10. Other legal protection if you are in debt

There are several laws and regulations designed to make sure that any credit deals you sign up to are fair, and any organisations you owe money to behave reasonably.

Unfair credit agreements
Parts of the Consumer Credit Act allow a court to rewrite any credit agreement (including a mortgage) if it thinks the agreement is an 'extortionate credit bargain'.

This means that it:

• has payments which are 'grossly exorbitant' (too high compared with similar agreements); or
• 'grossly contravenes the ordinary principles of fair dealing', which means where you have been a victim of sharp practice.

Courts have used this law to reduce very high interest loans, especially in cases where the person signing the agreement was pressurised into signing. But this is not easy to prove, and if you think you might have a case, you should get expert advice from an adviser or the trading standards department at your local council.

Unfair contract terms
When you sign a contract for credit, or to buy something, it should spell out all the terms and conditions of the deal. The law says that a company can't enforce any part of a contract if it is not in plain English or if it is unfair (but this doesn't mean a price that you think is unfair).

These regulations prevent lenders from:

• charging much higher interest to customers who have missed payments; and
• taking customers by surprise with unexpected or hidden small print or unclear wording in agreements.

If you think that there was a term in a credit agreement which you weren't aware of when you took it out, contact an adviser or the trading standards department at your local council.

Credit licence
Anyone who offers credit (a creditor) must have a licence from the Office of Fair Trading. They won't be able to legally enforce the terms of their credit agreements if they didn't have a licence at the time you signed the agreement.

Most credit agreements that consumers sign are 'regulated agreements' under the Consumer Credit Act. This means that they must be in writing and also explain, among other things:

• the amount of money you are borrowing;
• the interest rate; and
• how long you will be paying the debt back.

Creditors who arrange credit using regulated agreements should not be able to use court action against you if you never signed such an agreement. Creditors cannot start court action if they haven't given you an agreement to sign. You can get advice on other details of the Consumer Credit Act from:

• an adviser or solicitor,
• the Office of Fair Trading; or
• the trading standards department at your local council
• your local Citizens Advice Bureau

Undue influence
A creditor might not be able to make you pay back a loan if you have been put under a lot of pressure from someone you know to sign up for it.

The most likely situation is if your husband or wife or partner persuaded you to sign a secured loan agreement (a mortgage, for example) which was entirely for their business. But you must also show that the lender didn't explain to you how the loan worked, and that you should have got independent advice before signing.

This law is complicated, so if you are in this situation, you will need to get specialist legal advice.

Limitation period
The Limitations Act 1980 gives creditors a maximum amount of time to start legal proceedings after the last payment or written contact from the debtor. For most debts, this is 6 years, or 12 years for mortgages. If you have not paid anything towards a debt for more than 5 years, you should get specialist advice before you speak to the creditor about an arrangement to pay what you owe.

Harassment to repay
It is a criminal offence for a creditor to needlessly upset you to get you to repay. Harassment includes:

• threatening you with a criminal prosecution when you can't be prosecuted;
• pretending to be a court official;
• sending letters which look like court forms; and
• telling other people, such as neighbours and your employer, about your debt to force you to pay.

If you are being harassed, keep a record of exactly what happened and when, and report it to your local trading standards department at your local council. A creditor could have their credit licence taken away, if they are found guilty of harassing you (see 'Credit licence'  above).

If the creditor ends up taking you to court to get you to repay, you can tell the court about the harassment then. This could reduce the court costs you may have to pay. Some types of harassment may also break the Human Rights Act (see 'Dealing with bailiffs').