Loan company's debt appeal fails

Tony and Michelle Meadows faced losing their Southport home

A couple whose £5,740 loan escalated to £384,000 have fought off an attempt by the loan company to enforce the debt.

The Court of Appeal dismissed a challenge by London North Securities to a county court ruling which wiped out Tony and Michelle Meadows' debt.

Three judges ruled the Merseyside couple's loan agreement could not be enforced under the Consumer Credit Act.

The court, sitting in London, said the amount of credit being advanced was wrongly stated.

But the judges declined to deal with other controversial aspects of the case - said to be of general concern to lending companies - including the county court judge's description of the agreement as "extortionate".

The Merseyside couple took out a home improvement loan at an annual interest rate of 34.9% in 1989 and ended up facing repossession of their home in Gosforth Road, Southport.

Debts cleared

If the couple had paid the instalments for the loan term of 15 years, it would have cost them £26,000.

But the Meadows, already in arrears on two prior mortgages, were unable to keep up the loan repayments.

The lenders argued that in 1989, the agreement was no different from any other non-status loan agreement.

Mr and Mrs Meadows had their debts cleared and the threat to their home lifted last October when a judge ruled that the credit agreement was unenforceable because of failures to comply with the Act.

For the first time in fifteen years we can actually plan a future Tony Meadows

Mr Meadows said on Wednesday he was "delighted" at the judge's decision.

"For the first time in fifteen years we can actually plan a future, we can plan what we're going to do without the Sword of Damacles, if I can put it that way, hanging over us," he said.

"So it's fantastic news. I'm still coming to terms with it. It's absolutely brilliant".

He urged others considering taking out a loan to seek advice first.

"Obviously read the small print and ask the questions that perhaps you don't think about at the time, and just make sure you know exactly what the consequences are should anything go wrong," he said.