The debate rumbles on about these ‘ambulance-chasing’ companies that say they might be able to wipe off your credit card debt…for a fee (i.e. between £200-600 just to look at your debt!).

On LBC last week we had a guy on who had actually had had his debt wiped off in this way (he was one of the 0.00001% of applicants that actually get anywhere with these). He said he had tried to negotiate with his credit card company and they just wouldn’t listen so he was pleased to have got his money back in this way.

Fair enough if he tried the straight way first, but generally speaking there are really good reasons why this whole idea is a very bad one for everyone involved:

- Even if you are one of the TINY minority that has managed to get your debt wiped off it is going to harm your credit record. James Jones of Experian (which do CreditExpert that you can get for 30 days for free) says that if you have paid anything towards your debt then you are deemed to have accepted that this is your debt. Therefore, even if you get out of paying it back due to a legal loophole it will still stay on your credit report and it will be there as a DEFAULT. That default notice will be there for six whole years, making it difficult and expensive for you to get credit.

- Now that some of these cases have been referred to the High Court in London as test cases the whole thing is effectively on hold and will be for a few years. Any applications made now will have to wait until a judgement is made on these test cases. That’s years!

- These ambulance-chasing companies are supposed to be regulated by the Ministry of Justice but many of them aren’t. The Ministry is currently tracking down the unregulated ones and closing them down and it’s possible that one you have contacted is unregulated and, therefore, about to be closed down, taking your money with them!

- The rest of us will suffer because of people getting their debt discharged in this way. Don’t imagine that credit companies will take this lying down. If they do end up losing money in significant amounts then they will up the charges for all other consumers – we’ll end up paying.

So, when you hear those annoying radio ads saying you could have your debt wiped off due to a legal loophole, just ignore them. If enough of us blank them then they should go away!