If you've ever wondered how to clear credit card debt and you happen to live in the U.K. then you may have heard of a legal manoeuvre recently which can save you a huge amount of money just by challenging the legality of the credit agreement itself. Sometimes referred to as a loophole, this isn't really a loophole at all as it is a specific change in the law which is there for anyone to take advantage of if they know how.
Let's take a look at this a bit more closely. The change in the law which allows people to clear credit card debt (or indeed any kind of loan) specifically relates to the Consumer Credit Act of 1974 which was amended in 2006 when changes were made which compelled lenders to state certain details in the contracts for loans and other types of finance agreements. This included things like the length of the repayment term, the APR and other details and these had to be displayed within the contract, which also needed to have a signature on it.
Changes in the Act relate to any loan facility taken out prior to April 6 2007, which is the first day of the financial year immediately following the year in which the changes were made to the Act, i.e. 2006. So any loan agreement made before this date needs to have these details - known as the prescribed terms - clearly on it, and the lender must be able to provide a fair copy of that original document showing the prescribed terms if asked to do so. The basis of being able to clear credit card debt rests upon the ability of the lender to reproduce the correct documents.
It is surprising to lots of people how so many such contracts do not contain these prescribed terms. In their rush to get people to borrow money, banks and other lenders were greedy enough, it seems, to leave out these items from the original documentation. It is estimated that as many as seven out of every ten such contracts taken out before that important date lack this necessary information.
The law states that loan agreements which do not have these details are unenforceable. That is, any amounts still owed on the loan cannot be enforced by the lender in cases where the contract does not contain the prescribed terms. In order to clear credit card debt it is necessary simply to show that these items are not present on the original draft.
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