Debt escape court cases put on hold

[Storm]

Unfortunately when the debtor wins these cases quite often they make applications to the court to have the records at the credit reference agency indicate that the credit has been settled so future lenders do not see it as an adverse event.

The case that has triggered the latest series of press articles is by no way a win for the credit industry which is why the judge is looking to stay cases in the Chester courts because some very technical legal arguments were presented to the court and he doesn't feel these complex matters should be dealt with in the lower courts.

The knock on effect could be that thousands of cases will get stayed while test cases are heard in the courts and the then likely appealed probably some 18 months to 2 years before fully heard and case law set.

Depending on the directions given by the court this could be used as a stalling / respite tactic as where an argument exists as to the validity of the agreement courts will be minded to stay any legal recovery proceedings - Claims Company’s in my view will start focusing on people with debt problems offering all kinds of promises of putting creditors on ‘hold’.

I was with a leading barrister on this subject earlier in the week who shared my concerns at a complete grid lock of the civil legal process which will put more pressure on vulnerable consumers who might see these companies as a way to solve their short term problems rather than finding a medium to longer term solution to debt such as IVA or debt management.

Legitimate errors in documentation and or miss selling of financial products such as Payment Protection Insurance should have a method of redress wit in the legal framework.

The catalogue issue is more fundamental - a number of them operate with no formal agreement regulated by the consumer credit act - I won't name them but them are three or four that have no legal basis for their relationship with the client.

Something that was interesting from a seminar I was at was the number attending from the CAB who regularly use the unenforceable agreement challenge as part to the process of dealing with debt.

[kallis3]

Very interesting post Storm.

I agree that there are probably some cases, such as the PPI, which are legitimate ones, but I also agree that there are a lot of companies who will prey upon the vulnerable who are desperate.

There are also a lot of unscrupulous people out there who will do anything to get out of paying for their debts - whether they are in dire straits or not.

[Adam Davies]

Hi
I think that it is sad that the CAB are regularly using the unenforceable agreement challenge as part of the process of dealing with debt.
It is wrong and detracts from the people that try to deal with their debts in a legal and moral way, such as choosing an IVA, bankruptcy or DMP
Regards

[Storm]

Its often refered to as the Can't Pay against Won't Pay

Recent reviews of cases did highlight that a significant number of debtors requesting copies of their agreements under section 77/78 of the Consumer Credit Act were "A" paid - ie never missed a payment and were showing no signs of debt problems.

[kallis3]

Totally agree Andy.

[Storm]

One of the training providers used by CAB and a number of other "Charitable" advice centres delivers a specialised course on the subject.

[Adam Davies]

Hi
Agreed and IVA.co.uk will not support debt avoidance.
Regards

[kallis3]

They should be giving advice as to how to deal with your debt responsibly and pay back what you can, rather than how to avoid paying it all together.

[bic]

how will you ever learn to budget etc if your debt is wiped off like that. it is because of an iva that i have had to look at what and why i spent the money i did. i now can justify and account for every penny i spend. out of interest if people do get their debts wiped off how will it affect their credit file, would they be able to continue applying for credit and not paying that off either. just a thought

cath

[sparklywatcher]

I think that would be an issue and I think they would never learn to be responsible for their money either

[kallis3]

Even if they did succeed in writing off previous debts, they wouldn't be able to do it again. It only applies to loans before a certain date.

[Storm]

It is only applicable to agreements signed before 6th April 2007

[johnnybriggs]

When i discuss "debt avoidance" with groups of newly recruited debt advisors (so practically members of the general public) opinions are always split.

My point is always "you had the money, you should pay it back to the best of your ability." Can pay - will pay etc

However I also talk about extortionate credit transactions for example - does anyone remember "London Securities vs Meadows" (a £5000 debt turned into a £300,000 debt.)

and someone always says "they had the money they should pay it back"

and statute barred debt and I sometimes get the same response.

However I don't know anyone who is happy with bank charges and they always talk about how they phoned up and got them cancelled or reclaimed so many thousands through some website or other.

[sparklywatcher]

yes when I called National debtline they advised me on the catalogue debts I had could be written off and sent me a fact sheet on it all

[MelanieGiles]

Shocked that the CAB are advising people to avoid debts, when it is clear that the money was legitimately borrowed. This procedure is definately for an individual's conscience, but I know a lot of solicitors and claims companies are making a lot of money right now.