Could You Write Off Your Credit Card Debt?
Credit card debts are one of the most pressing problems facing many consumers today, with huge debts built up in the carefree boom years now becoming unserviceable because of increased APR rates and less disposable income.
Many people know about the advantages of an IVA in getting your debt written off, but this only occurs with significant damage to your credit rating, and is a lengthy process of up to 5 years during which every penny will have to be watched and repayments kept to rigorously.
There is, apparently, a much better way of getting rid of your credit card debt, and it involves making sure that your credit card agreement is in fact legally binding in the first place.
Consumer Credit Act
Under this 1974 act, many aspects of how a credit card agreement is set up are laid out in precise detail. Any deviation from this set of rules can easily render a credit card agreement illegal - and so any debts owed on the card will be written off. Reasons for an illegal and unenforcable agreement include:
- Not mentioning the APR
- Incorrect interest calculation
- It hasn't been signed by both the creditor and the debtor
- The agreement has been supplied with an unrequested credit limit rise
...and several other technicalities.
How to Proceed
The first thing you need to do is to contact your credit card issuer and request a copy of the original credit agreement. If they can't or won't provide this in a set period of time, then the agreement is in default and you can walk away from the debt.
Next, you need to determine if there are any flaws in the agreement. This is probably best left to solicitors with a specialist company who will take over all contact with the card issuer from that point onwards.
Fees and Success Charges
Many companies offering to help you write off credit card debt will charge an upfront fee for making any claim, and this is always something to be wary of: you may be throwing money away when you have no chance of being successful. Before parting with any cash, make sure you have something in writing setting out exactly what your money will get you, and what your chances of success are.
A better way of paying for this service is with a 'no win no fee' arrangement, whereby if your debt is written off, a percentage of the debt amount is paid to the company who arranged this.
Will it Harm Your Credit Rating?
In theory, as these accounts are illegal and techinically never existed in the first place, all records of them must be expunged when the account is closed - and this means any default notices or late payment entries must also be removed from your file. However, it's very likely that the card issuer will refuse to deal with you in the future, as is their right, and this may extend to other kinds of financial services they offer such as bank accounts and mortgages.
If this all sounds too good to be true, then maybe that should be a warning signal - after all, if this kind of debt write off were easy, then we'd all be doing it and the banks would be in an even worse state than they already are. However, if you can find a reputable company offering this kind of service, then it's got to be worth at least looking at if you have heavy debts and are finding them a problem.
Related Articles:
- Handling Credit Card Arrears
- What Makes a Credit Agreement Illegal?
- Getting Credit Card Debts Under Control
- The Slowest Way To Pay Down Credit Card Debts
- 4 Ways To Tackle Credit Card Debt
Site is for information only and does not constitute financial advice. E&OE.
