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Warning Over Loan Clearance Firms

In recent years, the UK has become a nation of borrowers, taking out personal loans and credit cards as though they were going out of fashion. This has, of course, led to record levels of loan and credit card debt amongst UK consumers.

Whilst the economy was growing well, this was not a major problem for many, but the effects of the credit crunch and recession have hit many borrowers hard, leaving many in the situation where they are unable to keep up with their loan and card repayments each month.

Not surprisingly, there has been a huge increase in the number of new firms which are offering debt advice on loans and cards and whilst many of these firms do offer genuine, helpful advice for a reasonable fee, there have been warnings to consumers about some firms which claim to be able to clear loans and other debts.

The Office of Fair Trading (OFT) has issued a warning to borrowers that they should be careful about approaching any firm which says it is able to clear personal loan and credit card debts through a legal loophole.

Firms are claiming that they can use the wording in the Consumer Credit Act in order to have loan and card debts written off for consumers. The OFT has warned that this is not the case and that these firms are misleading customers into paying large administration fees, often hundreds of pounds, for nothing.

Ray Watson of the OFT said “Consumers have a right to information on debts they owe, but it is important that they realise that these sections of the Act cannot be used to write off legitimately owed debts. Although the debt can be classified as unenforceable until the right paperwork is provided, people are encouraged to seek advice and help on how they can continue to repay the money they owe.”

News Source: http://www.bestloans.co.uk/