I Want to Erase all My Credit Card Debts Quickly and Legally

Having witnessed how credit card debt can get out of control myself, I have learned that the only way to clear credit card debts is to face the debt monster, research into my legal rights and get help of the best debt counsellors.

Credit Card Misery

Credit cards have a good side and a bad side. The good is that they protect purchases of up to £100 under the consumer credit act, and that cashback cards are great for making money on purchases as well as getting perks. But borrowers are often seduced into borrowing more money and increase spending. What may at first be a convenience could spiral into massive arrears thanks to late bank charges, admin fees and borrowing rates that could make your eyes water. It is small wonder the borrower feels increasingly trapped and wishes it would all just fade away.

Steps to Clear Credit Card Debts

Only radical steps can put a stop to the credit card debt from snowballing out of control. The first is facing it. This means talking to a partner or friend. The next step is to gather all information about the debt. This means getting bank statements and credit agreements out of the dusty drawer and facing the monster. Don’t worry, it is rather like pulling a plaster off quickly. The pain is sharp, but fleeting. Establish the following:

• The size of each debt.
• The details of the debtors.
• Which debts must be paid off first.
• The interest rates of each debt.

The next step is contact a debt counsellor. By visiting the Citizen’s Advice Bureau, I was put in touch with the best debt counsellors.

The Only Debt Counsellors You Should Use

I found the following non profit credit card counsellors to be the best.

• Citizen’s Advice Bureau (CAB), the ideal first step to getting in touch with the best debt advisers.
• National Debtline (NDL), the best telephone contact when discussing debt problems. They also provide simple to understand factsheets about your rights when in debt, including template letters to debtors and debt collection agencies.
• Consumer Credit Counselling Service (CCCS), a must for those in credit card debt.
• Payplan, a free of charge debt management company. They are experts at drafting a debt management plan (or DMP) which is a sort of contract between the borrower and the lender on a more affordable way of paying the debt. An informal agreement between the creditor and the debtor could be negotiated for repayments of as little £1 per month. This gives the borrower the space to find a way of getting the debt written off.

Other bodies worth contacting are:

• Financial Ombudsman Service (FOS)
• Office of Fair Trading (OFT). Both the OFT and the FOS keep a watchful eye for unfair debt collection practices and procedures, which will not look good for the lender if the matter goes to court.
• DirectGov, offering advice on benefits that can be claimed via an online calculator.
• Money Saving Expert, offering the best financial advice online.

How to Write to Creditors

Getting debt written off involves going through a step by step process of writing to debtors, but don’t worry, the Citizen’s Advice Bureau and the National Debtline provide stock letters and easy to follow instructions for the borrower to follow. In legal terminology, these letters request that part or all of the debt be written off. A refusal from the lender means the borrower can invite the lender to take the matter to court, which could be costly for the lender. This may bode the question, is the cost of chasing the debt worth the value of the debt itself? The argument could be more in the borrower’s favour if the lender has violated any of the borrower’s rights as set out by the Office of Fair Trading (OFT).

Let’s look into the borrower’s rights in more detail.

The Rights of the Borrower

With the support of free legal advice from debt counsellors, the borrower can establish the following with the view of getting debt rubbed out.

Has the lender missold a loan agreement? Look out for inappropriate selling of payment protection with the personal loan, which the borrower did not ask for. Look out for discrepancies or obscurities on the loan agreement. Has the lender been transparent about the APR and their calculations of the debt? Are there any inaccuracies on the loan agreement? Has the original document gone missing? Admin errors can result in the borrower paying the wrong debt.

Has the lender been heavy-handed with chasing the debt, such as harassing the borrower by telephoning at work or during unsociable hours? Has the lender’s agents made unannounced calls to the door or using threatening behaviour? If this has been the case, the debt collection agency could have their licence revoked.

Some or all of these matters would be of interest to the Office of Fair Trading (OFT) and the Financial Ombudsman (FOB). Furthermore, the judge will frown upon bad practices it if the matter goes to court.

Credit Card Debt Removal

Although eradicating debt is not always as simple and quick as we wish, gaining space through a DMP via Payplan or similar non-profit debt counsellor is the best first step. The borrower may then follow a simple procedure of writing letters to the creditors, get free legal advice and establish how much powers the creditors actually have if the matter goes to court. The costs of retrieving the money could be more than the debt is worth, particularly if the lender has violated any of the debtor’s rights. In this respect, eradicating debt is often a waiting game.

Photo credit: Errefe from Wikimedia Commons