How to deal with "goodwill payments"

[photoman]

Bill-k.

I'm sure my reasoning is right, but await as much as yourself to see if this is correct method. If wrong then I await to see the proper reasoning and method?

If it is, then sorry for being a smart***e !!

 

Pondfish

I've never dealt with the Statutory sheets so don't know for certain, but don't see why not. Either just try it and see, or await Vamp and Bill-k to advise you.

[bill-k]

Just got this back from Vamp:-

 

It's simple. You have a duty to mitigate losses. Allocating to the earlier charges you reduce the interest applied if compound. Saying that, you can mitigate losses by allocating to the larger items if compound. Can't think at the moment, but not sure it really matters if you are doing simple interest. I want the spreadsheet done oldest first as clearing those could help avoid the 6 yr issue, and compound issue, so I just set a standard for my own spreadsheets.

Sent at 18:52 on Wednesday

 

me: OK - Thanks. It looks like a personal decision, then, apart from the duty of mitigation. At least mine won't be in the bin, yet, then !!

Thanks, I'll pass this on.

[bill-k]

Yes, Photoman, the mechanics of what you were telling us re: adding in a negative figure to the interest column sounds OK. It's this duty of mitigation that's at odds with the apparent reverse duty you have been quoted.

[bill-k]

BTW, Pondfish - if you can fill in a spready for statutory interest, you can do one for contractual. The difference is in the spreadsheet's built-in calculations, that's all. I'd certainly give it a try if I were you, as it can make a lot of difference.

[bill-k]

Sent at 19:04 on Wednesday

 

Vamp: You've hit the nail on the head.

BF was asking about the compound one only - because with the simple one you can just put a negative figure at the bottom. D'oh!!

 

Sent at 19:12 on Wednesday

 

me: Sorry - wasn't watching !! Thanks - I'll pass that on as well.

[TANZARELLI]

BTW, Pondfish - if you can fill in a spready for statutory interest, you can do one for contractual. The difference is in the spreadsheet's built-in calculations, that's all. I'd certainly give it a try if I were you, as it can make a lot of difference.

 

This may mean going back to prelim or LBA though if in previous correspondences it has been stated that the stat would be claimed.

 

Also would the way i have done it also be a fair way. I just divided the £750 over the total number of charges ie 25 in my case which gave a figure of 30 then took this of each charge to give me a new charge total. I left the interest the same as before as the way I see it they have still had my money for that period so i am entitled. I then re-calculated the daily rate from the new charges total doing the 0.00022 calc. Job done.

[TANZARELLI]

This was suggested by GaryH in http://www.consumeractiongroup.co.uk/forum/lloyds-bank/50966-tanzarelli-lloyds-tsb.html

 

Post #43

[bill-k]

It seems - and Vamp agrees - that it doesn't matter how you do it with simple interest (ie statutory) - but there are different effects of timing when applying this to compound interest. One the one hand, one can use it to remove earlier charges that may now have slipped out of the 6yr LA net, nut on the other, it seems one can simply deduct it from the most recent interest payments.

 

Yes, as Tanz says, if you have already started a claim with 8%, then you will have to re-start it with contractual.

[Michael Browne]

This was suggested by GaryH in Tanzarelli V's Lloyds TSB

 

 

The point is that in your case Lloyds paid the £750 after you had filed and you were therefore entitled to still claim s69 on the original amount, although I couldn't see why you couldn't just deduct £750 from the total claim.

Deducting equal amounts from every charge seemed unecessary and troublesome, particularly if you had say, 41 charges.

[TANZARELLI]

The point is that in your case Lloyds paid the £750 after you had filed and you were therefore entitled to still claim s69 on the original amount, although I couldn't see why you couldn't just deduct £750 from the total claim.

Deducting equal amounts from every charge seemed unecessary and troublesome, particularly if you had say, 41 charges.

 

Well 25 actually, and yes it was a bit of a headache, however was just acting on advice from one of your colleages. However you are right as I had filed before.

[TANZARELLI]

I think the point of all this discussion today has been to inform members of the way that is best to deal with these situations, as it has been shown that there are many different ways being suggested, yours being another (also what i was going to do at the start before asking for info on it).

 

I would hope that we could find one way and then all use it, to save confusion.

 

[Michael Browne]

Well 25 actually,

Yes I realised that, which divides neatly into £750.

