A County Court Judge has frozen over 100,000 claims by indebted consumers who are trying to have their loans and credit card debts written-off.
He ruled that borrowers who were overwhelmed with debts are unlikely to be able to write-off credit agreements due to unenforceability.
The loophole in the law, which could make credit agreements unenforceable, has been exploited by some companies to offer a lifeline to people wanting to get out of debt quickly.
However, more than 100,000 claims currently being handled on behalf of overstretched borrowers have been temporarily put on hold, pending the outcome of “a few carefully selected” test cases in London’s Commercial Court.
This means that, until a judgement is made, indebted consumers will have to carry on repaying their loans and credit card debts.
Borrowers have also been warned not to fall victim to Claims Handler’s promises, made on their adverts which claim to wipe out credit card debt, alleging that contracts put in place before April 2007 are potentially unenforceable.
Daniella Lipszyc, a solicitor at Ultimate Law said: “The ruling by His Honour Judge Halbert is a landmark decision that will have massive implications on cases involving the enforceability of credit agreements.
“After a number of early wins, many claims management companies have jumped on the band wagon, promising desperate consumers that they can write off credit card balances.
“In reality, cases have simply ground to a halt as banks and lenders up their game and become more clued up on the Consumer Credit Act and subsidiary legislation. It’s now extremely inappropriate and misleading for any company to promise to write off balances in light of this judicial move.”
A more legitimate way to resolve any debt problems would be to seek advice from a reputable debt help organisation – such as The Debt People, Hamilton Locke or Chiltern.
These companies all offer a range of professional debt solutions which can help you to regain control of your finances whilst affordably still repaying debts.
The debt help programmes they offer include Debt Management Plans, Individual Voluntary Arrangements (IVAs) and Trust Deeds amongst others.
For help with any debt problems, or for immediate debt and IVA advice, please call the number at the top of this page.
