The airwaves are plagued with claims companies promising to wipe out pre-April 2007 debts by exploiting Consumer Credit Act loopholes. We’re working on a full step-by-step guide to expose the myths & reality as to whether you can cancel old loans/get credit card debts wiped out. The legal issues mean we’re not there yet, but my mailbag’s now so big on this, here’s a very brief provisional synopsis.
Can you wipe out your debts?
The legal premise
It’s argued if lenders can’t produce a credit agreement or made admin errors, eg, omitting a key term like the APR, the debt can be wiped. This is not universally accepted, and there’s only limited evidence of success.
What you get
It’s not about money back, but not needing to pay the debt. We’ve asked many claims handlers for evidence, and of the few successes, most are for limited settlements, or an agreement not to pursue debts, though that ruins your credit score.
DON’T pay upfront
Some of the most vigorous marketing and exaggerated promises are from companies asking for £100s upfront. Personally, I wouldn’t go near them. If you feel you have a case, try a no-win, no fee handler only if they take a max 25% of the written-off debt.
Is it moral?
If people have been missold loans, eg wrongly forced to take out PPI insurance (see PPI reclaiming), fair enough. Yet wider reclaiming based on a technicality when someone’s chosen to borrow cash is more questionable.
What the courts say
In Sep 09 a County Court judge ruled for the first time that a woman who'd been missold Payment Protection Insurance with her credit card, could have her entire £8,000 debt wiped out. See the full MSE News story: PPI debt wiped out.
This suggests those who’ve been missold insurance with cards or loans do have a chance of having debts wiped although as the decision was in a lower court it doesn’t set a precedent for other claims and there could still be an appeal, so it's not clear cut at the moment.
What's next
We’re keeping working on the step-by-step guide, which will detail both a legal assessment of how to do it yourself and will list reputable claims handlers. When it’s ready it’ll of course be in the weekly e-mail.
Sadly, discussion in the forum is limited on this one as claims handlers are a litigious bunch, and the risk of handing them a juicy libel claim from some flippant comment sadly means discussion needs to be put on hold until we’re fully ready to publish.
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