Consumers are being encouraged to part with cash under an often false promise their credit card or loan debts will be written off.

This is despite recent court rulings which cast substantial doubt over borrowers' ability to escape their debts based on a technicality (see the Write-off your debt? guide).

Some claims management firms charge up to £500 per loan or credit card agreement they "assess", which means some could pay thousands who challenge multiple agreements.

Many are still touting for business online, in newspaper ads, and via cold calls, and often fail to disclose their fees in promotional material.

A member of the team received a recorded cold call from a claims management company over the weekend.

It said: "Did you hear about the landmark ruling yesterday in Manchester where a borrower had £8,000 written off? This opens the floodgates for consumers to write off debts they are paying."

The call cut-off before MSE could be transferred to a call centre to find the identity of this firm. There was no such ruling last week.

'Don't pay'

Chris Busby, from law firm Eversheds, says: "Consumers should beware of paying up-front fees to pursue these sort of claims for them because many of them are unsuccessful."

Wendy Alcock, money analyst, says: "Some of the most vigorous marketing and exaggerated promises are from companies asking for £100s upfront. Don't go near them.

"However, claiming based on a technicality when someone's chosen to borrow cash is questionable."

Claims management companies have often stated a debt is unenforceable where a lender fails to supply an exact copy of the original credit agreement or where there is an error on the agreement.

Yet a High Court judge ruled last October that even if you are successful in stopping lenders chasing you for debt where the agreement is missing, they can still report failure to pay to a credit reference agency (see the Debt write-off blow MSE news story).

This could have a disastrous affect on your ability to secure cheap credit, or any borrowing at all, in future.

Significant ruling

An even more significant High Court ruling last month reaffirmed that decision but added that a lender only has to supply a copy with the correct information (which could be written up on a blank piece of paper), not the exact copy.

Also, even if there is a minor error, this is not enough to get the debt ruled unenforceable (see the Debt write-off loophole closed MSE news story).

The cold calling claims firm was probably referring to a cleaner from South Tyneside who had an £8,000 debt written off last October, partly due to her lender, MBNA, charging her for PPI when she insisted she had not requested it (see the PPI victim gets £8,000 debt wiped out MSE News story).

However, subsequent rulings have reversed the tide. Prior to them, there was only limited evidence consumers did in fact manage to escape their debts.

Further reading/Key links

Debt help: Write off your debts?, Debt Problems
Full December ruling: High Court papers