The `You don't have to pay your bills' scam

If you get a text offering to help you write off your credit card debts, don't fall for it, warns Tony Levene.

I've been hit by a plague – not of locusts but of texts and phone messages telling me I don't have to pay my credit card and other unsecured loan bills.

One even told me I could escape £2,310 - even though none of these texters and callers can know what I owe or don't owe. But this promised freedom from debts does sound truly amazing.

It's also easy. I don't have to emigrate to the Gobi desert to escape my creditors or build a bailiff proof wall around my home. The beauty of this plan is that it is legal. In fact, it is actually sanctioned by new laws – or so the above mentioned texts and phone calls assure me.

I bet not too many lovemoney.com readers knew that! So I can go on a crazy spending spree, knowing I need never bother with the bills. Sheer heaven.

Here's one text. “Due to new legislation, records indicate that you can now apply to have it written off.”

And someone who described himself as “just working in the call centre of a major claims management company” told me if I had a pre-2007 credit card, it was “likely that I did not have to pay a penny.”

It only costs £499

So how to find this financial nirvana?

All it costs is £499 (and that would be added to my credit card, whose debts would be almost certainly null and void so it was really free!!!) plus I would get that £499 back in the remote possibility that this did not work.

What these claims management companies (all subject to light as a feather Ministry of Justice regulation) all maintain is that credit cards and credit agreements before 2007 may not comply exactly with sections 77 and 78 of the Consumer Credit Act. In a nutshell, these firms say, this puts the onus on the credit provider (the bank) to send a copy of the original agreement if the customer requests it. Failing to do so within 12 working days means the consumer can regard the agreement as unenforceable.

The same freedom can be obtained, they say, if the credit company failed to give proper written notice of interest rate changes or variations in the credit limit.

Now, according to a number of blog sites, some people have managed to achieve this – especially a few years ago when some banks decided it was cheaper to roll over than to fight this in court. They don't roll over any more.

Now here's what the claims management people don't tell you.

What they won’t tell you

Assuming you win because an “i” has not been dotted or a “t” crossed, unenforceable does not mean the debt is wiped out. It means it cannot be enforced through the courts. That won't stop the banks entering your failure to pay on your credit record – so no new mobile phone contract let alone a mortgage – and it does not stop debt collectors calling you. It won't stop the bank cancelling your card.

Plus, it does not prevent the bank selling the unenforceable debt to one of those companies that buys up old debts for a penny or two in the pound. They have no legal right to enforcement but they often have more graphic methods.

But even if the bank says it cannot find your original agreement, a legal decision (a December 2009 case known as Carey vs HSBC but it included other banks and other customers) that the claims people won't mention says the bank can “re-constitute” the contract. The bank may not be able to find your particular paperwork from 10 or 20 years ago, but it will have a sample so it can re-create the original. And unless you still have your copy of the document, you can't challenge it (it will probably be correct, anyway).

Once this is done, the debt becomes enforceable again.

Get out clauses

The other supposed “get-out” clauses – not informing about interest and credit limit changes – are covered in most terms and conditions.

The debt management companies send out almost identical letters costing around a tenner so it's good earner. And you can't ask for your money back if they can show the debt is legally unenforceable.

But don't expect a £499 refund if lenders find other ways of getting their cash or punish you with blacklisting. The claims people will argue they did what they set out to do – and you won't find a claims company to take your side in any subsequent dispute.

Banks are not the most attractive firms around. And you may have some sympathy with those who can't pay. But those who won't pay - and those that profit from encouraging borrowers not to pay their debts - simply put up the costs for the rest of us.

Follow me on twitter @tonylevene1