Author Topic: High Interest on Debt  (Read 1518 times)

namsie323

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High Interest on Debt
« on: May 24, 2011, 10:34:02 AM »
Hi,
 
Was hoping I could get some advice on a recent problem that I'm having 7 years ago I got myself into a lot of debt (£41k), I received some advice form my local CAB and went into a debt management plan over the past 7 years I have paid back all my debt and my estimated end date was jun 11, on contacting my debt mamnagment agency last week I was informed that I had another 4 years of payments as one of my loans with lloyds tsb had been accruing interest over the last 7 years and I still owed another £12,000, as you can imagine I was very shocked and angry >:( at the same time.  Had I been advised 7 yrs ago to take out an IVA I would have cleared all of this debt and wouldn't have any interest added, obviously Im not happy to pay the interest but I'm not sure what steps to take, I have however spoke to the Financial Obudsman to lodge a complaint, i'm very tempted next month to stop any more payments and try and sort this out but was hoping for some advice on where I stand with this.
 
Many Thanks

Debt Support Trust

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Re: High Interest on Debt
« Reply #1 on: May 24, 2011, 10:41:25 AM »
Hi namsie123,
 
Have you spoken to the debt management company to see why you were not informed of lloyds debt was still adding interest. This should have been pointed out to you
 
I think you are definatley doing the correct thing in going to Financial Ombudsman.
 
Andy
Qualified Debt Adviser
www.debtsupporttrust.org.uk

namsie323

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Re: High Interest on Debt
« Reply #2 on: May 24, 2011, 10:52:24 AM »
Hi Andy,
 
Ive spoken to my debt management company and they have given me no specific answers only that there is no guarantee that the interest is frozen, I was aware that LLyods were still charging interest and called payplan several times to inform them of this I was under the impression though that they would be talking to LLoyds TSB especially towards the end of this plan to get the interest taken off although I now understand this has not happened, I'm so annoyed as I thought I would now be able to move on with my life and work towards getting my credit rating back up, this has now put me at square one again, Im very tempted to stop paying next month and see what happens, its funny though as lloyds on more than one occasion have sent me letter saying if you pay us 3000 now we will write of the rest of your debt.
 
Thanks

James Falla

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Re: High Interest on Debt
« Reply #3 on: May 25, 2011, 04:42:36 PM »
Hi namsie323
 
You have found yourself in the same position as many other people who carry out debt management plans. There can never be any guarantee that interest will be frozen even with the non fee charging companies such as PayPlan and the CCCS. 
 
Unfortunately I do not think you will get very far with your complaint to the financial ombudsman as lloyds are perfectly entitled to continue adding interest to their accounts. However it can not hurt to try. Who are you lodging your complaint against? Ultimately, I do not advise you stop making your monhtly payments. If you stop then Lloyds will simply start their collection action against you once more.
 
The hard learned lesson here is if you are in a DMP (even a free service) you must keep an eye on the ongoing balances and keep re-calculating the affect of interest on the lenght of the repayment period. If it is not working for you, you can always then consider swapping to an alternative solution such as an IVA.
 
 
 
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shocksoc335

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Re: High Interest on Debt
« Reply #4 on: May 26, 2011, 08:05:26 AM »
I agree with James there is no simple answer here. Once you sign the terms and conditions of a credit agreement you are bound by its terms and conditions to include interest and charges.

Saying that, I would write to the creditor and point out that you feel they have been unreasonable provide them with proof that others creditors agreed to freeze interest and charges on the accounts whilst in a DMP.

Ask them to write the interest and charges off or to at least reduce the overall balance inform them that they should have adhered to the then banking code and had empathy and understanding for your financial position point out that you will escalate a complaint to the Financial Ombudsman Service.

Lloyds will not want more complaints and may although there is no guarantee at least meet you half way!

I hope so anyway!

regards
shocksoc335

Supporting 'Practical Debt Advice' by Elizabeth Mc

James Falla

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Re: High Interest on Debt
« Reply #5 on: May 26, 2011, 04:47:33 PM »
I guess its worth a try Shocksoc but I would not be holding my breath regarding getting a positive response from Lloyds. Please let us know how you get on namsie323.
 
By the way with refernce to Lloyds offering to settle the debt if you can pay a lump sum, this is not unusual. Lump sum settlements are a great way to pay off your debt much quicker if you can get your hands on some cash. If you are paying into a DMP for a long time, it is always worth trying to save some money from your living expenses each month to try and get a lump sum together which can be used o make lump sum settlements.
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