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Getting Your Debt Written-off

Don’t be fooled by the many companies who are currently claiming that all or most loans, credit cards, overdrafts and debts that originate in a 6 year period prior to April 2007 are not enforceable and therefore can be written off.

“It’s a no-brainer,” claimed a salesman from one such company to one of our clients just recently. “I will guarantee to you that we can get all your debts written off if you took the loan or card out before April 2007.”

Many companies offering such services are charging clients around £500 for a client’s first such debt and a further £100 per debt thereafter. So, for example, if a potential client has, say, 6 debts, they could be paying around £1,000 before that company has hardly started work on any of the cases. And what happens if you never hear from them again or if 6 months later they inform you that there is nothing that they can do?

It is evident, from what we have observed over the past few months as providers of DMPs, that the claims of many such companies are effectively unrealistic and unachievable. Many, we believe, have exaggerated the quantity of unenforceable debt that actually exists and of the number of accounts that could be subject to compensation.

The Ministry of Justice, who is responsible for regulating such companies now appears to agree and has recently issued warnings and in a statement Justice Minister, Bridget Prentice said, “We have produced guidance to protect innocent customers from being misled by businesses advertising easy and quick arrangements for outstanding loan, credit card and other similar debts to be written off and compensation to be obtained. We would urge anyone who is considering using a business offering such services to think carefully and seek independent advice before making any final decisions.”

Many people with debts are often eager to grasp at straws in the hope that this might be the solution they are looking for. But what most people are not made aware of is that the route to possibly getting their debt written off or gaining compensation is through the litigation process and, frankly, getting the result that you are seeking through litigation is far from being an exact science, in fact it could be described as being nearer to a lottery. Besides, this whole process is currently taking between 12 and 24 months to complete.

Additionally, many people are unaware that when it comes to litigation there can be a downside as well as an upside. For example, it is estimated that there is little more than a 60% chance of success for even creditable cases and, should the claimant loose the case, they are likely to be responsible for the defendant’s cost and disbursements in defending their position.

It must be remembered that legal and solicitor costs plus their disbursements can amount to anything from £500 to £800 (plus VAT) for each side in such cases. Even with “no win, no fee firms” where they take their fees out of any compensation won, the compensation may not be sufficient to cover all their costs in which case the claimant may be responsible for the balance. Depending upon what you are claiming for, this means that is rarely worth undertaking this process on any account where you owe less than £2,500.

Our advice is to be very cautious and think very carefully before going down this route and always remember, “If it looks too good to be true, then it normally is!!”