Understanding Equal Liability in Credit Agreements
Understanding Equal Liability in Credit Agreements
When you enter into a credit agreement with another person – such as a joint loan or a shared credit card – both parties are usually considered to have "equal liability." This means each person is legally responsible for the full amount owed, not just their individual share. If payments are missed or there’s a problem with the goods or services purchased, the credit provider can pursue either or both parties for repayment or resolution.
Why Equal Liability Matters
Equal liability is important because it ensures that all parties to a credit agreement are treated fairly by the credit provider. If you share a loan or credit card, the lender cannot hold one person solely responsible while ignoring the other. Both individuals have the same rights to challenge unfair charges, request information, or make claims if something goes wrong. This protection is especially important if one party is unable or unwilling to pay, as the other can still seek support or redress from the credit provider.
Common Situations Involving Equal Liability
Equal liability most often arises in situations where two or more people apply for credit together. Examples include:
Joint loans: Both borrowers are responsible for repaying the entire loan, not just a half-share.
Shared credit cards: If you have a secondary cardholder, both may be liable for the balance, depending on the agreement.
Finance agreements: Couples or business partners often take out finance together, and both are accountable for meeting the terms.
If a dispute arises – such as a faulty product purchased with a joint credit card – either party can make a claim with the credit provider. It’s important to understand your rights so you can act promptly if issues occur.
The Legal Basis for Equal Liability in the UK
The principle of equal liability is set out in UK law, most notably under Section 75 of the Consumer Credit Act 1974. This law states that the credit provider is "jointly and severally liable" with the retailer or service provider for any breach of contract or misrepresentation. In simple terms, this means you can claim against the credit provider as well as the retailer if something goes wrong with your purchase, provided certain conditions are met.
Section 75 applies when:
The credit agreement is for £100–£30,000.
The goods or services were bought using credit (such as a credit card or certain types of loans).
There is a direct link between the credit provider, the borrower, and the supplier.
This protection is a powerful tool for consumers, as it gives you an extra avenue for resolving disputes and ensures both parties to the agreement can seek help if needed. For more detailed guidance, you can read about your rights under the Consumer Credit Act 1974.
If you need to write to your credit provider to make a claim or assert your rights, you may find it helpful to explore our range of credit-related letter templates, which cover various situations involving joint credit agreements and equal liability. These templates can help you communicate clearly and effectively with your lender.
When and Why to Make a Claim for Equal Liability
When and Why to Make a Claim for Equal Liability
If you’re sharing a credit agreement – such as a loan, credit card, or hire purchase – with another person, you are usually both “jointly and severally liable.” This means each person is legally responsible for the full amount of the debt, not just their share. However, situations can arise where you feel you are being unfairly asked to pay more than your fair share. Understanding when and why to make a claim for equal liability can help you protect your rights and manage your finances more fairly.
Common Scenarios Where Equal Liability May Apply
You might consider making a claim for equal liability if:
You’re being chased for the full debt: Even if you only spent half the money or benefited equally, the credit provider might pursue you alone for the whole amount if the other party is unable or unwilling to pay.
Breakdown in relationship: If you’ve separated from a partner or co-borrower, you may find yourself being asked to cover their share of the debt.
Disputes over responsibility: Sometimes, one party disputes that they should pay, or there’s confusion about who owes what.
In these situations, making a formal claim to your credit provider can help clarify your position and may lead to a fairer outcome.
Benefits of Making a Formal Claim
By writing to your credit provider to request equal liability, you:
Establish your position: Making your case in writing helps set out your understanding of the agreement and your expectations about how the debt should be divided.
Encourage fair treatment: A formal claim can prompt the credit provider to review how they’re pursuing the debt and, in some cases, negotiate a repayment plan that reflects each party’s responsibility.
Create a record: Having a written claim means there’s evidence of your efforts to resolve the issue, which is important if the dispute continues.
What to Expect After Making a Claim
Once you’ve sent your letter, the credit provider should acknowledge your claim and investigate your concerns. They may:
Review the terms of your agreement and your payment history.
Contact the other party to discuss their share of the debt.
Offer a revised repayment arrangement or provide a written explanation if they disagree with your claim.
If you are not satisfied with their response, you can escalate your complaint. The Financial Ombudsman Service provides independent help for consumers who are unable to resolve disputes with financial service providers. You can learn more about this process by visiting the How to complain – Financial Ombudsman service.
The Importance of Clear Communication and Record Keeping
When dealing with debt and liability issues, it’s essential to:
Communicate clearly: State your case in writing, using clear and respectful language.
Keep copies: Save all correspondence with your credit provider, including letters, emails, and notes from phone calls.
Document your payments: Keep records of all payments made towards the debt, showing who paid what and when.
These steps can help protect your interests, especially if the situation escalates or you need to involve an independent body like the Financial Ombudsman Service.
By understanding your rights and taking proactive steps, you can work towards a fair resolution and avoid being unfairly burdened with someone else’s debt.
