MSE News: Debt write-off loophole closed by court

This is the discussion thread for the following MSE News Story:

"A loophole in loan agreements which would have allowed a Cheshire couple to write off their £40,000 debt has been closed by judges at the Court of Appeal..."


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Comments

  • Rafter
    Rafter Posts: 3,850 Forumite
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    I think this is a sensible decision.

    If you have borrowed money that you have no hope of repaying, we live in a civilised society when you don't have to and can declare yourself bankrupt.

    If you have an unfair or illegal credit agreement then you have redress to the financial ombudman service.

    If you have borrowed money, enjoyed the benefits of whatever you bought but somehow think due to a technicality on the credit agreement that you should somehow have the whole lot written off then you need to grow up and realise that banks don't lend money they haven't borrowed from savers or other banks. If enough customers don't repay their debts, banks go bust or need bailing out ultimately by tax payers.

    R.
    Smile :), it makes people wonder what you have been up to.
  • Mikek_3
    Mikek_3 Posts: 65 Forumite
    "If you have borrowed money, enjoyed the benefits of whatever you bought but somehow think due to a technicality on the credit agreement that you should somehow have the whole lot written off then you need to grow up and realise that banks don't lend money they haven't borrowed from savers or other banks. If enough customers don't repay their debts, banks go bust or need bailing out ultimately by tax payers."

    agree 100%

    Mike
  • MrsTinks
    MrsTinks Posts: 15,241 Forumite
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    And I wholehearted agree... :) I know it will upset a lot of regulat DFWs but the practice of getting out of paying what you owe on a technicality has always riled me. I am paying back every penny I owe the hard way and haven't even thought of looking into if I could get out of it on a technicality because I SPENT THE MONEY!
    I'm all for fighting unfair charges and illigal lending practises and harrassment etc - but trying to get out of repaying what you owe on a technicality? Nothing but theft if you ask me!
    DFW Nerd #025
    DFW no more! Officially debt free 2017 - now joining the MFW's! :)

    My DFW Diary - blah- mildly funny stuff about my journey
  • Clive_Woody
    Clive_Woody Posts: 5,853 Forumite
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    Lending money is a two way thing, the banks have been heavily criticised for their irresponsible lending, but the huge number of people trying to get out of paying the debt they owe has only made the situation worse.

    We would all love free money, but that is not what a loan is.

    Greater accountability all around is no bad thing.

    :D
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • _Andy_
    _Andy_ Posts: 11,150 Forumite
    It's surprising, given how many threads come up about it, how this thread (and two other recent ones) just get buried. I'd have thought it would've been more popular.
  • ~Brock~
    ~Brock~ Posts: 1,710 Forumite
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    _Andy_ wrote: »
    It's surprising, given how many threads come up about it, how this thread (and two other recent ones) just get buried. I'd have thought it would've been more popular.

    I agree Andy, but my theory on this is that the debt write off merchants and their disciples are more interested in the claims management spin than the questionable facts behind them.

    When a judgement comes along (or even 3 judgements in a row!) that drives a bulldozer through many of their beliefs and assumptions it either goes right over their heads, or they don't want to listen because it doesnt suit the preachings of their masters.

    There's a few over on CAG that are jumping around in rage, obviously aghast at the thought that this consumer can't lay claim to the £40,000 that they think is so rightfully theirs.

    Long live common sense.
  • woody01
    woody01 Posts: 1,918 Forumite
    About time aswell!
    There are far too many scavengers that saw it as an easy way to get out of paying back money they borrowed.
    People need to be responsible for their actions, rather than finding some loophole that excuses them.
    Hopefully now, alot of these 'blag-artists' will be held accountable by their debtors and get what they deserve.

    And for everyone that say this site is Money Saving......i agree.......but saving money is one thing. Trying to excuse yourself from paying your bills is another thing altogether.
  • Sol00
    Sol00 Posts: 1,230 Forumite
    First Post First Anniversary Combo Breaker
    I'm not completely certain what it was they were claiming for. I'm assuming it was because the fee was added to the credit and therefore would be subject to the commercial rate of interest, along with the amount borrowed?

    If that is the case, I disagree with the decision as I can imagine the fact that they'd be paying extra interest would not have been made clear at the time of signing.
  • ~Brock~
    ~Brock~ Posts: 1,710 Forumite
    First Anniversary First Post Combo Breaker
    edited 19 November 2009 at 12:35AM
    Sol00 wrote: »
    If that is the case, I disagree with the decision as I can imagine the fact that they'd be paying extra interest would not have been made clear at the time of signing.

    Of course it was. The total amount of interest payable would be explained on the agreement, and included in the APR.

    This case boiled down to the true interpretation of the wording of Section 9(4) of the Consumer Credit Act.

    The appeal judges correctly interpreted it as meaning that a fee should not be treated as credit in the sense of added to the amount of credit to (for example) take the loan over the amount needed to exempt it from the act, or to exclude it from any APR calculation.

    This was the essential difference between this case and the Wilson v First County Trust case that arguably started the whole unenforcability bandwagon. In that case the fee had been added to the amount of credit and therefore the total cost of the credit, and the APR, had been mistated.

    Section 9(4) does not say that interest should not be charged on a fee, and providing the interest is transparent and the APR is quoted correctly then nobody has been ripped off.

    It was just another loophole that opportunistic lawyers sniffed out and thought they could capitalise on. Sadly a whole industry of people claiming thay can - for a fee - wipe your debts has sprung up around such flawed arguments. A doubt that many people are going to get their fees returned to them either.
  • The banks have been screwing consumers over for years with unfair bank charges and diabolical interest rates. But they don't like it when we bite back do they.
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