Extortionate credit bargains—CCA 1974 and CCA 2006
Extortionate credit bargains—CCA 1974 and CCA 2006

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Extortionate credit bargains—CCA 1974 and CCA 2006
  • Jurisdiction
  • Factors determining ‘extortionate’
  • Remedies
  • Equitable relief

Jurisdiction

Sections 137–140 of the Consumer Credit Act 1974 (CCA 1974) allow the court to reopen a credit agreement where the debtor is an individual and the agreement constitutes an extortionate credit bargain so that the court may then do justice between the parties. For these purposes, an individual includes a sole trader, a partnership and an unincorporated body of persons.

These provisions have been repealed by sections 19–22 of the Consumer Credit Act 2006 (CCA 2006) and replaced with CCA 2006, ss 140A–140D. The new provisions apply to all new credit agreements made on or after 6 April 2007 and also to pre-existing agreements as from 6 April 2008.

However, any agreement completed before the new provisions took effect remains subject to the original CCA 1974, ss 137–140. An agreement is ‘completed’ if there is no longer any sum which is or may become payable under it. The court has power to reopen a completed agreement for up to 12 years after the date of the agreement, as a claim upon a specialty within section 8 of the Limitation Act 1980. Consequently, the original provisions will remain relevant for some time to come.

The court may also reopen an extortionate credit bargain made before 6 April 2007 which had not become a completed agreement by 6 April 2008 if the debtor

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