7. The lender cannot inadvertently include an ancillary product in the credit agreement.

If you signed up for a loan or credit card that does not conform strictly to any of the above requirements, then your credit agreement will effectively be torn up and rendered legally unenforceable. These 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

A specialist claims company can advise you on whether or not you have a valid case and how to begin the process. The specialist company consist of experienced lawyers who are experts in consumer protection laws, and they will investigate your credit card/loan agreement and establish whether or not you have grounds to sue your lender for issuing an unfair credit agreement. Most cases never get as far as court as lenders tend to settle out of court.

You can start the ball rolling by first of all getting your credit report from your credit company. By law, your credit company has to supply a copy of your credit agreement within 12 days as long as you submit a postal order of £1. If you do not receive your credit card agreement within this time, you are no longer liable for the debt.

Jide Pearce has been writing about debt solutions for just over three years. Jide's blog always has insightful articles on various forms of debt solution. For example, on http://www.debtsolutions-r-us.com, he answers the question How can I avoid paying loan penalties?

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