OFT Clamps Down On Loan Debt Purchase Schemes
The Office of Fair Trading (OFT) has issued a warning to consumers and individuals with large debts on personal loans and credit cards regarding companies which are currently offering to buy up people’s debts, or sell their loans on to others.
As many individual’s personal debt levels on personal loans and credit cards continues to increase and people are finding it harder to manage their debts during the current economic down turn, the OFT has warned that there has been an increase in the number of companies offering to buy peoples loan debts from them, thereby writing off a person’s debt altogether.
These advertisements and claims made by the various companies involved in this activity are false and are misleading borrowers into thinking that they can simply sell their loan debts to the company and clear themselves on any responsibility for their commitments. It is illegal to sell on your loan debts without the written consent of the original lender and the OFT have advised that anyone taking this course of action will have to pay a large fee to the company involved, yet would still be responsible for the loan and would be subject to the usual debt recovery action by the lender, as well as suffering the damage to their individual credit score.
The OFT and Trading Standards are currently working to prosecute companies offering to buy peoples loan debts. Ray Watson, of the OFT said: “Like most scams, when something looks too good to be true, it usually is and this is certainly the case here. You cannot simply sell on your debt and its liabilities and businesses that make misleading claims to the contrary are just trying to take advantage of consumers’ distress. The OFT will not hesitate to take swift action against businesses which deliberately mislead consumers.
Consumers with debt problems should contact their creditor to arrange a repayment plan or their local Citizens Advice Bureau who will be able to provide free advice.”
