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Final Demand Joint Loan Account following Bankruptcy

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Hello, I was recommended to post on this site and time is also not on my side! I appreciate any input and advice, thank you :)


a) I went insolvent in September

- since the date,

I went to the HSBC branch with my wife to remove my name from the joint account and sign over responsibility to my wife as a sole account holder (including overdraft £900 and joint consolidation loan £326p/m on 18k).


She did IE sheets and was telephoned across, approved, and we signed.

The joint loan was part of my bankruptcy

I understood it that my wife would take responsibility of that, hence going to branch and doing this.


b) Since then, she was issued a final demand notice out of the blue, claiming default on arrears (there are no arrears, never have been) and 18 days to settle balance in full (£18k). No mention of any BR, just a final demand which is inaccurate in it's detail for the reasoning - and as it transpires, resolving it.


c) 3 days of calls, and about 5 hours of speaking and on hold between departments because nobody seemed to know what was going on,

we were told by the Financial Guidance Team to do nothing,

let it ride out as they needed to charge off the account because of my bankruptcy

- they'd even refund the latest payment which was automatically made after this demand letter.

But doing this, of course would result in a default marker for my wife.

and the recovery department would be in touch to collect the debt.


Not knowing who to believe,

I was passed to the 'insolvency team' who told us that my wife must get back in touch with the Financial Guidance Team,

do a I/E and set up a repayment agreement BEFORE the 18 days.


Needing clarity, and being frustrated at being told different things between departments

(as well as being emotionally crushed, not to mention the psychological damage of listening to that HSBC hold music),

we went to branch to have someone work with us to resolve.


She made a call to the department on the final demand letter,

who also said - get in touch with the Financial Guidance Team to do an I/E and set up a payment plan,

if she does that then the default will not be passed to the CRAs.

She put us in a room to make a call to the Financial Guidance Team,

but then the whole fiasco started again...


d) The Financial Guidance Team are adamant that they will not allow a payment plan.

One guy we dealt with even went through a I/E with my wife but then came back after speaking to his manager, sorry, actually, that this isn't possible.


I have spoken to the Manager who also insisted that it simply is not possible to set up a plan because of my bankruptcy, the account needs to be charged off. Period.

I have argued that this goes against the terms of the loan in that she has not had the opportunity (actually denied!) to resolve this and she is being forced into default unfairly.


The original contract has a clause about calling in the loan if bankruptcy happens to any party,

but there is a line also that states that such action won't happen without notice and an opportunity to resolve,

which is what I believe is being blatantly breached here.


The manager raised a complaint for me

- I have the reference number and intend to follow this up with my version not knowing what the complaint that he has raised references.


Even after I spoke to the manager (who I suspected had either got this very wrong or has is own agenda),

I asked to get put through again to the insolvency team again,

who again stated the same - 'speak to the Financial Guidance Team' and get it sorted before the 18-days! Stalemate.


My final call with the Financial Guidance Team yesterday,

I spoke to a very nice woman who looked into everything and took it upon herself to speak between departments, not me, and get back to me.


Her news: anyone who has told me that you could set up a payment plan is incorrect and has probably not understood that the final demand was generated because of my insolvency (even though the final demand says nothing of the sort - it even gives a reason it has been sent which is due to previous notice of arrears [not true])..


. the insolvency team I was repeatedly passed to was the 'wrong one' based in India, not in Birmingham...

and apologies for the mix up but 100% we cannot set up a payment plan,

the account needs to be charged off and your wife will have to speak to the recoveries people after.


e) So what now!!?


For our efforts, we are totally unable to resolve this through a payment plan, it's 18K or default.


I have a complain reference number.


They say that expect about 4 weeks for a reply to the complaint but maybe up to 8.

I understand that I cannot do anything with the Financial Ombudsman until I have a reply (or 8 weeks).


To recap

- my issue is that my wife is being forced unfairly into default with every effort and the ability to repay with amounts of the original agreement.

a black mark on her credit reference with a default.

Plus, we have no idea even if there is no escape from this situation,

what demands will be placed by the recovery department (i.e. currently the loan is 60 months at £326 p/m).

But then, if my wife has a black mark anyway,

what options are there for her to make a reduced offer or anything of that nature?

We're in territory that we didn't expect and don't really understand.


Perhaps naively, we expected the burden of the joint loan to simply fall on my wife, not being called in with a £18k demand.


I'm also unsure what to do in the interim

- if I'm raising a complaint, do we get any period of grace here

- do we commit to whatever collections dept gets in touch after, or hold them off?


Any help is very very very appreciated - our 18 days is up on 3rd Nov, and we've wasted a week speaking to them on the phone and getting absolutely nowhere!


Thank you :)

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The loan should simply continue as before with your wife making monthly payments, there should be no question of "setting up a repayment plan". The shocker is HSBC refunding the latest payment putting her into default. Hopefully someone will be along soon to help, in meantime her credit file will be affected by financial association with you.

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  • 4 weeks later...

Any feedback/input on this would still be most welcome. The only update is that HSBC today replied to MY complaint, essentially confirming that that they're following protocol by closing the loan account with a final demand and it going to default for my wife. Thanks :)

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Bankruptcy on a joint debt.

You have forcibly changed the original contract with the bank and the bank can and do ask for the amount to be paid in full. Its a breach of contract. 2 people liable, now the contract is changed without their permission. = loan reacalled.

Whoever set up your bankruptcy should of explained this too you.

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The contract being breached as I understood it should result in a default notice - and the breach being remedied by my wife with a continuation of payments as per the contract of our loan that clearly states in a situation of Bankruptcy (amongst other situations) that 1) advanced notice should be given and 2) opportunity to fix. i.e. a breach can be remedied by either party (obviously not me).


This went straight to final demand - and that letter mentioned nothing of the bankruptcy and contained wrong information about arrears not being dealt despite previous letters (which totally isn't the case). And if the loan is to be recalled, I don't get why HSBC are continuing to take monthly payments (2 now)?


I have had so many people in the 'know' tell me that my wife should simply continue.


Quote from another forum:

"As clearly your wife cannot pay in full, then she needs to continue to pay the contractual payments on time and needs to take the complaint forward.

If what HSBC are saying were true, we would have seen it on this forum many times - and in my job role my 14 debt adviser colleagues and myself would have seen it also - but never have...I believe that they should have issued a default notice."


Does your experience sgtbush tell you otherwise?

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