Agreements on money borrowed up to the amount of £25,000 before April 2007 could be found to contain errors. Whether it’s a personal loan, credit card, store card, hire purchase agreement, overdraft or car loan then these credit agreements and even some charges may become unenforceable in certain circumstances.
The Consumer Credit Act 1974 laid out a number of strict requirements for lenders and these must be met in order for a lending institution, such as a bank or credit card company, to be compliant when lending out money. Lenders are required to produce regulated credit agreements that are properly implemented and signed by both the customer and the bank or credit company.
For a loan to be enforceable means that all the Act’s requirements must be met. It also means that should any of those requirements be neglected, then the loan is unenforceable and that the customer is no longer obliged to pay back the money borrowed.
The customer’s loan documentation contains some of the information needed to determine whether the loan is unenforceable or not. This documentation needs to be read carefully to check whether the lender has factored in the costs of Payment Protection Insurance into percentage charges.
Should the loan documentation show no evidence of this inclusion, the customer could be eligible to have the loan investigated for potential invalidity. Not only would this mean no longer having to pay back the debt, but the original loan or credit card application entry could also be removed from the customer’s credit report.
It is also possible to go back through any old loan or credit card statements the customer may have and double check the interest costs and charges. If there are any which seem to have been incorrectly calculated, then this might also be a valid reason to have the customer’s loan investigated as being unenforceable.
When credit card limits have been increased without the customer’s knowledge or permission a claim can be made. If the customer didn’t request the limit increase then the customer’s credit card facility could also be considered unenforceable.
If the total amount of charges being applied to the customer’s credit are not disclosed fully and completely then the loan might also be unenforceable and there is a possibility that the customer could see the debt wiped out without having to pay another fee.
{ 2 comments… read them below or add one }
I hear what you say and do not doubt it is excellent information. My BC was taken out in 2004 and limit has been increased 3 times. never asked, just was on when a statement came in. Its all well and good saying it is not enforceable but!!! how as a man in the street do I reclaim my RIGHTS! Its all well and good saying BC should not do this nor that–but!! how do I enforce this. There is lots of good advice out here, but nowhere can I see the man in street getting his rights delt with without lots of srious hassle. If they are wrong it should be automatic that “some” organisation out there steps in imediatley and tells them. We should be able to, EASILY to enforce our rights, so far we just cannot. So, telling us what we can do and how wrong THEY are seems to me a total waste of someones excellent effort to try and help. Info is one thing, action is a different animal. Cheers
Thanks for the comment.
This post is about what unenforceable loans are, so people have a better understanding of them.
If you feel that one of your loans maybe unenforceable you can pay a small fee to a company like ours (http://www.realclaims.co.uk) where our solicitors will go over the agreements and see if it is unfair or not.
If the agreement is unfair then the court has discretionary powers to redress the balance which includes making the loan unenforceable meaning that you would not have to pay back the debt.
We will warn that the debt is not always wiped clean but the loan company will not be able to charge you interest or ask for repayments.
It is also possible to challenge your own agreements but we would recommend doing some considerable research into the matter to ensure the best possible chance of success.