How to Write a Letter to Claim Equal Liability from a Credit Provider
Writing a letter to claim equal liability from a credit provider is an important step if you believe you share responsibility for a debt with someone else – such as a joint account holder or guarantor. Here’s a clear, step-by-step guide to help you draft an effective letter and make sure your rights are protected.
Step 1: Gather the Key Details
Before you start writing, collect all relevant information about your account and the issue. This will help you present a clear and complete case to your credit provider. Make sure you have:
Your account number or reference number
Full names and contact details of everyone involved (including joint account holders)
Copies of relevant agreements or correspondence
Step 2: Structure Your Letter Clearly
A well-structured letter makes it easier for the credit provider to understand your request. Here’s what to include:
1. Your Details
Begin with your name, address, and contact information at the top of the letter. Include the date to create a clear record.
2. The Credit Provider’s Details
Add the name and address of the credit provider you’re writing to.
3. Account Details
Clearly state the account number or reference so they can identify your case quickly.
4. Explanation of the Issue
Briefly describe the situation. For example, you might write:
“I am writing regarding the above account, which I hold jointly with [name of other party]. I understand that under Section 75 of the Consumer Credit Act 1974, both parties are equally liable for the debt.”
If you’re being treated unfairly or only one person is being pursued for repayment, explain this clearly.
5. Request for Equal Treatment
Politely but firmly state what you want. For example:
“I request that any action or correspondence regarding this debt is addressed to both account holders equally, in recognition of our joint liability.”
6. Supporting Evidence
Mention any documents you’re enclosing, such as a copy of your credit agreement or previous letters.
7. Your Contact Details
Finish by providing the best way for the credit provider to contact you.
8. Sign Off
Use a polite closing, such as “Yours sincerely,” followed by your signature and printed name.
Step 3: Tone and Language
Be polite, clear, and firm. Avoid aggressive language, but make sure your request is unambiguous. If you are making a formal complaint, you may find it helpful to refer to Formal Complaint templates for guidance on tone and structure.
Step 4: Sending the Letter
Send your letter by recorded delivery or another tracked service. This provides proof that the credit provider received your request, which is important if you need to follow up later. Keep copies of everything you send, including any supporting documents and the delivery receipt.
Step 5: What Happens Next?
The credit provider should respond within a reasonable time – usually within 14 days. If you don’t receive a reply, or if your request is ignored, you may wish to escalate your complaint or seek further advice.
For more examples and ready-made templates, take a look at our other credit letter templates. These resources can help you save time and ensure you include all the necessary information.
Taking these steps will help you make a clear and effective claim for equal liability. Remember, the law – specifically the Consumer Credit Act 1974 – protects your rights when you share responsibility for credit agreements. If you need to make a formal complaint, Formal Complaint templates can guide you through the process and ensure your letter is professional and effective.
Template Letter for Equal Liability Claim
Template Letter for Equal Liability Claim
If you believe a credit provider should be equally responsible for a debt under Section 75 of the Consumer Credit Act 1974, you can use the template letter below to make your claim. This law protects consumers when they use a credit card or certain types of finance agreements for purchases between £100 and £30,000. It means the credit provider shares responsibility with the retailer if something goes wrong, such as if the goods are faulty or not delivered.
How to Use This Template
Replace the placeholders (shown in square brackets) with your personal and account details.
Be sure to include any relevant evidence, such as receipts, correspondence with the retailer, or proof of the problem.
Keep your language clear and polite. This helps your claim to be taken seriously and processed quickly.
Always keep a copy of your letter and any responses for your records.
[Your Name]
[Your Address]
[Postcode]
[Date]
Customer Service Department
[Credit Provider’s Name]
[Credit Provider’s Address]
[Postcode]
Dear Sir or Madam,
Re: Section 75 Claim – Equal Liability for [Description of Goods/Services]
Account Number: [Your Account Number]
I am writing to formally request that you accept equal liability for the issues I have experienced with my purchase, as set out under Section 75 of the Consumer Credit Act 1974.
On [date of purchase], I bought [describe the goods or services, including make/model/order number if applicable] from [retailer’s name] using my [credit card/credit agreement] with you. The total cost was £[amount].
Unfortunately, [briefly describe the problem – for example: the goods were faulty, the item was not delivered, or the service was not provided as agreed]. I have contacted the retailer on several occasions to resolve the matter, but [explain the outcome, e.g., they have not responded, refused a refund, or have not resolved the issue].
Under Section 75 of the Consumer Credit Act 1974, you are jointly and severally liable for any breach of contract or misrepresentation by the supplier. I am therefore requesting that you [state what you want: refund the amount paid, repair or replace the goods, or another suitable solution].
Please find enclosed copies of my purchase receipt, correspondence with the retailer, and any other relevant documents.
I look forward to your response within 14 days. If you need any more information, please let me know.
Yours faithfully,
[Your Name]
Practical Tips
Be as specific as possible about your purchase and the problem.
Attach copies (not originals) of all supporting documents.
If you do not receive a satisfactory response, you can escalate your complaint to the Financial Ombudsman Service.
This template is designed to help you clearly state your case and refer to your rights under the law. Taking a respectful and organised approach can increase your chances of a positive outcome.
