Magazine article The Spectator

Beware Peddlers of Dodgy Debt Relief

Magazine article The Spectator

Beware Peddlers of Dodgy Debt Relief

Article excerpt

It's a law of the financial jungle that where there is debt there is desperation and where there is desperation you can sell all manner of dodgy 'solutions'.

Last year, commercial radio stations were full of ads telling us that - thanks to a 'little-known loophole' - half our debt could be wiped off if we would just ring the given number. You may even have been cold-called by computers about this fabulous 'new' idea. In fact they were just peddling Individual Voluntary Arrangements to the unwary. An IVA is a binding agreement with your creditors under which you pay off a portion of your debts, usually in monthly instalments over five years, in exchange for the writing off of the rest of the debt. It is an entirely legal debt solution, one stage below full bankruptcy, and it can be the right answer for some people - but by no means for all. Certainly not for most of the poor saps who signed up through these ads.

The sharks behind the ads were (and in some cases still are) trying to palm IVAs onto people who would not be able to meet the scheduled repayments.

Not surprisingly, the banks which end up bearing much of the cost in bad debts have increasingly refused to accept IVA applications, thus closing the alleged 'loophole' that allowed IVA promoters to make a fast buck.

Ever open to any way of making cash out of the less fortunate, however, these predator firms have found another way of gulling the desperate. Now the radio ads are offering to arrange for your debt to be wiped off if the terms and conditions of your loan or credit card didn't have all the right boxes ticked.

For a mere £600 or so, they offer to 'audit' your debt to see if any of it could potentially be deemed illegal, and therefore struck out. They fail to mention, of course, that barely one in a thousand applicants is actually successful in this manoeuvre. Nor do they let people know that the legal process involved is currently frozen as a handful of test cases are about to be considered by the High Court to decide whether this is genuinely something that people should be able to do. Given the glacial nature of High Court proceedings, it could take years before a ruling is made, during which time any applications made on behalf of debtors will be in left in limbo.

Not only that, but many of the parasitical businesses behind the ads are not even regulated, as they should be, by the Ministry of Justice. …

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