Taking loan payments when told I couldn't pay

[bobhawkes]

First came the divorce and all the costs of setting up a new home, suporting my ex for a while (I'm a good guy, really), paying for the kids.... The bank came to the rescue, great! Then came unemployment. I contacted all creditors and explained the situation, Most were willing to suspend interest and accept token payments, except my bank who refused outright to reduce the interest and suggested a reduced repayment that was quite clearly not within my means based on the information I had given them which could be easily verified.

 

Realising that if the regular loan repayment went out of my current account there would not be enough left to live on I tried to stop the standing order. Impossible. The bank continued to make transfers from my current account to the loan account for several months.

 

My question - is this legal? In effect transferring the debt from a low interest loan account to the punitive interest rates of an now overdrawn current account when they had been advised of the situtation? Why should they be able to pay themselves when, had the standing order been to anyone else, they would have to stop it on my instructions?

 

Isn't there a legal requiremet for the bank to minimise its loss resulting from the breach of contract and have they failed to do this? Not to mention their obligations under the Banking Code.

 

The annoying and quite alarming thing is that until the matter was passed to a collection agancy I didn't seem to be talking to anyone who was listening or able to make a decision - just call centre staff reading instructions from the screen. Even then I didn't get to talk to the real decision makers.

 

Of course as the loan repayments continued to be taken there was not enough to pay the direct debits... And the PPI on the loan didn't apply to me even though I had been charged for it in full at day one (not made clear).

 

I'm about to settle the debt but no more than I have to. Advice would be appreciated.

 

Thanks.

[seylectric]

I'm not the expert on here, but one thing concerns me - why was it impossible to stop the standing order? That doesn't sound right to me, I could be wrong but I'm pretty sure the bank can't legally overrule your instructions to stop a standing order.

[bobhawkes]

I susupect the bank see this as an internal transfer and would claim that this is different to an order to pay a third party.

 

After they refused to change the payment when I phoned I tried to stop the transfer via the internet. It went through as if the transfer was cancelled but the next day it was back and still active.

 

The important point is that if the bank are told that there are insufficient funds and asked to take approriate action they surely have a legal obligation to mimimise their loss arising from the breech of contract.

[lookinforinfo]

If you look at your situation from the banks point of view, whether they

pay the loan transfer or not, you will still get clumped £35 or so. It does not change the amount you owe the bank and they won't have to register a loan default on your credit report. And after reading one of Bankfodders postings, I get the impression that it is more serious from a legal standpoint to miss a loan payment than to exceed an overdraft facility.

 

I know it was a horrible situation for you to be in, and I appreciate that to get your current account back in the black, or a nicer shade of red [ie

within the overdraft limit] becomes doubly difficult.

 

At least your loan was coming down and I suppose that for a bank to list that you had missed a loan payment would be a tremendous black mark

against you. Small comfort.

 

I suppose they do it because we so rarely move our accounts to another bank, that they do not feel they have a duty to offer a service. For

instance, some time ago I needed an unexpected repair to my car, and

my salary was not due in the bank for another couple of days. I asked

my garage [where I was a regular customer] if they could hold my cheque for a couple of days-which they did without charge.Contrast that

with my bank who I have banked with for considerably longer than I have dealt with the garage.I qsked them to delay payment of a standing order for two days.They refused and said they would charge me £25 I think if

there were insufficient funds. I cancelled the standing order and reinstated it two days later. But look at the difference in attitude between the two businesses.

[bobhawkes]

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