Dilemma - what are the risks of each option?

[teru teru bozu]

Hi, I was just wondering if anyone could give me advice.

 

After getting into a temporary financial difficulty a few years ago HSBC put me onto a "managed loan" to pay off my graduate loan, overdraft and credit card, with £103 a month repayment. This wasn't an issue until a few months ago when, in between one job and another I had to temp for a few months which put me on a massively reduced income, which forced to stop repayments for about 6 months.

 

I am back in employment now and have restarted my 103 pounds a month repayments, however the bank is demanding the 600 pounds or so in arrears, and has indicated that my only option is to take out another managed loan to cover the current managed loan, some charges and the 600 in arrears. I was happy with this proposal provided the repayments do not rise too much. However in the process of applying for the new managed loan, my application got rejected. This is apparently because my income-expenditure form showed that out of my 280 pounds or so disposal income, I am currently making 100 pounds a month to a DCA, and

50 pounds for a credit card, both to whom I owe a lot less than HSBC.

 

They indicated that they are willing to give me a managed loan if i can find a way to increase my disposable income, by negotiate with the other creditors to reduce the amount of money i pay them to about 70 pounds and 30 pounds respectively.

I am reluctant to do this because:

 

DCA - I have already had a lot of trouble with this agency who have nearly taken me to court as i kept changing my repayments

depending on circumstances, and I am finally at a level where i pay them 100 a month and they leave me alone; and

 

Credit card - this is with the bank which I use for my current account on an everyday basis which is overdrawn, and I fear

that if I indicate to them that I am in difficulties they may withdraw the overdraft, which would completely finish me off.

 

The frustrating thing is that I have enough disposable income to even increase the payments to about 140. As this has got to the final demand phase if I do not get this arranged before the end of next week then the debt will be sold onto Metropolitan DCA which I would like to avoid, primarily because I do not want to cause any unnecessary concern to my housemates. I am tempted to phone HSBC to tell them that the other two creditors have agreed to a reduced payment (or to tell them that I will be making a reduced payment to the other two whether or not those two agree), and therefore in HSBC's eyes I will be eligible for the managed loan (even though I can afford to pay it anyway).

 

So my options are:

1) - to let it go through to Metropolitan

2) - to tell HSBC that the other two creditors have agreed a reduction

 

If anyone has any advice or words of warnings about the pros and cons of each option it will be much appreciated.

Thanks

[spamheed]

They are playing silly beggars

 

It is against the OFT guidelines to suggest you incur more debt to pay off your existing debt, ie take out a loan to help pay them back.

 

Eache creditor has an equal right to receive payments, but that payment will be based on what you cabn afford and not on how aggresively they persue you.

 

If this debt goes to a DCA, you can offer them a payment amount based on how much disposable income you have, eventually, should it go to court. The courts would allow you to repay your debt off by installments (as you already have shown you are willing to do so) these would also be based on your ability to pay.

 

A rule of thumb would be.

 

1. Don't incur more debt, regardless of what they tell you. it will be at a much higher rate than your existing debt.

 

2. Don't believe them when they threaten you with the end of the world - it simply wont happen

 

3. Insist on all communications in writing, they can and do tell lies on the phone, these can later be refuted. written documents are admissible in court.

 

4. Pay only what you can realistically afford, even if it means reducing the payments you are currently making to them. despite what they may tell you, you are allowed to have a life.

 

Hope this helps

[Docman]

I agree with spamhead, HSBC are being silly.

The problem with HSBC in particular is that they are run by computer - or so it seems. If the decision comes out of the 'computer' then it seems to be taken as from God and not altered in the face of commonsense.

I suggest you take control of the situation otherwise you won't get very far. You might like to write to HSBC and inform them that you will continue to pay £103 as under the agreement together with an additional £30 or so each month until the arrears are cleared.

If they default you and refer it to a DCA, continue to make the payments of £103 plus £30 directly to the bank and frankly ignore the DCA. If HSBC do take it to court, they will have to show why your proposal of £30 (which of course you will have continued to make) is not acceptable taking into consideration your income and expenditure and the size of the liability to HSBC.

[teru teru bozu]

Thanks, Spamheed. So would you suggest that getting this managed loan is a no-no, regardless of whether or not they would give it to me?

 

Also, I was just looking through some of the posts on this forum and it seems that if I dispute, in writing, the amount owed, then HSBC cannot take it further until this is resolved. Some of the debt is actually the result of bank charges - however I have not yet taken any steps to reclaim any of the charges. Would it be adviseable to attempt to dispute the amount owed, even though I have already taken out a managed loan with them which "paid off" the existing debt (so even if I could dispute my overdraft, this overdraft is gone and my debt now is for the managed loan), and also I only have a week left before the debt gets sold onto Metropolitan?

[42man]

If you are struggling and they are being unreasonable it is always a good idea to put the debt into dispute, having had one of these 'managed' loans - they don't actually MANAGE anything, it's just a title for a loan that makes you feel like it is in perfect control !! - I would request your statements for the last 6 years and start reclaiming your excessive charges + 8% compounded interest - so for example a penalty charge of £75 (which is a common penalty from HSBC ) back on January 1st 2003 would now be worth £106:55 to you !!!! there is a good interest calculator here... Bank Charges: Reclaim them, they’re unlawful, includes free template letters ...

