What Can Make a Credit Card Agreement Illegal - and Unenforceable?

There's been a lot of publicity recently about a new legal way of having your credit card debts written off without resorting to insolvency with an IVA or bankruptcy.

The method relies on exploiting the 1974 Consumer Credit Act, which sets out strict requirements on how the credit agreement is drawn up and implemented. If these conditions aren't met, it can be possible to write off the debt.

Before we go any further, it should be pointed out that no credit card company is going to let debts be written off without a fight, and so even though there is nothing to stop you pursuing a claim on your own, the only realistic way of avoiding being tied down in court hearings and counter claims, with hefty legal bills, is to work with a solicitor experienced in this field. This will of course cost money, but if your debts are large you may feel this is a price well worth paying. Be sure you sign up under a 'no win no fee' arrangement though, with no upfront fees, or you may be paying money when you have no chance of having your debts written off.

So what can cause your credit agreement to be illegal?

Copies of Original Documents

The lender must be able to provide copies of the original credit agreement on demand. If they cannot, then enforcement of the agreement is impossible under the law. This is something to especially bear in mind if the debt has been passed to a collection agency or sold on - often, the agency will not be able to access the original documents.

Credit Agreement Not Signed

Every credit agreement needs to be signed by both the borrower and lender, and if it is not then it is invalid.

APR Stated

The credit agreement needs to specify the interest rate and other costs associated with the finance in the form of a clearly presented APR.

Credit Limit and Term

Likewise, the amount of the finance and the repayment term must be described accurately. If the credit limit was put up between signing the agreement and the account being opened, without a request from the borrower, then there may be grounds for challenging the agreement as unenforceable.

Credit Taken Out Before 6.4.07

The credit agreement needs to have been taken out before 6th April 2007, when an amended Consumer Credit Act came into effect, in order to have any chance of these methods working.

Important - Consult a Solicitor Before Going Any Further!

The information in this article is only a brief outline and should not be relied on when deciding whether or not to pursue a challenge against your credit agreement. If you feel you want to take matters further, you should consult an experienced solicitor on a no win, no fee basis.