Customers buy items from a catalogue and spread the cost of payment over a 20 to 40 week period, typically. The problem is that a lot can happen in this timeframe so spending too much on catalogue purchases can potentially create a number of debt problems.
The Regulation of Catalogue Debt Problems
Catalogue debt problems are usually regulated by the Consumer Credit Act 1974. The exceptions are when less than 5 payments are required in a 12 month period or the credit extended was never greater than £50. A requirement exists that the credit agreement is signed by both the borrower and the lender.
Unenforceable Catalogue Debt - Agreements Signed Prior to 6th April 2007
A catalogue debt is a regulated agreement so, if the lender is unable to supply the borrower with a copy of the credit agreement within 12 days, it may be an unenforceable catalogue debt.
Writing to the lender requesting a copy of the agreement along with a cheque for £1 obligates them to provide this to the borrower. When requesting a copy, also ask for the following as it may prove useful during debt counselling sessions:
- A statement of account
- Details of any payments made and the present outstanding balance
- Details of any further amount due to be paid
- Details of goods ordered
- A copy of the initial signed agreement
There are also a number of other reasons to write off debt if the agreement existed prior to 6th April 2007 and doesn't comply with certain prescribed terms. Examples of where it is possible to write off debt are if the rate of APR isn't stated or the agreement isn't signed by both parties.
Tribunal Decisions and the Financial Ombudsman - Agreements Signed After the 6th April 2007
All agreements after the 6th April 2007 are regulated by the Consumer Credit Act 2006. Credit help is available to those with debt problems as a result of unfair agreements, but this is decided by the Financial Ombudsman at tribunal.
Potential Debt Solutions to Catalogue Debt
- Ask the lender for a copy of the credit agreement. If the lender is unable to provide this, they won't be able to enforce it at the County Court. This could result in the borrower being able to write off debt. The provision of an unsigned 'true copy' will not assist the lender.
- Send the lender a copy of incomes and expenditures and offer a token payment based on affordability. It is advisable to get debt counselling as they will be able to assist with this process.
- Pursue a debt solution method, such as a Debt Management PlanThis would enable a borrower with several forms of credit to put all debts under one roof.
No matter how isolated having a debt problem makes someone feel, there are literally millions of people in the same situation. There are debt solutions available, but be sure to request a copy of the credit agreement and seek debt counselling before deciding on a debt solution.
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