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What can you do if you don't think you should pay back a debt
This information applies to England, Wales and Scotland
What can you do if you don't think you should pay back 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.
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 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.
To find out more about the reasons why you might not have to pay back a lender, see How to dispute 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.
If you don't think you should 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.
Complaining to the credit lender
If you think you're being chased for a debt you don't owe or that the lender can't make you pay back, the first thing you should do is complain to the lender.
Put your complaint in writing, explaining why you don't think you owe the money. If you have any evidence, it may help to send that to the lender with your letter.
For example, you may not have been aware of what you were doing when you signed the credit agreement because of a mental illness or learning disability. You may be able to get evidence from your doctor or other medical professional to support you.
To find out more about the evidence you may need to provide if you want to complain that you didn't know what you were doing when you signed a credit agreement, see You signed an agreement to borrow money when you didn't want to.
If the lender doesn't agree with your reasons they may continue to demand payment of the money. Ask them to explain why they don't agree with your reasons and to provide proof that you owe the money. For example, you could ask them to send you a copy of the agreement you signed with your signature on it.
If you still think the lender is wrong, you can complain to the Financial Ombudsman Service (FOS).
If the lender takes you to court for the debt, you can go to court and say you don't owe the money.
You can get help to complain to a lender who is chasing you for money 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.
Complaining to the Financial Ombudsman Service (FOS)
If you think you're being chased for a debt you don't owe, complain to the lender explaining your reasons.
If they don't deal with your complaint or you are unhappy with their answer, you can ask the Financial Ombudsman Service (FOS) to deal with the problem.
There are some basic rules for you to remember before going to the FOS:
- you can only go to the FOS after you have made a complaint to the lender
- the lender has up to eight weeks to deal with your complaint
- you must complain to the FOS within six months of getting your lender's final response to your complaint or from the end of the eight week period if they haven't responded.
You can make a complaint to the FOS by contacting the Financial Ombudsman Service helpline on 0300 500 5000 or online at: www.financial-ombudsman.org.uk.
Complaining to the FOS does not prevent you from taking court action.
The credit lender takes you to court
If the credit lender takes you to court for money you don't think you owe or that they can't make you pay back, you can go to court and say you don't owe the money. This is called disputing the claim.
When a lender takes you to court, you'll get a number of documents from the court before the hearing. One of these will be a defence form which you can use to explain why you don't think you owe the money.
You can't simply say that you don’t owe the money. You'll need to show reasons why you don't owe the money. This could be because, for example:
- the time limit for starting court action has run out
- the action has been taken against the wrong person
- you were under age when you made the agreement.
For more information about the reasons why you might not owe money, see How to dispute a debt.
It's a good idea to ask a specialist legal adviser to check you have a legal reason for disputing the claim before you fill in the court forms. If you go to court and lose, you won't just have to pay back the debt, you may have to pay legal costs on top of this.
Check the court papers to see when you need to get the forms back to the court (usually within 14 days). When you're getting advice, tell the adviser how long you've got to return the forms so that they can help you do things in time.
You can get specialist legal 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.
For more information about what happens when you're taken to court for money you owe, see What happens when you're taken to court for money you owe.
What to do if the lender has already taken you to court
If a creditor already has a court judgment against you and you later find out that you didn't owe the money or they shouldn't have made you pay it back, you may be able to get the judgment cancelled.
If you're in this position, you should get advice as soon as possible from an experienced debt adviser. You can get debt 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.
Using a claims management company to dispute a debt
Claims management companies, also known as claims assessors, are firms that charge you a fee to help you check whether your credit agreement is correct. They sometimes claim to be able to help you challenge whether a credit agreement is legal in court, even when you don't have a good reason to dispute the debt.
For example, if you owe money on a loan or hire purchase agreement, you may have been tempted by claims management companies or claims assessors offering to help you challenge whether your loan or hire purchase agreement is legal.
They may tell you that your loan or hire purchase agreement is unenforceable. You may be told that you can't be forced to pay the money back because the loan company hasn't provided you with a copy of a signed agreement, but this may be misleading.
It's important to be clear what 'unenforceable' means. It doesn't mean, for example, that you no longer owe the money or that you can't be chased for the debt.
If you want to challenge whether a loan or hire purchase agreement is legal, there may be ways of doing this other than going to court. For example, you may be able to complain to the credit lender. You should only think about going to court as a last resort.
You can get free help to check your credit agreements and to sort out your debt problems 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.
In England and Wales, claims management companies have to be authorised by the Ministry of Justice. You can check whether a claims management company is authorised by searching on the Claims Regulation website. Go to: www.claimsregulation.gov.uk.
For more information about what to do if you think you have an unenforceable debt, see Signing an agreement to borrow money.
Further help
- How to dispute a debt
- Signing an agreement to borrow money
- You signed an agreement to borrow money when you didn't want to
- Your rights when you borrow money
- Help with debt
- What happens when you're taken to court for money you owe
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.
