Published in Debt Advice Features on Wednesday, November 15 2006

Although most creditors are bound by many laws and regulations, it does not mean that you may have possibly misinterpreted or overlooked an aspect of your credit agreement that has resulted in you not being treated fairly, and you may feel conned.

If you borrow money from an organisation they are bound to act reasonably and responsibily. There are several laws and regualtions to ensure you get treated correctly;

Unfair Credit Agreements

If a court believe any part of a credit agreement to be what would be classed as an extortionate credit bargain, it can rewrite the credit agreement. This also applies to mortgages. This could apply to extremely high repayments compared to similar agreements or if you have been a victim of sharp practice. This is commonly used to reduce very high interest loans.

Unfair Contract Terms

The states that a company cannot enforce any part of a contract that if it is not in plain English or if it unfair. These regulations prevent lenders form charging too much interest to clients who have missed payments and taking customers by surprise with hidden small print or unclear wording.

Credit Licence

Any organisation who offers credit or collects debts must have a licence from the Office of Fair Trading. What this means is that they can only enforce the terms of their credit agreement if they had a licence when you signed the agreement. Most credit agreements are ‘regulated agreement’ under the Consumer Credit Act. This means that they must be in writing and also explain the amount of money you are borrowing, the interest rate and how long you will be paying the debt back. Creditors can only take action against you if you have signed such an agreement.

Pressure to Sign

A creditor cannot force you to repay a loan if you were put under pressure from some one to sign up for it. This is a very complicated law, but for example if you were pressured into signing for a loan by your partner which was not for you, but entirely for them you may be able to use the law. You must be able to show however that you di not how the loan worked and that they should have told you to get independent advice beofre signing.

Limitation Period

Creditors can only claim their debt within six years of your last payment or of written acknowledgement for most debts. This period is twelve years for a mortgage. If you have not heard from a creditor in six years (or twelve for a mortgage), definitely seek further advice before contacting the creditor or arranging payment.

Harassment to repay

Creditors cannot overly hassle you to repay their debt, and it is classed as a criminal offence to do so.

What can be classed as harassment?
- threatening you with a criminal prosecution when you can’t be prosecuted
- pretending to be a court official
- sending letters that look like court forms
- telling other people about your debts such as neighbours or your employer to force you to pay them

If you feel you have been a victim of harassment, keep a record of what action has been taken against you.

If you feel you have been the victim of any of the above or that the creditors have violated any of the laws or regulations, keep detailed records of what has happened and contact your local trading standards office, or the citizens advice bureau or seek independent legal advice.