There have been a number of  ‘mixed signals’ of late in terms of unenforceable credit agreement. On the one hand we have emerging success stories of people having their debt wiped out because the lender made an error in the original agreement and on the other hand we have events like last week’s at the Manchester High Court. The ruling last week stated that creditors do not have to still possess the original credit agreement, but that a ‘true copy’ is acceptable. This ontradicts a number of the claims by the companies at the forefront of the unenforceable credit agreement claims and throws even more confusion into whether or not unenforceable credit agreement claims really can wipe out certain debts.

In order to clarify the situation somewhat, the Office of Fair Trading is set to release clear guidelines on the matter, due out by the end of January 2010.

Essentially, the way that most Claims Management companies handling these cases are advertising them, is as being able to eradicate debts owing to a loophole in Section 78 of the Consumer Credit Act. This states that unless a true copy of the original credit agreement can be supplied within 12 days of such a request by the debtor, that the debt is unenforceable. But the debt is only deemed unenforceable until such an agreement can be produced. This means that some people have successfully had their debts written off owing to creditors being unable to produce such a copy.

Some other unenforceable credit agreements have been the result of omissions or mistakes in the original agreement.

While unenforceable credit agreements are certainly something I believe should be pursued if there is a genuine error on the part of the lender, the guidance is limited and there is significant confusion surrounding the issue at present. The guidelines will be welcomed by consumers and the creditindustry alike.

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