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Understanding the Discharge of Section 75 Agreement
When you enter into a credit agreement, such as a loan or a hire purchase agreement, you may be protected by the Consumer Credit Act 1974. One of the key provisions of this law is Section 75, which makes the creditor jointly and severally liable for any breach of contract or misrepresentation by the supplier. This means that if you have a claim against the supplier, you can also claim against the creditor, and vice versa. This can give you an extra layer of security when dealing with expensive or complex transactions, especially if the supplier is not a reliable or solvent entity.
However, there may be times when you want to end the Section 75 agreement, either because you have paid off the debt or because you no longer need the protection. In such cases, you can request a discharge of the Section 75 agreement, which will release the creditor from its liability but not affect your rights against the supplier. The process of discharging a Section 75 agreement can be straightforward or complicated, depending on various factors, such as the type of credit, the amount involved, and the terms of the contract.
Here are some key points to consider when dealing with the discharge of Section 75 agreement:
1. Check your credit agreement.
Before you apply for a discharge of Section 75 agreement, you need to review your credit agreement and make sure that it includes this provision. Not all credit agreements are covered by Section 75, and some may have specific exclusions or limitations. For example, Section 75 only applies to credit agreements between £100 and £30,000, and only if the supplier is based in the UK or the EU. If you are not sure whether your agreement has Section 75 protection, you can contact the creditor or seek legal advice.
2. Communicate with the creditor.
Once you have confirmed that your credit agreement has Section 75 protection, you need to inform the creditor that you want to discharge it. You can do this by writing a letter or an email to the creditor, stating your name, address, and account number, and explaining your reasons for the discharge. You may also need to provide some evidence of the debt payment or the end of the contract, such as a receipt, a statement, or a termination notice. The creditor may ask you for more information or documents, depending on their policy.
3. Await the response.
After you have sent the discharge request to the creditor, you need to wait for their response. The creditor has a legal duty to respond to your request within 28 days, either by accepting or rejecting it, or by asking for more time or information. If the creditor accepts your request, they will send you a discharge notice, which confirms that they are no longer liable under Section 75 but does not affect your rights against the supplier. If the creditor rejects your request, you can ask for a review or appeal, or seek legal advice.
4. Check your credit report.
Once you have received the discharge notice from the creditor, you need to check your credit report to make sure that it reflects the discharge. The discharge of Section 75 agreement should not affect your credit score or credit history, but it may take some time for the credit reference agencies to update your file. You should also keep a copy of the discharge notice for your records, in case you need to refer to it in the future.
In conclusion, the discharge of Section 75 agreement can be a useful tool for managing your credit agreements and protecting your consumer rights. However, it requires careful attention to the terms and procedures involved, and may not be applicable in all cases. If you are unsure about how to discharge your Section 75 agreement, or if you need legal advice on a dispute with the supplier or the creditor, you should seek the help of a qualified solicitor or an independent financial adviser.
