MIp16-17_1209:MI 12 Jan 24/11/2009 16:30 Page 21
Claims | 17
Unenforceable outstanding and missed payments may well debt difficult or impossible but, many would
Most claims firms use computer software to show on their credit file. Credit reference argue, that does not give them the right to
check loan agreements for errors and this is agencies are not obliged by law to remove simply walk away from their obligations. The
probably where that spurious marketing claim adverse records relating to loans which are answer is not to hope for a ‘get out of jail free’
originates that 80% of loan agreements are declared unenforceable and, even if they card based on a legal technicality, but to find a
unenforceable. It is possible that 80% of loan decided to make a note on the file stating that solution to the underlying issues which caused
agreements contain errors, but that does not the agreement has been made unenforceable by them financial problems in the first place. In
necessarily mean they are all unenforceable. the courts, this may have the effect of many instances, borrowers would be better
Determining if a loan is unenforceable or not dissuading lenders from considering further advised to speak to a professional debt adviser,
is usually a complex credit applications in the future. rather than a claims
legal business A recent test case in the commercial court management
and it’s rarely an company.
issue which can What is
be determined my advice,
simply by as a lawyer,
using a piece to financial
of computer advisers? It’s not to avoid
software. financial claims altogether
It’s also because your client may, for
worth example, have a perfectly
considering a reasonable claim for PPI
number of other issues, mis-selling. However, when
before considering whether it comes to claims for
you should advise clients to unenforceable loan
check if their loan is agreements, be extremely
unenforceable. Firstly, claims cautious. Do not make the
companies charge fees and mistake of creating false
they can be reasonably hefty hopes with clients who are
with payments required up desperate to find solution to
front. No claims firm can their problems. If the
guarantee a positive outcome judgement turns out not to
and your client may, be in their favour, you could
therefore, end up with a find that they take out their
failed claim and be in a frustrations on the person
financially worse situation who recommended the idea
than when they started. in the first instance – you.
If you do recommend
Time that your client makes a
Secondly, making a claim claim, ensure that additional
takes time and it often takes steps are taken to address
months for a claim to be any financial problems they
fully resolved. During that may be facing – don’t let a
period your client’s debt
problems are not suspended;
they will continue to mount
and your client may even
find themselves in a position
where their lender is trying
to repossess their
home. Making a
claim may,
therefore,
simply be
delaying the has confirmed that unenforceable loan claim be the
inevitable and your agreement claims are not as clear cut as many only solution.
client may be better advised to address the root claims management companies make out and Also, choose a claims management company
cause of their financial problems, rather than the case has certainly put claims management with great care, because not all are as
trying to find a legal technicality to get them companies on the back foot. scrupulous as you may expect them to be.
off the hook. Ideally, either recommend your client to speak
Thirdly, your client needs to consider their Moral issue to an organisation such as CAB or consult a
credit rating. Even if their claim is successful, Which brings me on to my final point: the solicitor.
their loan is not wiped-out, it is simply moral issue. When someone takes out a loan Most importantly, don’t view financial
declared ‘unenforceable’. This means that agreement they have an obligation to repay it. I claims as an easy source of additional income.
although their lender cannot enforce the terms do accept that, unfortunately, some borrowers That would be a major misjudgement, for both
of their agreement, the loan remains encounter problems which makes repaying the yourself and your client.
www.mortgageintroducer.com December 2009 Mortgage Introducer
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