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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. Some have already been tracked down and closed and more will fall this year, taking clients’ money down with them. But many are still out there advertising their ‘services’ as busily as ever.
Taking part in a phone-in on LBC radio recently, I fielded numerous calls about these services, including one from ‘George’ who claimed he had managed to get his credit card debt wiped off by one of these companies. Apparently his £4,000 debt had been declared illegal and he was thrilled that he didn’t have to pay it.
Setting aside, for a moment, the morality of racking up a debt only to decide not to repay it because a particular phrase in the paperwork was wrongly worded, it’s worth noting that anyone who does actually manage to get their debt wiped off like this doesn’t get away scot-free. The credit reference agency Experian tells me that if the debtor has made even one payment towards the debt at some point, then he has acknowledged ownership of it. Even if he can claim legal reasons for making no more payments, the debt stays on his credit record, with ‘default’ next to it, for the next six years.
And if significant sums are lost by the credit card companies as a result of all this jiggery-pokery, you can bet your pinkies that they won’t allow themselves to suffer. Someone will have to pay and that someone will be you and me. The costs will be passed on in charges and higher interest rates.
All this is becoming a more urgent problem for society as a whole as more debtors enter the market every month. Students this year will leave university owing an average of around £21,500 and insolvency practitioners Debt Lifeboat have found that one in five simply expects to go bankrupt or take out an IVA some time in the near future.
And for every £1 we earn we are still spending, on average, £1.02 — so the debt problem is not getting any better. In affluent areas the picture is even more startlingly bleak. According to confused.com, the biggest debtors turn out to be in Kingston-on-Thames, whose profligate residents generally spend 169 per cent of their incomes.
So whatever happens to our economy as a whole, one thing is certain: the dubious peddlers of debt ‘solutions’ will continue to thrive. Like cockroaches, they will survive the most catastrophic of economic explosions.
Jasmine Birtles is founder and editor of Moneymagpie.com.
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