Thread: Partnership overdraft problem

Not sure if this is posted in the right section, and apologies if it goes on a bit!

My problem dates back to the 1990’s and relates to a (then) partnership overdraft with Lloyds in respect of a property development (converting my late grandfather’s house into two flats).

No legal partnership agreement was signed between myself and the family member concerned (hereafter known as Mr T for the sake of brevity), and Lloyds offered an overdraft facility in the form of a letter, a copy of which was signed by us both (and which I still have a copy of).

Mr T was an existing business customer of Lloyds, which was why they were so keen to provide the original overdraft.

To cut a long story short, the recession and property crash of the early 1990’s left us unable to complete the property development, with the net result that the bank took possession of the property. A debt of around £48,000 accrued, a sum largely made up of interest and charges as the matter dragged on, although interest payments were frozen.

I should add that Lloyds exacerbated the problem in that a member of their staff refused to accept a very reasonable offer for one of the flats in 1991, instead forcing us to accept a much lower figure later that year. When I complained to them about this they replied that they “could not be held responsible for falling house prices”.

In November 1994 Lloyds sent a letter requesting immediate repayment, together with notification that they intended to sell my house as this had been used as security against a personal loan of £8,000 provided by Lloyds. I wrote to them detailing my income and expenditure, and heard nothing further from them until August 1995.

This letter came from the Debt Recovery Unit in Southend, and advised that the balance had been transferred to them under a new account number, and that full payment was required. I subsequently agreed to a payment of £50 per month, in exchange for which no further interest would be payable, an agreement which I understood Mr T also had.

I don’t have a problem with much of the above, and just put it down to experience.

However, in the meantime the account was moved to Brighton, and it came to light that Mr T was no longer paying anything towards the debt, and had in fact had his name removed from this account when it was moved to Southend in 1995, all without my knowledge as neither he nor Lloyds had bothered to tell me. Needless to say a family rift ensued which continues to this day.

I complained to Lloyds that they had failed to advised me of this, and in removing Mr T’s name from the account without my knowledge, they had effectively doubled what I owed them as they were no longer pursuing him. Lloyds eventually advised me that in 1995 they had decided not to pursue Mr T “for the foreseeable future” so he could concentrate on his other business liabilities to them (liabilities which I should add have been repaid to them).

As I understand it a bank cannot remove a party from a joint account without the authority of both partners, but in this case Lloyds went ahead and did it without ever seeking my authority or agreement.

I did speak to the CAB at the time and whilst they agreed that Lloyds were in the wrong, they did not know how to resolve matters.

I therefore reluctantly continued paying £50 per month until the latest recession hit, and having been unable to maintain payments, Lloyds have now passed matters to a DCA, again without advising me that they were intending to do so, and the DCA is needless to say threatening court action.

The debt has reduced over the years to £40,000, and whilst I do not dispute that I am liable for half of this, I need to know whether I have any recourse in view of the action of Lloyds which have placed me in an unfair position.