winding up petition

Archive for October, 2009

23
Oct

Bankruptcy Annulment and Consumer Credit

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Q&A

1. What is bankruptcy annulment?

Bankruptcy annulment is a way of cancelling a bankruptcy, at the discretion of the court using grounds specified in the Insolvency Act 1986. It can only be used in limited circumstances and you should always seek specialist advice before considering your options.

2. Where can I go for help and advice?

Citizens Advice

For advice and information on debt and other topics, visit your nearest Citizens Advice Bureau – check the phone book for the address.

National Debtline

If you live in England, Wales or Scotland phone 0808 808 4000 or visit the National Debtline website for debt advice and information.

Consumer Credit Counselling Service

For debt advice throughout the UK – including Northern Ireland – phone 0800 138 111 or visit the Consumer Credit Counselling Service website.
 

The OFT has a duty to protect the interests of consumers by ensuring the fitness of those holding or applying for consumer credit licences. The OFT also has a duty to monitor social and commercial developments relating to the provision of credit and related activities.

The OFT is monitoring the lending and broking of secured loans to consumers that have recently gone bankrupt where the purpose of the loan is to annul the bankruptcy.

Background

Where an individual has become bankrupt, the Insolvency Act 1986 allows the individual to apply to court to have the bankruptcy ‘annulled’ in certain circumstances. One of the ways in which a bankruptcy may be annulled, subject to the discretion of the courts, is where the bankruptcy debts and expenses of the bankruptcy have been paid off.

There is a small but growing market in the UK of lenders and brokers that approach recently bankrupted homeowners offering short-term loans secured on the property in order to annul the bankruptcy before arranging for a remortgage.

A short-term loan is used to repay all outstanding unsecured debts and other costs and an application is made to annul the bankruptcy. Once the bankruptcy is annulled, a remortgage is entered into in order to repay the short-term loan.

Request for information

The OFT is interested to hear about consumers’ experiences of such services as part of its ongoing research into this market. We would be particularly interested to hear from consumers who have experienced problems in this area, for example, who may have taken out a short-term loan to finance a bankruptcy annulment, and were then unable to remortgage to pay off the short-term loan.

The OFT would also welcome further information from other interested parties, trade bodies, debt advisers and licensees.

If you have any comments, information of submission that you would like to make to the OFT to assist us in this research, please contact the Secured Lending Team:

Secured Lending Team – 2N18
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX

Email: secured.lending@oft.gsi.gov.uk

Responses by 30 October 2009 would be appreciated.
 

Category : BANKRUPTCY | Blog
16
Oct

Consumer Credit Debts & Write off

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There has been much hype over recent months over claims that loan and credit card debts taken out before 6th April 2007 can be written off due to recent changes in the law. Whilst much of the information surrounding this issue is inaccurate or misleading it is true that in some cases lenders are unable to issue legal proceedings to recover monies that are owed to them. This is because some of their credit agreements lack what are called ‘prescribed terms’ and are therefore considered ‘irredeemably unenforceable’.

What is the background?
In order to protect the public from unscrupulous lenders, the Consumer Credit Act was added to the statute books in 1974. It requires that most companies that offer goods or services on credit or those that lend money to consumers are licensed by the Office of Fair Trading.  It is a criminal offence to trade without a licensing arrangement.
The Consumer Credit Act also requires certain credit arrangements to be set out in a specific way and that these arrangements must contain certain information. Without this information these agreements are not enforceable.
Credit agreements where the amount of credit or hire exceeded £25,000 were excluded from control until 6th April 2008.  Whilst pre-existing agreements above £25,000 remain outside CCA regulation, all new credit and hire agreements are now covered by the 2006 Consumer Credit Act.
The Consumer Credit Act was worded in a way that lenders would be unable to enforce repayment of the loan or credit in court if they did not comply with the provisions of the Act.
Is it possible to write off debts?
There has been an increasing trend of consumers attempting to write-off their debts in recent months, partly thanks to a large number of advertisements from claims management companies seeking to exploit loopholes in the Consumer Credit Act legislation.
Where an agreement was signed before 6th April 2007, if a borrower doesn’t pay their debts the lender can apply to a court for an enforcement order to recoup their money.  However, there are certain circumstances in which the court does not have power to enforce the agreement. The loan or credit agreement therefore remains unenforceable and the lender is unable to recover any money from the borrower using legal means.
For example, when lenders cannot produce copies of the original credit agreement that a borrower signed, or if the agreement failed to correctly state one of the Act’s ‘prescribed terms’ (such as the Annual Percentage Rate (APR)) firms claim that borrowers may be able to get your debt written off.
For agreements made on or after 6 April 2007 the court now has discretion under the 2006 Consumer Credit Act 2006 to enforce an agreement which does not comply with the Act’s requirements. 
Despite some reporting to the contrary, cases of this type are continuing to be heard and the outcomes decided on their own particular facts.
Companies who promise to help
Many firms have appeared in recent months claiming in their advertisements to be able to get you out of your credit card or personal loan debt. There are some companies suggesting that up to 80% of agreements are unenforceable.
These companies generally charge a fee to assist you get rid of the debt, sometimes as a percentage of the amount you save. Whilst in certain circumstances as detailed above there are agreements which may be unenforceable, many of them are.  If you believe that your agreement is unenforceable and you are not making repayments you may well be incurring legal costs and default charges should it be proved that you are mistaken. You may also incur charges to a claims management firm even if your case is unsuccessful.
Firms that provide regulated claims management services must be authorised by the Regulator and you can search on line to see if the claim management firm you are proposing to use is regulated. 
Category : FINANCE | Blog
5
Oct

CCJ: County Court Judgements

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If you get a letter telling you someone is making a County Court Claim saying you owe them money, don’t be alarmed. The Court will decide whether you have a debt to pay – and if so, how you should repay it – in a way that’s fair to everyone.

 

The purpose of a County Court Claim continue

Category : DEBT MANAGEMENT | Blog