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Consumers who try to wriggle out of their credit card debts based on a technicality have been dealt a blow after one loophole was closed by the High Court, it is claimed.
Legal experts insist the decision means the argument that debt cannot be enforced when a lender cannot provide an exact copy of the original credit card agreement, or where the agreement contains a minor error, has been blown out of the water for many (see the Write-off your debt? guide).
This route, often put forward by claims management firms, has proved a relatively successful avenue for claims and MoneySavingExpert.com has seen limited evidence of lenders no longer chasing borrowers for debt in such circumstances.
The ruling does not mean an end to the debt-avoidance industry which has grown rapidly over recent months as other avenues may still exist, the Judge in the case said.
The verdict
The High Court trial, held at the Manchester District Registry Mercantile Court, involved eight separate claims by consumers against lenders to determine certain legal principles of when a credit card debt can be deemed unenforceable.
Even if unenforceable, a lender can often demand payment and register non-payment with a credit reference agency which can hit your credit score. It cannot, however, seek a court order to ensure payment.
Judge Waksman said last week in his ruling:
Some claims management firms, such as Cartel Client Review, one of the most aggressive firms which charges an upfront fee, declared the ruling a "victory".
Carl Wright, from Cartel, says: "The High Court has ratified
Legal experts insist the decision means the argument that debt cannot be enforced when a lender cannot provide an exact copy of the original credit card agreement, or where the agreement contains a minor error, has been blown out of the water for many (see the Write-off your debt? guide).
This route, often put forward by claims management firms, has proved a relatively successful avenue for claims and MoneySavingExpert.com has seen limited evidence of lenders no longer chasing borrowers for debt in such circumstances.
The ruling does not mean an end to the debt-avoidance industry which has grown rapidly over recent months as other avenues may still exist, the Judge in the case said.
The verdict
The High Court trial, held at the Manchester District Registry Mercantile Court, involved eight separate claims by consumers against lenders to determine certain legal principles of when a credit card debt can be deemed unenforceable.
Even if unenforceable, a lender can often demand payment and register non-payment with a credit reference agency which can hit your credit score. It cannot, however, seek a court order to ensure payment.
Judge Waksman said last week in his ruling:
- Lenders do not have to provide an exact copy of the original agreement. They simply have to provide "a reconstituted version... which may be from sources other than the signed agreement" under Section 78 of the Consumer Credit Act.
- As a result, he says lenders will usually be able to supply copies even if not within the required 12 working days.
- He also agreed with an earlier ruling in October that stated even if a lender cannot provide a copy, the debt is only unenforceable until a copy is provided. And, even while temporarily unenforceable, it does not stop the lender from reporting non-payment to credit reference agencies or from sending letters demanding payment (see the Debt write-off blow MSE News story).
- In any case, he said the lack of credit agreement alone does not mean the relationship between lender and consumer is "unfair".
- Where an agreement has been "varied" (eg, where the interest rate has risen), a copy of the original and the varied terms must be produced.
Some claims management firms, such as Cartel Client Review, one of the most aggressive firms which charges an upfront fee, declared the ruling a "victory".
Carl Wright, from Cartel, says: "The High Court has ratified
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