A subprime lender has agreed not to repossess for at least six years the home of a man who fell into arrears in what is believed to be the first legally binding deal of its kind in the UK.

Blemain Finance, an arm of the Blemain Group, reached the agreement in a High Court case with Peter Bentley, a carpenter from Bridgend who had lost wages as he cared for his sick father.

The deal is the latest victory by aggressive personal claims companies that are taking on companies responsible for a spate of lending during the credit boom to households that are now struggling to repay. Personal insolvencies continue to rise, with almost 100,000 in the year to September.

Carl Wright, of Cartel Client Review, the Manchester-based personal claims company, which took Mr Bentley’s case, has been using a clause in the 1974 Consumer Credit Act to argue that many lenders have an “unfair relationship” with uninformed consumers, who often sign up for loans they can ill-afford and which carry heavy penalty charges.

Mr Bentley ran into financial difficulty in 2007 when his mother died and he became his father’s main carer. He was forced to cut his working hours and fell behind with mortgage repayments, so Blemain sought a court order to repossess his home. Under the agreement Blemain will stop charging interest on the £40,000 mortgage and cut monthly repayments from £549.61 to £150 until the capital is paid off. Mr Bentley will drop his countersuit for unfair lending.

Blemain said: “Upon receiving details of [his] changed circumstances we reviewed Mr Bentley’s case and in light of his particular situation we offered an alternative conditional payment arrangement in order to assist Mr Bentley and to allow him time to resolve his current financial difficulties. This alternative conditional arrangement was accepted in full ... on behalf of Mr Bentley.”