Author Topic: mum debt  (Read 1146 times)

bramwec

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mum debt
« on: Jan 11, 2012, 08:54:01 PM »
Hi my mother is 75 and has recently had a bad fall leaving her in hospital for some time. As a result I have had to pay her bills were i have discovered that she had fallen behind with most of her bills. Also more worryingly she has ran up credit card debts to just over £6000. she receives only a pension and I have raised a complaint with the credit card company as to why in 2008 she was given a credit limit of £6100 when she wasn't working and had no additional income. She has been paying minimum balance each month for some time and they have been taking hefty interest charges (£60 plus etc) They have now frozen her account at my request and have said they will get back to me. The irresponsible lending department of lloyds tsb has responded to me to say that it isnt irresponsible lending as the card issued in feb 2008 was a replacement for a previous card that had a limit of £5100 when it was issued back in 2003 and that although I have requested card statements all the way back to 2003 they have stated  that due to the passage of time they are unable to obtain much information. I therefore cant see whether they have been milking her for interest for an extremely long period.I feel this is irresponsible lending as she has no way of paying this back and based on her pension should never have been given such a limit and this should have been reviewed. She owns her own home but it is in a poor state of repair and her bills total around £400 a month. Although I have paid all her utilities up to date
 the credit card company have refused even to freeze her debt.
Any advice on how to help my mother with this problem would be appreciated.

James Falla

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Re: mum debt
« Reply #1 on: Jan 13, 2012, 12:11:21 PM »
Hi Bramwec
 
I am sorry to hear about your Mother's situation. In terms of the legal question about irresponsible lending I suspect that you might struggle to win this arguement. If you want to press this it might be worth speaking to your local citizens advice.
 
The bottom line is to avoid a lot of hassle from the credit card companies you do need to find a solution to the outstanding debt. Because you Mother is a home owner this does affect the options open to her. Do you know whether there is any equity in the property? If there is little or no equity you could consider the option of bankrupty. I know this sounds radical but it would mean that your Mum would be debt free within a year and the house would almost certainly be safe. On the other hand if there is equity in the property you are probably best considering a debt management plan which would enable reduced payments and give a good chance of gettig future interest frozen. More information about both of these solutions can be found [** sorry, no personal contact invitations allowed **].
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bramwec

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Re: mum debt
« Reply #2 on: Jan 13, 2012, 08:08:28 PM »
 Hi James thanks for taking the time to reply. The bit I am really struggling to come to terms with is as to why if she was a pensioner and only had that as an income when she took out the card would they give her such a large credit limit. Surely this should be based on affordability to repay? She has clearly been making minimum payments for some time and paying as much in interest. She was clearly the ideal customer because she was paying the minimum just to keep up with the circle of debt with never any chance to escape the trap. She does own her own house and therefore has equity. The card company seem reluctant to even give a reduced full and final figure following my offer to pay the debt off for her even though they can see she would never be able to repay it herself and have refused to freeze the debt. It just seems that they want to squeeze her for as much as possible. Why is this not irresponsible lending ? My next step is ombudsman. But i recognise I need to try and deal with the debt while they investigate.

James Falla

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Re: mum debt
« Reply #3 on: Jan 17, 2012, 02:05:20 PM »
Hi there bramwec
 
The criteria used by banks and credit card companies when deciding what to lend to whom escapes me... :) The main problem is that generally banks do not spend enough time considering an individuals ability to repay. It seems that the decision has been more based on whether the individual has had a credit facility in the past and whether this has been well maintained. As you say clearly your Mother was an ideal customer..... I have long been saying that for banks to be more responsible lenders, they need to spend more time and effort with a credit applicant understanding their ability to repay going forward not simply their past history of repayments. Perhaps this is now starting to happen as we come out the otherside of the credit crunch years but we will see.....
 
In terms of the debt itself, I suggest the way to approach it is to actually start making reduced payments based on the amount your mother can afford. In this way the account will be passed to the collections department of the bank and they may well be more willing to reduce or freeze their ongoing interest charges.  After a few months of this you might then be able to do a deal with then to settle the debt with a lump sum.
 
 
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