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How to dispute a debt

About disputing a debt

When you borrow money you should be asked to sign a credit agreement. This is a legal document which sets out what both sides are agreeing to, including how the money you're borrowing should be paid back.

Borrowing money includes things like using a credit card, taking out a loan or a bank overdraft, buying goods on credit and taking out a mortgage.

To find out more about borrowing money, see Types of borrowing.

If you don't pay the money back or fall behind with your payments, the credit agreement usually gives the lender the right to take you to court and make you pay back what you owe.

However, there are times when you may be able to argue that you shouldn't have to pay the money back. This could be for a number of reasons, including:

  • you didn't sign a credit agreement with the lender or someone else signed it
  • the lender didn't follow proper procedures, for example, if the credit agreement has something wrong on it
  • you were under age when you signed the agreement
  • the time limit for recovering the money has run out
  • the agreement you signed is legally unfair
  • you were forced into signing the agreement against your will
  • you didn't understand what you were doing when you signed the agreement because you have a learning disability or mental illness.

If you're being chased for payments by a lender or being taken to court, you should check to see whether there are any reasons why you might not have to pay the money.

Read this page to find out more about the reasons why you might not have to pay back a debt and what you can do about it.

If you think there may be a reason why you don't have to pay the money, you should get help from an experienced debt adviser to see if there is anything you can do about it.

You can get help from a debt adviser at a Citizens Advice Bureau. To find details of your local CAB, including those which can give advice by email, click on nearest CAB.

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Did you sign an agreement

To be responsible for paying back a debt, you should have signed a credit agreement. This is a legal document which sets out what both sides are agreeing to.

Before agreeing to repay money, take a look at the original credit agreement to make sure you signed it, check what you agreed to and to see if anyone else also took out the credit with you.

If you didn’t sign an agreement, you shouldn’t be legally responsible for paying back the debt.

However, you may be responsible if you signed the agreement as a guarantor.

It’s possible that you are a victim of identity theft, where a criminal has taken out the credit in your name, or that you are being chased for a debt taken out by someone with the same name as you.

If you did sign the agreement jointly with someone else such as a partner, you probably will have to repay the money unless you can persuade the lender and the other person to let you off the payments.

If your partner signed the agreement on their own and then died, you can’t be forced to pay back the debt, although the lender can try to recover any money owed from the estate of the person who has died.

To find out more about being chased for money when you didn’t sign a credit agreement or you signed with someone else, see Signing an agreement to borrow money. You can also find out how to get a copy of the original agreement if you haven’t got one.

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Are you under 18

Young people (minors) can't usually be taken to court for debt. This applies to young people aged under 18 in England, Wales and Northern Ireland and under 16 in Scotland.

This is because you can't be legally held to a contract you make when you are under age.

In Scotland, anyone who is 16 or older can be taken to court for a debt. However, if you sign an agreement when  you're 16 or 17 and later think you shouldn't have signed it, you can apply to the court to have it set aside. You must do this before you turn 21, if you want to.

For more information about when young people are responsible for debts, see Young people – money and consumer rights.

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Are you a guarantor

A lender will sometimes ask for a second person to sign a guarantee that the money will be paid. This person is called a guarantor.

If you've signed an agreement as a guarantor and the borrower doesn’t pay as agreed, you'll be responsible for the debt instead.

For more information about being a guarantor for someone else's debt, see How lenders decide whether to give you credit.

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Are you a catalogue agent

When you act as an agent for a catalogue company, you should set up a separate account for each of your customers to pay their money in.

If you don't do this, you can be held responsible for any money your customers don't pay.

To find out more about being responsible for money your customers don't pay if you're a catalogue agent, see Signing an agreement to borrow money.

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Has the lender followed the proper procedures

When you borrow money you should be asked to sign an agreement which sets down what both sides are agreeing to. For most credit agreements the borrower also has legal rights (statutory rights) under the Consumer Credit Act.

This law sets out what a lender must do when offering credit. If the lender hasn’t followed the proper procedures, they may not be able to force you to pay back the money you borrowed, or they may need to get permission from the court to force you to pay it back.

A lender may not be able to force you to pay back money you borrowed if:

  • it shows the wrong amount of credit
  • it shows the wrong repayments or they're missed out altogether
  • it doesn’t contain all the legal notices it should, for example a cancellation notice
  • the lender is not FCA authorised to lend money.

For more information about what should be in a credit agreement and what notices are required, see Your rights when you borrow money.

For more information about how to check if a lender is FCA authorised, see Loan sharks.

Not all credit agreements come under the Consumer Credit Act. One common exception is mortgages.

For more information about mortgages, see Mortgage problems.

