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Warning over debt clearing
EAST Riding's trading standards chiefs are warning local people to beware of firms offering to clear their debts.
Low interest rates, wage cuts and freezes, and high house prices have meant that many people are struggling to meet their financial obligations.
The current economic climate has seen a rise in the number of claims management companies (CMCs) targeting cash-strapped families with promises to use legal loopholes to help people escape their debts.
However, these firms may expect payment of several hundred pounds, up front, from those who are already unable to meet their financial commitments and who are unaware of the free advice already available.
Changes to the Consumer Credit Act 1974 mean that borrowers only need to prove that the relationship between them and their lender is unfair rather than showing that certain criteria have not been met, such as an agreement being incorrectly worded or that the interest rate is extortionate.
If it can be shown that the relationship is unfair, the borrower could make a legal claim against the lender that the agreement is not enforceable.
Despite this change in the law, what is considered to be unfair has only been partly tested by the courts and there are many cases pending. An unsuccessful claim would leave an individual in even more debt.
The Ministry of Justice has highlighted some of the misleading statements made by CMCs, such as claims that 80% of credit agreements were unenforceable or that a CMC could get credit card debt written off “within six weeks”.
Colin Briggs, East Riding of Yorkshire Council trading standards services manager, said: “I would always recommend anyone who is struggling to pay their debts to seek advice from one of the organisations that can help them, free of charge.
“Why pay when you can get help or advice from organisations such as your local Citizens Advice Bureau, the Consumer Credit Counselling Service or the national Debtline?”
Anyone worried about debt can contact one of the following:
l Citizens Advice Bureau – www.citizensadvice.org.uk, or look in your local telephone book.
l Consumer Credit Counselling Service – www.cccs.co.uk, or 0800 138 1111.
l National Debtline – www.nationaldebtline.co.uk, or 0808 808 4000.
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Thursday 24 May 2012
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