Unenforceable Hire Purchase Agreements
Removing Financial Difficulties without Creating Further Bad Credit
Feb 24, 2009
Consumers that took out hire purchase before April 1st 2007 have a genuine chance of being able to write off debt in relation to legally unenforceable hire purchase agreements. There is a legal requirement that all hire purchase agreements need to comply with the prescribed terms of the Consumer Credit Act 1974. The agreement also mustn't be too one-sided in favour of the hire purchase company.
Unenforceable Hire Purchase Agreements. What is Necessary to Perform an Audit?
An essential part of the process to see if an unenforceable hire purchase agreement exists is an initial audit. Consumers that don't have a copy of the hire purchase agreement can request a copy from their lender. There are two ways that this can be requested:
- Under section 77-79 of the Consumer Credit Act 1974. This allows someone to get a copy of their hire purchase agreement for just £1. A cheque should be included with the formal request;
- More detailed documentation can be requested for £10 via a Subject Access Request (SARN) under the Data Protection Act 1998. Although it takes longer to get this information, it is harder for the hire purchase provider to comply with.
It is recommended that someone struggling with personal debt utilises the services of a legal professional to check whether the agreement is compliant. Although the prescribed terms of the Consumer Credit Act 1974 are few in number, there are more esoteric reasons for an unenforceable hire purchase agreement.
How to Establish Whether an Unenforceable Hire Purchase Agreement Exists
- The lender doesn't have a copy of the hire purchase agreement;
- The interest has been incorrectly calculated;
- The credit charges (rate of APR) are deemed unfair;
- A deposit has been paid on the item and this isn't acknowledged in the credit agreement;
- No rate of APR is displayed;
- There is no mention of any 'cooling off' period;
- The hire purchase agreement hasn't been signed by one or both parties.
It is believed that in 25% of cases, the hire purchase company is unable to provide a copy of the credit agreement. If this is the case, the lender is not legally able to enforce it. This means that it constitutes an unenforceable hire purchase agreement.
Should an unenforceable hire purchase agreement be in force, it is possible to write-off the outstanding amount owed and potentially receive a refund in relation to any payments made. Others have received damages because the agreement is too one-sided in favour of the hire purchase company.
Will Legal Action Cause a Bad Credit Rating?
An unenforceable hire purchase agreement case won't worsen a credit rating. In many instances, consumers have already missed payments on hire purchase agreements. Establishing that an unenforceable hire purchase agreement exists may improve a credit rating because entry is completely removed from the credit report.
A consumer that has taken out hire purchase prior to the 1st April 2007 will be well-served by getting their credit agreements audited by a legal professional. Should an unenforceable hire purchase agreement exist, because it fails to comply with the Consumer Credit Act 1974, any debt can be legally written-off. This can only serve to ease financial difficulties and alleviate personal debt problems.
Those seeking to write-off debt may be interested in finding out whether they have an illegal credit card or unenforceable loan agreement. Individuals that are struggling with serious debt problems may be able to write-off debt with an Individual Voluntary Arrangement, also known as an IVA.
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