Unenforceable Loans

If you have taken out a loan of up to £25,000 prior to April 2007 then there is a high probability that your loan agreement is unenforceable. Changes were made to the Consumer Credit Act in 2007 which sets out to protect consumers from being miss-sold personal loans, credit cards, payment protection insurance (PPI) and overdrafts. The Consumer Credit Act sets out strict requirement for lenders to comply with.  Research has found that 60% of lenders have failed to adhere to section 65(1) of the act. This section relates to failing to execute correct lending agreements. These are the initial credit agreements which you will have had to sign for. Is my loan unenforceable? Below are examples of when your loan or credit card agreements may not be enforceable.

• The agreement must state that amount payable and the correct rate of interest to be paid.
• If your lender has increased your credit limit without your knowledge
• Deposits have been paid and not acknowledged in the loan or credit agreement
• No signature on the agreement
• If you are taken out a secured loan, this should be stated in the loan agreement
• If  the lender only gives you the loan if you take out Payment Protect Insurance

If you are reading your loan agreement and find information which is inaccurate or has been omitted then your loan or credit agreement is unenforceable. What happens if my loan agreement is unenforceable? If your loan is unenforceable it means that you are no longer obliged to pay back the borrowed money. There is also the possibility that all repayments and charges accrued from the loan will be refunded in full. We recommend that you hunt through old loans and credit card agreements and double check that they comply with Consumer Credit Act. If they are breaching the rules and regulation or have been incorrectly calculated you may be able to receive compensation from your lender. If you have lost your loan agreements then request a copy from your lender. The lender must by law send any information it holds on you within a 40 day time period. Remember if the lender can’t provide a copy of the signed loan agreement then they are unable to enforce the debt. It should also be noted that clearing your debts through an unenforceable loan will not affect your credit rating. All records of the loan application, including defaults on payments are removed from your credit file.