Hi Susie, and good luck with this.

Depending on how high the charges are, this looks like the interest applied appears to be around 26%.  This is 2% so at this rate I'm afraid interest is currently being added at 2% per month or £340 interest charges per month.

The advice given of seeing Citizen's Advise, trying to get interest frozen etc., should certainly be taken.

Further points I have on this matter are:

- you should challenge all of the charges made, especially if they did not tell you at the time that they were adding those charges to your bill.  Offer to pay some of the undisputed charges provided they recalculate the interest so that no interest on the charges is included on your current figure.

- I'm also struck that when you agreed to pay the £30 per month, that no prediction of how this would affect you was given.  Even 10 years monthly interest on, say, £3k, was £60 - 2x the payment you were making.

- the long term effect on the balance of only paying 50% of the interest should have been obvious to the credit card company.  They supposedly have a duty of care to you and it would appear that this has not been exercised. This alone should be good grounds for removing all the interest from the date they failed to exercise their duty of care.

- even it they did warn you at the time that you were only paying 50% of the interest, and how quickly the debt would mount up, they, again exercising this duty of care, should have kept you frequently up to date with what the debt was so that you had the opportunity to pay a higher amount, or to refinance.

- I feel that further good news is that as you appear to have been paying the £30 each month for a while now, that you can now claim that this is an accepted payment to them; especially if they have not askd for a larger payment for some time.  Given that this is an accepted payment, they possibly have more to lose than you.  Even if interest was frozen now, at £30 per month it would take 47 years to repay the balance!  It appears therefore, that from a negotiating point of view, even if the above threats fail and you decide not to legal take them up, that you can make it clear that if the debt is not reconsidered, partly written off etc., that you will continue to pay the 'agreed' amount of £30 per month for the next 47 years.  If they reduce the debt then as a gesture of goodwill, you will pay a higher amount per month (assuming that this is possible).  They will be better off and you will be in a position of being able to clear the debt at some stage in the future.

Hi Susie, apologies for the slow response.

The first thing I would look to do is speak to your local Citizens Advice Bureau. What they will do is compile an income and expenditure form for you, detailing how much you can afford to pay each month. (Making the offer of £30 per month official). When they write to the lender on your behalf they will request that the interest is frozen. This will allow the full payment to come off the outstanding balance.

The CAB can also ask for the interest amount to be recalculated up to the period you agreed a reduced payment. This will be at the discretion of the lender.

Unfortunately, as the balance of the loan has been outstanding for 10 years the lender is entitled to charge you interest for the total time it takes for the balance to be cleared, though many lenders will freeze interest as a gesture of good will.

At the very least I expect that you can stop the balance increasing further, but i'm unsure that you can have the interest "refunded".

Once you receive your reply from Merit Finance please let me know of the outcome.

Good luck Susie.

 

 

There has been no response to my last message.

Hi Tim

 I believe we took this loan out in 1997, as I said my daughter was not 18, she is now 27. The Company is now called Merit Finance, but they were trading under a different name at the time. I'm sorry I'm can't remember what the APR was and unfortunately over time all documents relating to this have been lost or mislaid.....my daughter moving out.

So, really it is not a short period of time is it? 10yrs, but it does mean that on average the interest has been added at a rate of over a £1000 per year or thereabouts.

I have no problem in agreeing that we owe this Company money, but it just seems ludicrous that they keep adding interest all the time, so we are playing catch up and not very successfully.

I do have other debts, but these are all under control and payments are being made regularly.

It just seems a little unfair that this one loan is causing so much trouble.

Thanks

Hi Susie,

You do not look like an IVA case that's for sure. If this is the only debt that you have issue with, we need to just get this sorted. There is no way that your loan can have balooned to such an extent over a short time period.

Please can you tell me who the loan is with and what the APR was that you signed up to. How long ago did you make the arrangement with them? Did you do this formally?

Tim

Not sure if this is the correct place to be asking this question, but here goes.

Some years back my daughter took out a loan for £3000 to purchase a car, as she was not 18, I had to stand as guarantor for her, for quite some time payments were made on a regular basis, however she lost her jobs and suffered financially and was not able to make the full payments. I did for a while try to keep up the full payments, but being a single parent started to find this difficult and had to contact the Company and asked for reduced payments to be put in place. This they did. Over the last number of years I and my daughter have tried to keep up some payment to this Company and for the last 1 year or so have been making regular payments of £30 per month, which I do hope in the future will be able to increase.

 However, I have never received any financial statement from this Company and have since been told that with added interest because we have defaulted on this loan and also money added for phone calls made to us (some that have not been necessary), the debt now stands at over £15,000.....can this be right, is this legal.

I know that we have not kept up the agreed payments, but we did make this Company aware that we were suffering financial difficulties....this debt will not be paid off in my lifetime or even in my daughters, as each month they keep adding interest.

Please do not recommend an IVA, as I have no other problems apart from this one and obtaining an IVA will affect my being able to obtain any further credit.

Many thanks