 

The only other way of putting the debt into dispute at this stage is to request a copy of your consumer credit agreement as without a properly signed and executed agreement that had to have the prescribed terms a debt is unenforceable in a court of law. I usually only recommend doing this if the original creditor / debt collection agency starts becoming unreasonable (which HSBC seem to be at this stage - after all you can only pay what you can afford)

[42man]

Also be advised that HSBC will harrass you up to 10 times a day on your home/mobiles. The FOS are currently investigating my case as they have called me 168 times (the calls I know about since the beginning of this year) - and of the 50 or so I have answered 31 of those have been silent calls !!

[teru teru bozu]

Thanks. The thing is, I'm not actually struggling as I can happily afford to keep paying them the previously agreed 103 pounds, it's just that they want to hear that I have reduced my payments to the other two creditors before they let me take out another managed loan. Under my circumstance do you think it is wise to start disputing the debt at this late stage (and I don't know how easy it is to keep Metropolitan at bay with this argument once it gets passed onto them)?

[42man]

You can dispute a debt at any stage, as for Metropolitan they are the debt collection agency who are part of DG Solicitors who in turn are HSBC's in house team. Be warned Metropolitan are just as bad at telephone harrassment as HSBC !! If it was me in your shoes, I would certainly dispute it....do you have many excessive charges to claim back ?

[dilbert1]

My understanding is (and I'm sure someone will correct if I'm wrong), that once a debt is in dispute, no further action can be taken, which includes passing to a dca etc.

[42man]

Correct Dilbert, although this will be abused....

 

This is taken from the OFT's guidelines on debt collection...

 

DECEPTIVE AND/OR UNFAIR METHODS

 

2.8 - (k) -

not ceasing collection activity whilst investigating a reasonably queried or

disputed debt.

[teru teru bozu]

I'll have to look at my statements when I get home but if memory serves correct I been charged on many occasions - for a time almost every month, bank charges coming out of my account kept blowing my overdraft limit - but I have a feeling that each charge was about 12 pounds or so (I might be wrong) so I'm not sure if this falls under the definition of "excessive" charges...

 

Also would it be possible that, because I have previously allowed HSBC to force me to take out a managed loan before to pay off the overdraft / credit card / loan, I may have inadvertently lost my grounds for a dispute?

 

Thanks for all the help everyone, by the way!

[42man]

I'd be suprised if over the last 6 years that there would be some £35 and some £75 charges !!! just go through the statements and where it says CHARGES - they are yours !!! - as said before you can dispute a debt at any time....your managed loan makes no difference at all....just out of interest did you sign an agreement for the loan or did you just do it over the phone ?

[teru teru bozu]

Correct Dilbert, although this will be abused....

 

This is taken from the OFT's guidelines on debt collection...

 

DECEPTIVE AND/OR UNFAIR METHODS

 

2.8 - (k) -

not ceasing collection activity whilst investigating a reasonably queried or

disputed debt.

 

Thanks, that OFC guideline certainly looks like something worth quoting on my letter to stop it going to the DCA next week if I choose to go down this route. (Fortunately I have my statements already so I have time to send this letter). I'm not too concerned about the phone calls (I am thinking if I deny that it is me then they may leave me...or is that wishful thinking?) but what I would definitely like to avoid is have someone coming round to knock on my door and freaking out my housemates.

[teru teru bozu]

I'd be suprised if over the last 6 years that there would be some £35 and some £75 charges !!! just go through the statements and where it says CHARGES - they are yours !!! - as said before you can dispute a debt at any time....your managed loan makes no difference at all....just out of interest did you sign an agreement for the loan or did you just do it over the phone ?

 

I'll have to rummage through the paperwork when I get home. I just hope that if i had signed it I hadn't "acknowledged" the debt in any way, but either way I think this would be the route I will be taking, especially as I just realised right now that some of the debt may be due to PPI for a loan which I got while I was temping, so this would be worth a look as well.

[teru teru bozu]

After working through my statements I have calculated that my total bank charges are in excess of 800 pounds, and the debt also includes 700 or so pounds in a mis-sold PPI for a loan which was taken out when I only had temporary employment. This is only a small part of the total of about 10K I owe HSBC, so the dispute is only for the amount.

 

Would my next course of action be to reply to my final demand to dispute the amount of the debt, or to follow the standard template letters and ask for a refund of my charges? I have found out that, even though they have issued a final demand, they are still trying to take out 100 pounds a month from my (empty) HSBC account every month for my managed loan, and I don't know how to put a stop to this. I doubt it would fall under the "collection activity" as defined by the OFT guidelines.

 

If anyone has any suggestions on how I could approach this it'll be much appreciated...

 

Sorry if this is a trivial question - I am just wondering what people's opinions would be.

[teru teru bozu]

Also, I was wondering if there is a template letter for disputing the amount of the debt while asking them to hold collection activity while the debt is in dispute, at the same time?