Eddie Goldsmith , senior partner at Goldsmith Williams, has more bad news for consumers

You may be interested to know that a recent ruling in the High Court has dealt another blow to consumers wanting to write off their debts.

Borrowers have been using the provisions of the Consumer Credit Act to request a copy of their credit agreement to see whether the document is unenforceable or not. If a lender is unable to provide a copy of the agreement, borrowers have been trying to obtain an order from the court to have the debt wiped out.

However, the ruling, made by Judge Waksman in the Manchester High Court, means that banks need only provide borrowers with a ‘reconstituted’ version of their credit card agreement, which can be made from sources other than the signed document itself. The absence of an original signed agreement does not, therefore, mean that borrowers can simply walk away from their debt obligations. This means that financial institutions have the right to enforce debts even when a borrower’s original loan agreement has been lost or destroyed and a copy cannot be provided within 12 days, as required by the Consumer Credit Act.

This ruling acts as another reminder to brokers that there are no easy ‘get out of jail free’ cards for clients with mounting debt problems. If lenders have treated borrowers fairly, then borrowers remain obliged to repay their debts, even if their lender no longer has a copy of their original loan documentation.

Judge Waksman has criticised some borrowers for trying to avoid repaying their debts by challenging lenders to produce a valid copy of their loan agreement, saying that “the absence of a copy of signed executed agreement is no evidence that such an agreement was not made.””