If you haven’t got a copy of your credit agreement, you can ask the credit lender to send you one.

If you think the lender has not followed the correct procedures, you may be able to make a complaint or argue in court that you shouldn't have to pay the money back.

For more information about what to do if you don't think you signed an agreement and how to get hold of a copy of an agreement, see Signing an agreement to borrow money.

For more information about making a complaint or arguing in court that you shouldn't have to pay the money back, see What can you do if you don't think you should pay back a debt.

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Has the time limit for recovering the debt run out

In law, a lender has a set amount of time to take you to court for a debt. If a lender doesn’t start court action within the time limit, they usually can't force you to pay back the money. The debt is then known as statute barred.

If it's been around six years (five years in Scotland)or more since you've paid any money towards the debt or written to the lender about it, it's important to check what to do next before you contact the lender. This is because if you say the wrong thing, it may affect your right to argue that you don't owe the money.

You should check whether a debt is statute barred in the following situations:

  • before you contact a lender to arrange repayment of a debt
  • if you're taken to court for money you owe.

If the lender does get in touch with you after six years (five years in Scotland), you should not agree that you owe any money or offer to make payments until you've taken advice from a specialist debt adviser. This will help you to avoid accidently admitting you owe the money when you don't. Once you admit you owe the money, the time limit may no longer apply.

If you think it's been six years (five years in Scotland) or more since you paid any money towards your debt, you should get advice about what to do before you have any contact with the lender. You can get advice from your local Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Did you sign an agreement to borrow money when you didn't want to

You may have signed an agreement to borrow money (a credit agreement) when you didn't want to. If you signed the agreement under certain circumstances, the lender might not be able to force you to pay the money back.

These circumstances include where:

  • you were pressured, bullied or persuaded to sign against your will by someone else
  • your ability to understand what you were doing was affected by drink or drugs
  • you suffer from mental illness or a learning disability.

You can find more information about signing a credit agreement when you didn't want to in You signed an agreement to borrow money when you didn't want to.

If you think you signed a credit agreement under any of these circumstances, you should get advice about what to do. You can get advice from a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

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Is the credit agreement legally unfair

When you sign an agreement to borrow money, there are rules about how the lender must behave. An agreement to borrow money is called a credit agreement.

If the lender has broken any of these rules, either before or after you signed the agreement, you may be able to argue that the agreement is legally unfair. You may be able to get the terms of the agreement changed or get out of it altogether.

You would need to make an official complaint or take the lender to court to do this.

You might be able to argue that an agreement is unfair in the following situations:

  • you were mis-sold insurance such as Payment Protection Insurance (PPI) when you took out a loan
  • you were misled about the legal rights you have under the terms of the agreement
  • the lender didn't check that you would be able to keep to the conditions of the agreement. For example, they may not have checked that you could afford the loan repayments
  • you’ve been charged an unreasonably high interest rate on the loan
  • you've been charged unreasonably high charges for defaulting on the loan
  • the lender has broken any of the Financial Conduct Authority (FCA) rules and guidance or codes of practice
  • the lender has deliberately taken advantage of your lack of financial knowledge or experience.

To find out more about making a complaint if you think your credit agreement is unfair, see What can you do if you don't think you should pay back a debt.

If you think your credit agreement is unfair, you can get help from your local Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.

For more information about your legal rights when you sign a credit agreement, see Your rights when you borrow money.

For more information about the mis-selling of Payment Protection Insurance, see Payment Protection Insurance.

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What can you do if you don't think you should pay back a debt

If you're being chased for payments by a lender and you think there's a reason why you shouldn't have to pay back the money, you may be able to:

  • complain to the lender
  • complain to the Financial Ombudsman Service (FOS)
  • if you're taken to court, argue in court that you shouldn't have to pay the money back.

For more information about what you can do if you don't think you should pay back a debt, see What can you do if you don't think you should pay back a debt.

If you don't think you should have to pay back a debt you're being chased for, you should get help from an experienced debt adviser to see what you can do about it.

You can get help from a debt adviser at a Citizens Advice Bureau. To find details of your local CAB, including those which can give advice by email, click on nearest CAB.

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Further help

On Adviceguide

The Financial Ombudsman Service (FOS)

If you've complained to a credit lender and they haven't been able to help you, you can make a complaint to the Financial Ombudsman Service.

You can contact the Financial Ombudsman Service helpline on 08000 234 567 (free for people phoning from a fixed landline) or 0300 123 9 123 (free for mobile-phone users who pay a monthly charge for calls to numbers starting 01 or 02). To visit the website, go to: www.financial-ombudsman.org.uk.

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Citizens Advice

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