Consumers warned to beware debt loophole write-off firms

The Office of Fair Trading warned people against using companies that misleadingly promised consumers they could use sections of the Consumer Credit Act to wipe out debts.

The firms offer to "buy" consumers' debts from them, claiming they can get them written off, but charge people an "administration fee", often several hundred pounds.

The scam relates to the Consumer Credit Act, under which consumers can request a copy of their credit or hire agreement.

If the lender fails to provide the requested information, the debt becomes unenforceable, meaning the lender cannot get a court judgment against the borrower, take back hired items or things bought on credit or anything that was used as a security, such as a car.

But the OFT, which has produced a consumer guide on the issue, warned that even if the debt was unenforceable, people would still owe any outstanding money to the lender.

The lender could also continue to add interest to the loan or hire agreement, as well as default charges, while consumers' credit records could also be impacted if they did not repay the money.

The OFT also warned that the debt became enforceable again as soon as the lender produced a copy of the credit agreement.

The High Court recently ruled that for a debt to be enforceable, lenders did not have to produce the original credit agreement. Instead it said a reconstituted version was acceptable, as long as it was accurate.

Rents soar as mortgages out of reach

Rents soared to a record high during September as demand continued to be boosted by frustrated home-buyers.

Landlords hiked rents for the eighth consecutive month during September to an average 689 a month, says to LSL Property Services.

The cost of renting a home is now 3.1 per cent higher than it was last year and above the previous all-time high reached in August 2008.

The steep rise is being driven by soaring demand as first-time buyers find it harder to buy a home or find a mortgage.

But the supply of rental homes is failing to meet demand, as landlords face difficulties getting a mortgage.

David Newnes, estate agency managing director of LSL Property Services, said: "Landlords have seen tenant demand continue to hit new heights. The mortgage market remains tight and many buyers simply cannot get the finance to get a foot on the property ladder."