OFT issues 'debt sale' warning

24/06/2009

Consumers have been warned to be wary of companies which claim to be able to wipe out debts by purchasing credit agreements.

The Office of Fair Trading (OFT) has recorded a rise in the number of advertisements in newspapers and on the internet making the claim, and has told consumers to be on their guard.

Despite the companies' claims, it is not permitted under British law for debt to be sold without the permission of the lender.

Instead, consumers who 'sell' debt to these companies - even through a broker - will still be liable for the debt and will also lose the money they paid for the service.

"Like most scams, when something looks too good to be true, it usually is, and this is certainly the case here," said Ray Watson, OFT director of credit.

"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."

Mr Watson added that the OFT will take "swift action" against the misleading firms.

EuroDebt director Kevin Still said that his firm has "seen an increase in the number of consumers and financial intermediaries who have been targeted by these companies".

He added: "We would strongly recommend that anyone in financial difficulty seek professional advice from a genuine debt advice provider. Dealing with your debts rather than avoiding them is going to be in your best interests.

"EuroDebt's clients have multiple credit agreements and it is important to provide a fair return to these creditors based upon what you can reasonably afford, that is the basis of a robust and sustainable debt solution like a Debt Management Plan or an IVA."

Tags; Debt Management and Banking,

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