Your Rights
Click here for more information on Consumer Credit Act 1974, and your rights.
Unenforceable Debts
How do Debt Write Off (DWO) Claims work?
The purpose of the Debt Write Off (DWO) is to set out in detail your rights and obligations under each credit agreement you have:
- The Solicitors raise a “legal dispute” as a matter of fact of law which is relevant in defining the nature of your legal rights and liabilities.
- Check if your lender has complied with the Responsible Lending rules.
- Ensure that your lender and or third party (debt purchaser) and their employees have complied with the law and we will confirm the status of each of your credit accounts and any current arrears.
- Establish that your lender and or third party (debt purchaser) is “Treating you Fairly” when dealing with any default or missed payments.
- Evidence your financial difficulties and show that you are unable to meet repayments as they fall due.
Debt Write Off (DWO) claims are suited to consumers who are currently in a Debt Management Plan or do not qualify for an Individual Voluntary Arrangement (IVA).
Solicitors will detailed and comprehensive suite of Consumer Protection Laws and Regulation to challenge the true indebtedness of the Credit you agreed to take out with your creditor.
Legal arguments will usually use the Dispute Resolution Process (DISP) provided by the Financial Services & Markets Act 2000 to settle your claim, however, on some occasions we may be able to challenge the actions and omissions of your creditors via the Courts.
What Consumer Laws and Regulations are used?
Since the financial crisis in 2007, the government have introduced a number of protective measures to better protect vulnerable consumers. Solicitors will draw on a number of regulatory and legislative standards to protect your position and ensure your Rights were protected and not breached in any way.
Where the Court find that the relationship between you and the creditor is unfair, the Court has wide reaching powers to enable it to rectify the unfairness. This can include:
- Reducing your liability under the agreement
- Payment of compensation
- In some cases even making your Agreement void, effectively writing your debt off.
Protection from Harassment Act 1997
In respect of lending arrangements, this legalisation can be used where the creditor’s collection practices cross the line and become oppressive and predatory. In the case of Roberts v Bank of Scotland PLC [2013] EWCA Civ 882, the UK Court of Appeal upheld an award of damages against the Royal Bank of Scotland for harassment.
The FCA’s Consumer Credit Rule book breaches
In 2014 the FCA took over regulation of the consumer credit industry. Those regulated must comply with the rules contained within the Consumer Credit Source Book (known as CONC). Where a creditor breaches this rule, and the consumer has suffered a loss as a result, the Courts will compensate the consumer.
Some of my debt has been sold on. How does this impact my claims?
Many creditors will sell the debt once the arrears on the account reach a certain point. These debt purchasers, such Lowell Group, Moorcroft and Cabot Financial, will buy these debts at a fraction of the outstanding balance. In our experience, these firms pay no more than 5% of the debt at the time of the sale.
A third-party debt purchaser will generally stand in the shoes of the original creditor in respect of any consumer claim we bring on your behalf.
What are the problems with commercial debt management plans?
Debt Management Plans (DMP) became popular in 2007, just as the global financial crisis began to take hold. Essentially, a DMP works by establishing the consumer’s disposable income (after all household expenditure is deducted) and distributing this to Creditors on a pro rata basis. Whilst these plans gave some short term relief, in our experience, the plan was rarely appropriate and key features were not explained to consumers. For example, we often see the following:
- They failed to advise clients that their credit history would be severely impacted
- Set up fees and management charges were not explained clearly to clients
- Clients were not properly advised that collection activity would most likely continue
- Interest was not always frozen as promised
- Plans were not regularly reviewed to ensure that DMPs were affordable and sustainable.
Whist we do come across Debt management plans where the advice had met the Financial Conduct Authority’s (FCA) strict rules, the vast majority of cases demonstrated poor advice and an inappropriate product for our clients.