How to Legally Write Debt Off

Rumours have been circulating in the press about whether you can actually write debt off legally. You may have heard radio advertisements from companies offering a ‘debt write off’ service and wondering “Is this true? And if so, how can it be done?” To set the record straight it is possible and yes it can be done through a process called an ‘Unenforceable Credit Agreement’.

What is an Unenforceable Credit Agreement?

A UCA is a method of proving that your loan or credit card agreement is invalid. A credit agreement must correctly drafted by the lenders in order to make it legal in a court of law. If a credit agreement is missing specific ‘prescribed terms’ then the contract is effectively invalid making it ‘unenforceable’ and preventing the lender chasing you for further repayments. This usually results in the debt being written off by the lender as they are not legally obliged to collect it.

Is this a scam or a debt loophole?

It seems too good to be true doesn’t it? Questions have been raised as to whether this is a scam or a loophole to get out of debt but the fact of the matter is… this is the law itself! But you are probably thinking “well how could this be? Surely banks or the Government wouldn’t allow this to happen?” To explain a little bit more, all lending under the value of £25,000 is regulated by the Consumer Credit Act 1974. In 2006 specific sections in the Act which protect consumers from incorrectly drafted documentation were removed, opening the floodgates for millions of credit agreements to be challenged for enforceability.

The Act was re-amended on 6th April 2007 but with so many credit agreements now in circulation it means that if you have a loan or credit agreement taken out before this date your contract could be unenforceable and effectively void. If this is the case the debt could be completely written off and you would not have to repay a penny!

This could result in millions of pounds of consumer debt being written off so its no wonder the banks don’t want this to get into the mainstream!

Has anyone actually managed to do this?

Yes. The BBC’s Panorama programme recently reported on a couple from Rugeley who decided to challenge the banks themselves and managed to legally write off six of their credit agreements, totaling £37,000 worth of debt. But because they didn’t fully understand the legal process and decided against seeking advice from a professional claims company, they were stung with a hefty legal bill at the end which closely equated to the amount that was written off! Ironic I think! So if you are thinking of having a go at writing off debt yourself, be sure to do your research before you start!

How can I do this myself?

Before I go into this I would advise speaking to a professional who has legal experience as you don’t want to end up with a huge legal bill at the end!

Firstly you must send a CCA (Consumer Credit Agreement) request under section 77 or 78 of the Consumer Credit Act to your lender not forgetting the standard £1 fee for this made payable to the lender (best to send all payments by postal order). Along with this you should send a ‘Subject Access Request’ under the Data Protection Act 1998 along with the standard fee of £10. Your lender is legally obliged to accept these requests and provide you all the transaction details and information held about you on their system.

Remember not to sign any correspondence you send to them. This is very important because if they cannot supply a signed copy of your agreement then the debt is unenforceable and the contract is not effectively legal and you could have the entire debt wiped out and not have to repay a penny. There have been rumours of lenders forging signatures from CCA and Subject Access requests in order to make the agreements valid so be sure not to do this. Also send all correspondence by recorded delivery.