Claims for cancellation of debts may be put on hold

According to a recent report tens of thousands of pending claims to cancel consumer debt such as credit cards could be put on hold by the courts, with judges in England and Wales considering this move over claims that have been filed by claims handling firms that have been advertising in the media such as television and print.

It is thought that around one hundred thousand claims could be put on hold if the move goes ahead.

The problem with the claims that have been filed by these claims handling firms is that they state that lenders cannot enforce the credit agreement relating to the debt if the right paperwork has not been kept, but in order to clarify the situation judges are considering using a selection of the claims to conduct a test case in the High Court, as was the case with the bank charge claims, which went to the High Court at the start of last year.

One judge said: “It is apparent that there are a number of claims to be commenced nationally in which the main claim will be for a declaration of the invalidity of a credit agreement for non-compliance with the Consumer Credit Act.

Estimates vary but up to 100,000 claims may be involved. The consensus is that the appropriate course is to refer a few carefully selected cases to the Commercial Court in London on a test basis… and then stay all others until the test cases have established the requisite principles.”

In the meantime consumer groups have urged those struggling with debt to contact their lenders or a debt charity, with one official stating: “Anyone who find themselves struggling with their debt should contact their lender and arrange to have their repayments restructured. If they are really worried about their debt, they should contact Citizens Advice, National Debtline or the Consumer Credit Counselling Service.”