41, 37 or whatever isn't quite so easy

I would hope that we could find one way and then all use it, to save confusion.

 

Me too.

[TANZARELLI]

Thanks for your comments Michael, glad we agree on the last bit.

 

I hope this has answered a few queries pondfish too.

[bill-k]

Had a look at GaryH's idea, and it's slowly dawning on me that the key to this must surely be the circumstances of the initial part-payment (whether £750 or whatever). If this was made prior to any claim being submitted for repayment of charges, then it would seem that in return, this should be taken off of the earliest charges which would have been part of the claim about to be submitted.

 

If, however, we have already prepared a schedule and submitted it as part of a claim, then they have missed that boat in effect. Our entire claim stands as it is, with daily interest accruing on the whole amount until it is settled in full. If they have paid £750 toward that amount, then good for them, but that is not full settlement of the claim submitted prior to that payment.

 

This to me seems both fair and simple, and that is what the court likes to see, methinks.

 

J (another of) MHO's !!

[photoman]

I see your point Bill, but surely your prelim and LBA's have already stated that you expect and are entitled to interest, regardless of whether or not you have got as far as filing a court claim.

The only circumstances that your first scenario could be deemed fair, is if the Bank had unilaterally without any prompting whatsoever, just sent you a payment?

This would involve them sending out pre-emptive payments to EVERY customer they have before they had even sent even a prelim ?

I strongly believe that any such payments should not be taken off the actual charges, as this just gives the Banks a tactic to massively reduce or even negate any further interest, by just paying off the capital, thus very little motivation to settle claims promptly.

At best, they could then just sit back and take an eternity to settle a claim, or at worst declare all or most of the amounts settled, and just contest or declare the interest is no longer applicable.

[photoman]

BTW. I think this discussion should maybe be moved to it's own thread?Perhaps you would care to start one? How about something along lines of:

"How to deal with partial payments" ?

[bill-k]

I see your point Bill, but surely your prelim and LBA's have already stated that you expect and are entitled to interest, regardless of whether or not you have got as far as filing a court claim.

Sorry - not clear enough, by submitting claim, I meant submitting it to the bank - ie., claim starting at prelim stage.

The only circumstances that your first scenario could be deemed fair, is if the Bank had unilaterally without any prompting whatsoever, just sent you a payment? Agreed.

This would involve them sending out pre-emptive payments to EVERY customer they have before they had even sent even a prelim ?

- it appeared that Lloyds had been doing this with some of the £750 payouts.

I strongly believe that any such payments should not be taken off the actual charges, as this just gives the Banks a tactic to massively reduce or even negate any further interest, by just paying off the capital, thus very little motivation to settle claims promptly.

Also agree - I think. The method I have used here is to work through each charge in turn, from the first charge. In each case, both the charge and accrued interest to date of payment are progressively cancelled until all of the payment has been used up in this exercise. That is what I was doing on that spready for Vamp. So, if say we got a £750 payment on 01/01/07, and the total of charges +interest on the first 6 lines of our spready came to £720, then we completely cancel those as having been settled fully on 01/01/07. The remaining £30 is then taken from the total due on the next line up, and interest continues to be added to the remainder.

At best, they could then just sit back and take an eternity to settle a claim, or at worst declare all or most of the amounts settled, and just contest or declare the interest is no longer applicable.

Not if my above comment stands, I think.

BTW. I think this discussion should maybe be moved to it's own thread?Perhaps you would care to start one? How about something along lines of:

"How to deal with partial payments" ?

This is Pondfish's thread, and this question of the £750 payment goes back over 50 posts !!! I think re-naming this thread might be more appropriate !!!

Your call Pondfish !!

[photoman]

Okay. Yes agree with what your saying particularly in line with the comments about us having a duty to mitigate the debt, and be seen to be reasonable.

For this to be done properly, I think the order that the payment is aportioned should be earliest interest first then the charge it relates to, then the next portion of interest, and then it's related charge. Not charges first then interest.

This may seem like splitting hairs, but could be quite crucial when we come to dealing with claims prior to 6 years ! In some of these cases the interest could be greater than £750, so that must be worked off first, before it's relevant charge.

For example.

Say the interest on the oldest charge is £850, and they pay you £750, this then leaves a £100 interest liability, which would still be subject to compounded interest on that interest to present date.

