Is It Possible To Have A Credit Agreement Declared Void
In the real world, is it possible to have a credit agreement declared void and not to have to pay back any of the money loaned
. There are plenty of advertisements from Claims Management Companies promising that (for a fee) this is possible. Sign up here to challenge your loan and credit card agreement and then sit back and wait whilst all your debts and loans are wiped clean.
If only life was so simple.
Many of the challenges to loan and credit agreements rely on the lender not being able to produce the original agreement. Sections 77 and 78 of the Consumer Credit Act 1974 impose an obligation upon a lender to provide a copy of the credit agreement to the borrower upon request and payment of the statutory fee (currently 1.00). In many cases they cannot do so and this has led to a number of challenges. These challenges have been notwithstanding the fact that the granting of credit and receipt of money loaned has not been denied.
For some reason a large number of these challenges-around 100-occurred in Manchester and they were all heard together by way of a test case. The court in this recent case of Carey v HSBC Bank were asked to decide whether if a borrower requested a copy of the original credit agreement as he is entitled to do and the lender could not provide it; what will happen to the loan. Would it be unenforceable? Will there be any other way of satisfying the requirement and if not would there be an - unfair relationship - which might make the loan agreement unenforceable.
All the statutory provisions were considered at length by the judge in a judgement which stretched to nearly 60 pages. In a nutshell, the arguments failed. It was held that provided the lender could provide a 'reconstituted version - of the original agreement, the requirements of section 78 of the Consumer Credit Act were satisfied. The - reconstituted - agreement must show the borrowers name and address but this need not necessarily come from the agreement.
Worse still was to come for those trying to escape liability. It was held that the reconstituted agreement did not even need to be Consumer Credit Act compliant. Furthermore the unavailability of the agreement did not create an unfair relationship so as to make the agreement unenforceable under section 140 of the Act.
It therefore seems that unless the arguments are taken further up the judicial ladder and possibly to Europe, many of the promises and hype of the Claims Management Companies have no basis in law. Promises that a clearly incurred debt could be wiped out simply because the original agreement is not forthcoming has no basis in law and are only for the gullible. But that does not answer the question of whether some loans and credit agreements can be unenforceable in their entirety. Some are and that is dealt with in the second part of this two-part article.