Judge freezes credit claims
After a recent announcement by the Solicitors Regulation Authority (SRA) that it was investigating ten claims management firms for misleading customers over the prospect of writing off debts, a judge has frozen over 100,000 claims made by indebted borrowers.
In a hearing in Chester County Court, Judge Derek Halbert announced that all cases have been put on hold pending the outcome of "a few carefully selected" test cases in the Commercial Court in London. Claimants were attempting to write-off credit and loan debt by using a loophole in the law, which could make the contracts unenforceable.
However, the SRA has warned consumers “to be wary of statements suggesting that 80 per cent of credit agreements and unenforceable,” as has the MoJ in its recent battle to clamp down on claims handler’s advertising in the PPI claims market.
Antony Townsend, chief executive of the SRA, said: "These ads appear to offer an easy way out of difficulty to people who have debts they are struggling to pay. But many credit agreements do meet the legal requirements and, therefore, can't easily be challenged as unenforceable."
The judge’s ruling means that over-indebted borrowers will have to carrying on repaying loans until a judgement is made.
Daniella Lipszyc, a solicitor at Ultimate Law, said: "The ruling by His Honour Judge Halbert is a landmark decision that will have massive implications on cases involving the enforceability of credit agreements.
“After a number of early wins, many claims management companies have jumped on the band wagon, promising desperate consumers that they can write off credit card balances.”