Don't be tempted by dodgy debt claims

Posted in 'Dealing with Debt' by Richard Catlin

01 July 2009

Tempted by the current offers by firms touting that they can clear your debts by challenging them as unenforceable? Don’t be.

Consumers have been warned by the Office of Fair Trading (OFT) to be wary of claims handling firms seeking up front fees and offering to take on your borrowings, challenge their legality, and get the debts written-off.

As reported earlier by checkmyfile, we believe the chances of success in wiping out debts are very small. It is rarely reported that the law enables lenders to seek directions from the court to have any agreements which might be inadvertantly unenforceable put right in many cases. And even if they could be erased, the way that the matter is likely to be reported on your credit report is likely to damage your rating. A leading Judge has called for all court action to be put on hold pending the outcome of a few selected ‘test cases’.

It is also unlawful to sell debts on without the consent of the lender, and claims to the contrary are unfounded.

Lenders are also unlikely simply to sit there and watch thousands of pounds of debt be wiped out. If the attempt is perceived by a lender to be a blatant attempt to avoid debt, it is even possible that the lender could claim that the borrower has ‘attempted to obtain a pecuniary advantage by deception’ – an offence under the Theft Acts – and which could conceivably result in a fraud warning on your credit report, whether the attempt is proven or not.

As with all dodgy stuff, an advance fee is often involved - typically around £300 - in addition to agreeing to pay a fixed percentage of the debt to be written off.

The OFT has been involved in running battle with a number of debt firms in recent months, covering a range of underhand practices aimed at exploiting consumers in financial difficulty. In addition to the bogus ‘sell your debt’ claims, firms have also been criticised for cold calling people with misleading debt management services, as well as charging hundreds of pounds to pursue those ‘unenforceable ‘ debts.

The reason for the sudden surge in firms trying to cash in and exploit consumers is easy to see. The Citizens Advice Bureau has reported a 21% increase in the number of requests for help with debt it received in the first three months of this year compared to last.

If you need debt advice, whether your financial pressures are short-term or severe, our free Debt Advice Centre is good place to start.