What is a Unenforceable Credit Agreement?

An Unenforceable Credit Agreement or UCA is basically a way of legally proving that your credit card or loan agreement is invalid or ‘unenforceable’.

What do we mean by unenforceable?

The Consumer Credit Act 1974 was set in place to regulate unsecured lending below the value of £25,000. In section 127 there is a provision for making an agreement unenforceable if it does not contain certain pieces of information or otherwise called ‘prescribed terms’. If any of these prescribed terms are missing then the credit agreement is deemed unenforceable. Please note that it only applies to credit agreements taken out before April 2007.

Why is it only for agreements taken before April 2007?

In 2006 a new version of the Consumer Credit Act was introduced and section 127 was removed, superseding the 1974 version. April 2007 is the ceiling date for Unenforceable Credit Agreements as this is the start of the financial year meaning only credit agreements taken out before this date can be challenged.

So this is the ‘debt loophole’ I have been hearing about?

It is not considered a 'loophole' as such, it is merely using the law as its set out to be used. Section 127 was put in place to ensure all the lenders covered all the terms of lending, some agreements were improperley drafted and some of the prescribed terms were missed out. This is not the fault of the consumer, but the fault of the lender.

There are still a lot of credit agreements still in circulation which are legally invalid and also agreements that have been lost or destroyed by lenders, which also makes them unable to legally enforce the terms of the agreement. The debt between you and your lender needs to be bound by an agreement. If there is no agreement then there is effectively no debt!

Is it morally correct?

Well that depends on personal opinion. There are a lot of discussions about this, but the main opinion seems to be that if they forgot to add the prescribed terms then that’s there fault! Maybe a little cold, but these are multi-billion pound organisations and with all the resources they have, they still got it wrong. It shows the level of care and consideration for its customers. Think about it, if you miss one single payment on your debt, how considerate are they with you? They slap the charges on one after another with no thought of you, the customer. You are simply a number on a screen to them and you have to treat them the same.

Can I do it myself?

You can do anything yourself if you have the time to sit down, research and implement a strategy but as with most Unenforceable Credit Agreement claims, sooner or later there is a high possibility it will get to a legal stage. When it does, you will need to know the ins and outs of the Consumer Credit Act 1974 or use the services of an experienced solicitor to help you through the process or you could end up with a hefty legal bill.

We can help you with this. The companies we recommend process Unenforceable Credit Agreement claims on a daily basis and have the experience and knowledge required to challenge the enforceability of any agreement. If you want more information simply give us a call on 0800 043 2027 or use our Contract Checker to see if your debts qualify.