Vital Reading

Vital Read. Dealing with debt. Beware of claims firms offering to clear debts.

Beware of claims firms offering to clear debts.

They not only offer to reclaim your bank charges and interest on unfair insurance policies but some claim they can legally free you from your debts and win compensation from lenders for dragging you into unfair loans in the first place.

These are a new breed of claims management company (CMC) which pray on cash-strapped families turning to them for help as the credit crunch bites and forces lenders to turn away new customers.

Some firms promise no-win, no-fee services but charge upfront fees, promise to use loopholes to help people escape debts and have little justification for their claims.

Often their clients have no other option but to try to talk their way out of repaying their debts or trying to claw back punitive charges.

But some CM Cs, despite robust ‘no win no fees’ promises, could land you even further in debt.

The government has overhauled  the claims management industry over the past year- with all CM Cs placed under ministry of justice regulations since April 2007.

However among these regulated firms, there are traps through which the indebted may find themselves in even more of a predicament.

One service launched nationwide  this month is called Cartel Client Review, which claims to have already attracted 10,000 indebted clients  since it started operating last year. It charges an initial payment of £495 per disputed product plus £125 per additional product.

It’s aim is to clear all of a clients mortgage, loans and credit card debts-as well as to potentially retrieve any repossessed homes.

The service bases it’s claims on changes to the Consumer Credit Act brought in this year, which aims to protect individuals from unfair relationships. However all of the complicated cases have yet to be tested by the courts.

CCR founder, Carl Wright, declined to describe in detail how his service is going to carry out these legal victories but said instead: Lenders ride roughshod  through the legislation we’re here to balance that out.

CC R’s website promises a refund  of the £495 down-payment in the event of an abandoned or unsuccessful claim. However scrutiny of it’s terms and conditions shows that , if it decides to abandon a case, there is no refund of the payment for disputes over such products as credit cards and personal loans.

If a claim is unsuccessful, refunds are only granted in the case of a mortgage, car finance, secured loan or repossession prevention, not credit cards or loans.

In such an instance, a client could be left several hundred pounds worse off than when they started out, if they were reclaiming on a credit card or a personal loan.

And this is in spite of the fact that consumers could instead have exercise  the option of using the free Financial Ombudsman Service if they feel that they were genuinely treated unfairly by a bank.

THATS ALL FOR NOW -SEE YOU SOON

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