What does an unenforceable credit agreement actually mean in law?

Regulated Credit Agreements under the Consumer Credit Act 1974 (CCA) can only be enforced by the Courts.

If you're making the payments in accordance with the Agreement, then this action is not required because you are paying voluntarily.

If due to personal circumstance you stop making payments and the Lender wants to force you to pay, then they will ask the Court to enforce the debt.

If the Credit Agreement is enforced by the Court (usually by a County Court Judgment), and you fail to make the payments under the Judgment, the Lender can then apply to take further enforcement action as detailed below.

Attachment to Property (Charging Order).
Attachment to Earnings.
Bailiffs Order.
Petition for Bankruptcy.
Forced sale of Property.

Therefore you could be evicted from your home for failing to comply with a County Court Judgment.

This means it's possible to have your home repossessed in relation to an Unsecured Personal Loan/H.P./Credit Card.

However, if the Credit Agreement has Breaches of the Prescribed Terms under the CCA 1974, this could mean the

Agreement is flawed and may be Unenforceable.

If this is proven to be the case on a Regulated Credit Agreement taken out before 06/04/07, the Court cannot enforce that Credit Agreement. It is therefore UNENFORCEABLE. This means the Lender cannot pursue you for the debt through the Courts.

This does not mean the debt is ‘voidable’, you will still owe the money, but the Lender cannot obtain a County Court Judgment/Charging Order/Forced Sale/Petition for Bankruptcy.

It also means if you have had any of the above Judgments awarded against you, and possibly other enforcement action, these can be overturned and/or stopped.

We check the Prescribed Terms within a Credit Agreement and if they're missing or flawed, then you may have a claim.

What are Prescribed Terms?

These are terms written into the Consumer Credit Act designed to protect the Consumer.

If the Lender has not followed these few simple terms, then the Agreement does not fall within the Act and therefore the Lender cannot use the Act to enforce the debt through the Courts.

This is not a loophole in law which enables consumers to 'avoid' paying their debts.

The Consumer Credit Act 1974 was brought into law to protect Consumers against unscrupulous lending and to establish, in law, some basic guarantees protecting the Consumer. If the Lender fails to follow these basic terms they are in breach of the Act and must suffer the consequences.

A Lender will use the Courts to enforce the Agreement and seek redress to enforce the debt; they can hardly then complain if the borrower uses the Court to protect themselves if the said Agreement has breached the law.

For example:

If you took out a loan and were told the Interest Rate was 10% and later you actually found it to be 20%, you would justly feel mislead. You may not have agreed to take out the loan if you had known the true cost. You have been mislead and overcharged.

Proving Unenforceability does not mean the debt is ‘written off’, it means that if you're under the threat of legal action by the Lender and/or a Debt Collection Company you can stop any legal action and therefore protect you, and your family from the consequences of having your home repossessed and/or being declared bankrupt.

When the Agreement is proven to be Unenforceable, the Lender can only obtain repayment of the debt with your agreement.

We cannot guarantee to stop the Lender from marking your credit file for any missed payments, however we can obtain the removal from your credit file of any Court action that has been taken against you i.e. CCJ/Charging Order/Bankruptcy. In this respect your credit file will be improved and/or repaired.

Why not find out how accurate your Credit Agreement actually is.