What to Do After Sending Your Equal Liability Claim Letter
What to Do After Sending Your Equal Liability Claim Letter
Once you have sent your equal liability claim letter to your credit provider, it’s important to know what to expect next and how to protect your rights throughout the process. Here’s a step-by-step guide on what to do after you’ve made your claim.
Typical Responses from Credit Providers
After receiving your letter, most credit providers will acknowledge your claim within a few weeks. Under Section 75 of the Consumer Credit Act 1974, credit providers are jointly and severally liable with the supplier if you used your credit card (or certain other credit agreements) to purchase goods or services costing between £100 and £30,000. This means they may be responsible for resolving your claim if the supplier cannot or will not.
Credit providers may respond in several ways:
Accepting Your Claim: If the provider agrees that they are equally liable, they may offer a remedy such as a refund, repair, or replacement, depending on your situation.
Requesting More Information: The provider might ask for further details, such as receipts, contracts, or evidence of your attempts to resolve the issue with the supplier.
Rejecting the Claim: Sometimes, the provider may dispute their liability, often by arguing that Section 75 does not apply or that the circumstances do not meet the criteria.
If your credit provider accepts your claim, make sure you understand the terms of any offer and keep a record of all correspondence.
If You Don’t Receive a Response
Credit providers are expected to respond to complaints and claims within eight weeks. If you haven’t heard back after this time, it’s reasonable to send a follow-up letter or email. In your follow-up, reference your original letter, include any relevant account details, and politely request an update.
Be sure to keep copies of all your communications, including dates and the names of any staff you speak with. This will help if you need to escalate your complaint later.
Escalating the Issue
If your credit provider rejects your claim or fails to respond within eight weeks, you have several options:
Make a Formal Complaint: Most credit providers have a formal complaints procedure. Follow their process, making clear that you are unhappy with their handling of your equal liability claim.
Contact the Financial Ombudsman Service: If you’re not satisfied with the provider’s final response, or if eight weeks have passed with no resolution, you can escalate your complaint to the Financial Ombudsman Service (FOS). The FOS is an independent body that can investigate disputes between consumers and financial firms. They will review your case and can order the credit provider to take action if they find in your favour.
Seek Legal Advice: If your claim is complex or you’re unsure about your rights, consider seeking independent legal advice. Legal professionals can help you understand your options and support you if you decide to take further action.
Possible Outcomes
The outcome of your claim will depend on the specific circumstances and the evidence you provide. Here are some possible results:
Adjustment or Refund: If your claim is accepted, your credit provider may refund your payment, cancel the debt, or make other adjustments to your account.
Partial Settlement: Sometimes, the provider may offer a partial refund or other compromise.
Rejection or Dispute: If your provider disputes your claim, you may need to provide additional evidence or escalate the matter as described above.
Ongoing Investigation: In some cases, the provider or the Financial Ombudsman may need more time to investigate, especially if the case is complex.
Remember, you have rights under UK law to pursue an equal liability claim, and there are clear steps you can take if things do not go smoothly. Staying organised and following up promptly will help you achieve the best possible outcome.
Related Issues and Further Help
Related Issues and Further Help
Understanding equal liability with a credit provider is just one part of managing shared financial responsibilities. There are several related credit and debt issues you may face, especially when more than one person is involved in an agreement.
Shared Liability and Other Credit Issues
When you share a credit agreement, such as a loan or credit card, both parties are usually “jointly and severally liable.” This means each person can be held responsible for the full debt, not just their share. Problems can arise if one party cannot pay, so it’s important to know your rights and options.
If you feel the terms of a credit agreement are unfair or you change your mind before it starts, you may have the right to cancel. Find out more about how to cancel a credit agreement before it starts.
Another common issue is being charged a loan fee but never receiving the loan. If this happens, you can take steps towards getting a loan fee refunded.
Understanding Your Rights as an Unsecured Creditor
If you’re owed money but do not have security (like a property or car as collateral), you are considered an unsecured creditor. Knowing your rights is essential, especially if the person or company you lent to is facing insolvency. You can learn more about your rights as unsecured creditors and what steps to take if you need to be recognised on a creditor list.
For more detailed guidance, the Citizens Advice page on Unsecured Creditor explains what to do if you receive a letter about a debt and how court action might affect you.
Dealing with Debt Collectors and Bailiffs
If you fall behind on payments, debt collectors or bailiffs may become involved, especially for things like parking fines. Knowing your rights and the correct procedures can help reduce stress and prevent unfair treatment. Read our advice on dealing with debt collectors and bailiffs for parking fines for practical steps and important information.
Similarities with Joint Insurance Policies
Shared financial responsibilities aren’t limited to credit agreements. If you have insurance with someone else, such as a joint car or home policy, you are both responsible for the terms and payments. Issues can arise if one party cancels or fails to pay. To understand more about these situations and how they compare to joint credit, see our guide on joint insurance policies and shared responsibilities.
If you need tailored advice or are unsure of your next steps, consider seeking independent guidance. Understanding your rights and responsibilities is the first step in resolving shared credit issues and protecting your financial wellbeing.