I think, if you are doing a spreadsheet regards this, it could even warrant a couple of additional columns entitled "payment attributed" and "date payment recieved" or something such like. This would be then linked into the original interest on charges calculation, (and would maybe need also need some date reference in the calculation), and the interest on the interest calculation, if you see what I mean ?

[bill-k]

Okay. Yes agree with what your saying particularly in line with the comments about us having a duty to mitigate the debt, and be seen to be reasonable.

For this to be done properly, I think the order that the payment is aportioned should be earliest interest first then the charge it relates to, then the next portion of interest, and then it's related charge. Not charges first then interest.

Agreed - it does make a difference.

This may seem like splitting hairs, but could be quite crucial when we come to dealing with claims prior to 6 years ! In some of these cases the interest could be greater than £750, so that must be worked off first, before it's relevant charge.

For example.

Say the interest on the oldest charge is £850, and they pay you £750, this then leaves a £100 interest liability, which would still be subject to compounded interest on that interest to present date.

I think, if you are doing a spreadsheet regards this, it could even warrant a couple of additional columns entitled "payment attributed" and "date payment recieved" or something such like. This would be then linked into the original interest on charges calculation, (and would maybe need also need some date reference in the calculation), and the interest on the interest calculation, if you see what I mean ?

The spread I have been working on "freezes" at the moment in time the payment was made. The combined total of charge + interest is all down one column. Working from the top, the £750 is used to "zero" each line until there is,say, £30 left. The last £30 is simply deducted from the next line down. Remember, these are combined totals, so it can be charge or interest that has been reduced here.

So, at this point, a total claim value of,say, £2,000.00 has now become £1,250.00, and we re-start the interest clock from here, continuing to add compound interest to these combined totals up to today's date. The first few lines have now been cleared, and there is one line that has been reduced. The remainder are unaffected. I could post a temp. link here to download this spread if you fancy a closer look - it's still untested so I can't recommend it for use, yet.

[photoman]

Bill,

Thanks for all your hard work on this, and I've enjoyed the debate.

I think I have a fair understanding of the principles and proper fair procedures, but I am however a bit out of my depth regards the actual mechanics of how to implement it.

To some extent also, I think we may also be doing the Banks work for them here, and could not be faulted as a layperson litigant in person for simply adding a payment against account entry on our original google sheet as per my original suggestion.........who knows, this may even be the right way?

In short, what I am saying here is that I await your better judgement on the correct mechanical procedure to implement what we have agreed upon.

In the meantime, until a protocol is set and widely known, and as these payments now seem to be a regular occurance, people really need to know how to deal with them now?

Perhaps advise anyone recieving any interim payments to simply deduct them from the total claim to date, but keep the interest clock running on the balance??

 

BTW. I think you may find peeps like Mindzai and Lucid could have some useful input or suggstions?

[Pondfish]

Bill-K , Photoman , Tanz , Micheal Browne

 

I am happy to have this discussion on this thread, i have been really interested in the comments todate. However, i think as Tanz mentioned, that a standard approach to this tactic needs to be developed and integrated in to the various spreadies offered to prevent future endless discussion throughout the site. It would be good to have a cells where any payments offered could be entered with the date recieved.

If you all feel a new thread would serve this discussion better then i'm OK with that, but could someone post me a link so i can continue to watch the discussion?

Are other banks paying part settlements in the way Lloyds are?

Is this tactic an attempt to reduce interest liability on larger claims?

[bill-k]

Thanks for that Pondfish. You can have your thread back now !!

Yes, P'M, this question of Personal Litigants being more precise than they have to came up before, when I mentioned that employing APR/AER rates to calculate contractual interest is incorrect. Indeed, why should we work unnecessarily to our detriment. A reasonably intelligent and earnest attempt to get it right should suffice, and if the bank objects, then we are taking it to the very place to voice that objection in !!! The principle "K.I.S.S." would seem appropriate here.

 

Yes, good point, I'll have words with the dynamic duo M&L. Their spready is well-respected.

[TANZARELLI]

Thanks folks, and a big thanks to you pondfish for allowing this debate to happen on your thread. I hope you have found it useful, I know I have.

 

Tanz

[photoman]

Think this could be useful in discussing how to apportion any Goodwill payments recieved against outstanding claims.

[Pondfish]

Well i did invite some discussion didn't i?

 

Certainly got it