Consumers are being advised to avoid entering into agreements with claims management companies that offer to ‘write-off’ their debts. These companies use loopholes in consumer credit legislation in order to try and void the agreement with the lender, a practice which has come under the scrutiny of the Ministry of Justice (MoJ).
Lender agreements are not easily voidable especially since the Consumer Credit Act 1974 was amended in April 2007. The MoJ has already shut down 100 claims management firms as part of push to remove misleading firms from the industry. Behaviour being targeted by the MoJ includes companies cold-calling customers and offering to have their debts written-off for a percentage fee and knowingly misleading customers as to the full costs and risks involved.
The Advertising Standards Authority has also intervened, focusing on the advertisements used by these companies. As a result, fines have been issued on three companies this year. One such case involved a company claiming to have an 80% success rate in writing off their client’s debts but no evidence to prove it. Another questionable statement being targeted is ‘No Hidden Fees’, when in fact undisclosed fees are involved.
Claims management companies are required to be licensed under the Consumer Credit Act 1974 in order to provide advice on the payment or rescheduling of debts. The MoJ has urged anyone considering these services to seek independent legal advice before entering into a contract. Further assistance can also be obtained through Citizens Advice or the National Debtline.
Caution and care are always advisable when entering into any agreement of this sort. Obtaining experienced legal advice is very important as it will help find any risks involved when using one of these services.
To learn more about how a bankruptcy lawyer can help you please click here...
To obtain legal advice for bankruptcy and debt matters please click here.....