Quick Query re Loan etc

[richthegill]

Hola. My Aunt is owed thousands in bank charges but won't reclaim them as she has a loan as well. She was told that if she was successful with the charges she will have to pay off her loan in full, which is more than the total charges.

Now I have told her they cannot do this, but she won't budge. Am I correct?? They wouldn't do that would they.

[sallysas]

My understanding is that any money you successfully claim back is legitimately offset against other debts owing to that bank. Whatever the outcome your aunt will owe less, so she still wins. I went for statutory with my first claims but I am now going for compound contractual as I feel more experienced. It's all good. Hope this helps. Sally

[hagenuk]

There will not normally be any reason for the bank to call in a loan just because you make a bank charges claim against them.

Is the loan in arrears?

If it is not then it would be a breach of contract for the bank to call it in early. The rule of Set Off referred to above only applies to debts that are already due or overdue, if the loan payments are up to date then there is a contractually prescribed and agreed repayment schedule in place and the bank will not have any legal recourse to demand repayment early.

[sallysas]

A little knowledge is a dangerous thing (where I am concerned anyway). Sorry about that. Sally

[hagenuk]

Originally Posted by sallysas

A little knowledge is a dangerous thing (where I am concerned anyway). Sorry about that. Sally

You did fine, it was not entirely incorrect as in many cases credit card debts (if overdure) and overdrafs can be called in as the banks exercise their right of Set Off, loans and other financial arrangements however are different.

Look here for more details.

banking: firms' right of 'set off'

Certain conditions must be met before the firm can exercise its right of ‘set off’.

The account from which the firm transfers funds must be held by the customer who owes the firm money.

The account from which the firm transfers the money – and the account from which the money would otherwise have come – must both be held with the same firm.

The account from which the firm transfers funds – and the account from which the money would otherwise have come – must both be held in the same capacity by the customer concerned. So, for example, if Mrs C holds a savings account in her capacity as treasurer of a local society, the firm cannot take money from that account to pay Mrs C’s personal credit card bill that she normally pays from the current account she holds in a personal capacity.

The debt must be due and payable. For example, if a customer misses making a loan payment, then (at least until it calls in the loan) the firm can take only the missed payment – not the balance of the loan.