Woman's home saved after credit agreement deemed unenforceable

A woman has had three loans, which were secured against her home, written off thanks to a leading North West law firm, giving renewed hope to thousands of others facing a daily debt nightmare.

Stephensons Solicitors LLP won the County Court case for Mrs Thomas from Penzance, who had taken out five secured loans over her property between September 2004 and January 2008 with creditor, Blemain Finance.

She took out the loans for home improvements, debt consolidation and to purchase a car, with the amounts borrowed each time ranging from £5,000 to £10,000. In addition, two of the agreements contained Payment Protection Insurance, known as PPI, costing between £800 and £1,500.

Mrs Thomas maintained the repayments on her loans until July 2007 when she suffered an accident at work and could no longer work. The accident had caused her lung to become trapped in her ribcage and she was left with reduced capacity in her lungs and is in constant pain.

Mrs Thomas quickly fell into arrears with the loan agreements. The payment protection she had taken on two of the agreements only covered her for the first 12 months she was out of work and in total she received only £2,311.32 in repayments from the payment protection insurer, despite paying much more in premiums and interest.

In July 2008, Blemain Finance issued possession proceedings to take Mrs Thomas’ home in relation to four of the agreements. They claimed she owed £52,000.

Mrs Thomas said: “The stress of this caused me to dread the postman calling.”

She went to her local Citizen’s Advice Bureau who referred her to Stephensons in September 2008.

Liam Waine, a consumer partner at Stephensons, said: “It became apparent that the last three agreements were not executed correctly and were therefore unenforceable because the amount of credit on them was incorrectly stated. Each agreement was out by a few pounds and pence.”

The case went to County Court. Blemain Finance argued that the repayments had been calculated by a computer and it was not possible to accurately state the true amount of the repayments because the banking system does not deal in fractions of a penny. They argued that the misstatement was only slight and therefore insignificant.

Mr Recorder Stead rejected Blemain’s arguments and as a result, the three agreements with which he was concerned were unenforceable. He did not accept that the discrepancies in the figures were merely mistakes.

In successfully defending the possession proceedings, the legal charges relating to the unenforceable agreements were ordered to be removed from Mrs Thomas’ property. The repayments made under the three enforceable agreements were also refunded to only live agreements, therefore extinguished the arrears and as a result, the possession proceedings were dismissed. Blemain Finance was also ordered to pay most of Mrs Thomas’ legal costs.

Blemain Finance is appealing the decision.

Liam added: “The rules governing the content of credit agreements are inflexible and are designed to protect the consumer. It’s the responsibility of the creditor to ensure they comply. The onus is on them to provide an enforceable and correctly drafted document if they are hoping to repossess someone’s home.

“There are many people facing similar situations and this case illustrates that even the most complicated debt problems can be unravelled to secure a positive outcome.”

Stephensons’ consumer team is one of the leading specialists in the country in dealing with debt problems on behalf of clients. There are various funding options open to people, including legal aid and conditional fee arrangements, also known as no-win, no-fee.

For more information on this, contact Liam and his team on 01616 966 229.