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Interest charged on defaulted account...


Idoru
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I've a notice of default for a student overdraft and having checked my statements obtained through dpa, I've been charged interest for about a year on the defaulted amount.

 

Is this legal or should it just be written off by the bank immediately?

 

original thread with more info : http://www.consumeractiongroup.co.uk/forum/royal-bank-scotland-bank/51848-idoru-bos.html#post425686

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Defaults are not imposed by the Courts, so interest can continue to be applied.

 

I'm a little cofused by this, if a contarct is defaulted, then surely it is not extant and all the terms and conitios applied to that contarct - including the application of interest - is no longer applicable.

 

Or have I got the wrong end of the stick.

 

Mike

If I've helped tip my scales

 

Blair Oliver & Scott, £2500 written off December 2006 Default removed January 2007:D

http://www.consumeractiongroup.co.uk/forum/general-debt/56001-mike220359-blair-oliver-scott.html

 

Monument, didn't sign the agreement

:D

 

Lloyds TSB didn't sign the agreement!

:D

 

Citicards, didn't sign the agreement

:D

 

RBS tut, tut!

:rolleyes:

 

Morgan Stanley, oh dear

:rolleyes:

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Mike, in some cases a default is applied to act as a warning to the borrower that they have to get the account into shape and to let potential lenders

know that the borrower may be having financial problems. However if the

borrower carries on making regular payments, despite having arrears, then

the lender would prefer that to having to sell the debt on. And in those

circumstances, interest would continue to be charged.

In other cases, a default may have been issued as a preliminary to selling on the debt as the lender has given up hope of a recovery. There is I believe

still some argument as to how much of the conditions of the original agreement passes on to the new owner-for instance whether they can charge

the same amount of interest as the original creditor.

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