The ease of payment that credit cards offer makes it simple for debt to pile up quickly.
With more and more people becoming victim to this kind of debt, many are looking for a solution to help end the debt cycle and start fresh.
Those struggling with this problem find credit card debt write-offs very appealing, but there are some things that should be researched and considered before deciding to take action.
Generally, when something is too good to be true, it usually is so it is important to know all the facts.
Be Cautious When Considering Credit Card Debt Write-Offs
When it comes to credit card debt, there are a number of companies that will call cardholders and those in deep credit card debt assuring them that they can wipe out the money owed to lenders using a “legal loophole.” Businesses like this claim that they can utilize portions of the Consumer Credit Act 1974, specifically sections77, 78 and 79, to wipe their credit card debt slate clean, but this is very misleading.
The Office of Fair Trading, or OFT, warns consumers that sections of this Act cannot be utilized to clear lawfully owed debts and to be cautious when dealing with these types of organizations and to make sure they understand the facts about credit card debt before doing in business with them.
OFT explains that credit card holders have the right to require a copy of their credit agreement from any lender. If the institution does not provide this documentation, the contract becomes unenforceable, meaning the lender cannot acquire a court order against the cardholder reclaim any items purchased with the card or reposes any items being used to secure the debt.
This is the “legal loophole” organizations often refer to. Truth is, even if the agreement becomes unenforceable, the cardholder will still owe money to the lender including further interest charges and payment default charges. Not to mention, as soon as the documentation is provided, the agreement becomes enforceable again.
Legitimate Ways to Write-Off Credit Card Debt
Although loopholes in the Consumer Credit Act cannot be used to clear credit card debts, there are some ways that these debts, along with other unsecured debts, such as unsecured loans and overdrafts, can be written-off legally. These processes are reserved only for individuals who genuinely need assistance to pay off their debts and an application is usually required before the write-off is approved and granted.
One way to accomplish this is by applying for bankruptcy, which will divide your assets among creditors, protect from any further legal action, and write-off any outstanding debts. This process will require the applicant to make contributions to the debt if within his or her budget.
Individuals living in England, Wales, and Northern Ireland may be able to enter into an Individual Voluntary Arrangement (IVA) or Debt Relief Order (DRO) or to clear their debts. DROs, however, are only available to those who fall within a category of very specific circumstances and IVAs are only extended to those who can commit to making monthly payments, agreeing to only write-off a portion of their debt.
Finally, those living in Scotland have the option to enter a Protected Trust Deed which works much in the same way as an IVA – a portion of the debt will be written off and the debtor will agree to make monthly payments toward the remainder of the debt.
Having a large amount of credit card debt can be a stressful and scary experience – unfortunately, the only way to keep credit card debt under control is to monitor spending closely from the beginning.
Many individuals are over their heads in this kind of debt and begin looking for relief in all the wrong places.The Office of Fair Trading encourages cardholders to know the facts about credit card debt and look for legitimate ways to clear this debt if they are struggling financially.