How to Legally Cancel Credit Card Debt

Total Credit Card Debt Elimination- Consumer Credit Act 1974

Sep 16, 2009 Asa Ghaffar

Struggling to keep up with credit card repayments each month? Discover how to legally cancel credit card debt under the Consumer Credit Act 1974.

It may be possible for a UK citizen to legally cancel credit card debt that fails to comply with the prescribed terms of the Consumer Credit Act 1974. This would mean that any unpaid credit card debt would be completely cleared without any negative ramifications for someone's credit rating.

Legally Cancel Credit Card Debt

Provided that a card was signed-up to prior to April 2007 and is under £25,000, it is estimated that there is a 60% probability that the credit agreement will not stand up in a court of law. More recent agreements tend to be compliant.

The Consumer Credit Act 1974

The law aims to prevent a lender entering an 'unfair relationship' with a borrower. This means that any prescribed terms need to be clearly defined in the agreement. If this isn't the case, it may be possible to legally cancel credit card debt as it is unenforceable.

Prescribed Terms

A credit agreement could be deemed unenforceable if it fails to comply with the prescribed terms of the Consumer Credit Act 1974. Whilst not a full and comprehensive list, possible reasons include:

The lender is unable to provide a copy of the original agreement.
The credit limit is not clearly visible.
The incorrect calculation of interest.
The credit limit has been increased without the agreement of the customer.
Any charges are deemed unfair or punitive.
The APR is not displayed.
The 'cooling off' period was not mentioned.
The agreement has not been signed by either party.

How to Legally Cancel Credit Card Debt

It is possible to tackle a case personally, although it won't be easy. Lenders have become better at defending cases and are using clever delay tactics. The borrower can request a copy of the credit agreement under the Consumer Credit Act for just £1 or under the Data Protection Act for £10.

Always get proof of postage. Should the creditor be unable to supply a copy of the original agreement, the debt is unenforceable. However, it will be necessary to go through the court to establish this fact.

Whilst success means total credit card debt elimination, most challenges are made via a professional service. There is normally a fee for this service, but charges do vary considerably between providers so be sure to shop about before signing-up.

How Will Credit Ratings Be Affected?

An individual with an adverse credit history will find that total credit card debt elimination improves their credit rating. This is because it is not possible to register missed and late payments with credit reference agencies in respect to a debt that never legally existed.

It may be possible to legally cancel credit card debt or unenforceable loan agreements under the Consumer Credit Act 1974. It is recommended that repayment is maintained throughout the duration of the challenge.

Remember that there are other ways to tackle financial difficulties, including a Debt Management Plan or an Individual Voluntary Arrangement (IVA).

Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional before proceeding.

The copyright of the article How to Legally Cancel Credit Card Debt in Personal Budgeting/Finance is owned by Asa Ghaffar. Permission to republish How to Legally Cancel Credit Card Debt in print or online must be granted by the author in writing.

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