Northern Rock and arrears charges

Lisadp1970 · 4 November 2008 at 11:50AM

Hello

Northern Rock are still charging us £55 a month in arrears charges even though we are paying the full amount which was ordered by the court back on 6th October!
The agreement we came to was for us to pay £1028, which is the interest only and £72 a month towards the arrears, which is 10 months worth.
We paid this on the 28th Ocober, yet NR are still charging us £55 a month in arrears charges!

I spoke to some girl on the phone who said that under T&C's etc they were entitled to do so, I told her that I am damned if I'm going have £55 a month of money we are really stretched to find, go and line the banks fat cats pockets rather than help us out of the financial mess we're in!

The reason we are now unable to pay the full mortgage amount is due to the fact my husband lost his job at the start of the year,and is now in employment which pays a 1/3 of what he was earning before.
We can only just about manage the £1100 we agreed in court and selling is out of the question as the house is currently £30k in neg equity!

Apparently under the Mortgage Conduct of Business Rules, NR are obliged to deal with us fairly as to our financial situation and freeze arrears charges, as according to my calculations at this rate it will take 41 years to pay off our arrears!
Can anyone offer us advice on this please?

Thanks
Lisa

silvercar · 4 November 2008 at 12:04PM

The agreement we came to was for us to pay £1028, which is the interest only and £72 a month towards the arrears, which is 10 months worth.
We paid this on the 28th Ocober, yet NR are still charging us £55 a month in arrears charges!

They are still charging you £55 a month because you are still in arrears. Until all the arrears are paid off you are still in arrears. The court agreement specifies how you will clear those arrears, but until they are cleared you are still "in arrears".

Unless the court ordered NR to stop charging you an arrears charge, you are probably stuck with it. Though, if the repayments have been agreed in court I would have thought that you pay what the court said, there would be no obligation to pay an extra £55. Though it must be annoying that of the £72 arrears payment only £17 is clearing arrears theremainder is swallowed in charges.

The only advice I can offer is for you and your husband to look for better paid jobs.

BTW I don't think dealing with customers fairly includes not charging for arrears.

Lisadp1970 · 4 November 2008 at 12:15PM

How dare you say to me "Look for a better paid job"!!
My Husband was seeking work for 4 months after losing his job as an IT Contractor in the Investment Banking arena, he was earning £65K a year doing that.
As that type of work has dried up since the credit crisis he has basically taken what he can.
As for me I have a 4.5 year son who is Autistic and can only be cared for by myself, plus a 2 year old and a baby on the way so me finding "better paid work" is also out of the question.!

Also do not advise on the Mortgage Conduct rules unless you know anything about them.
I have been told by the National Debtline that banks are obliged to treat customers fairly and assess each of thir financial situations individually, those rules have been laid down by the FSA, what I want from people on this board is any help or words of wisdom from someone who has been in this situation themselve, not be preached to by those who know nothing of being in difficult situations!

opinions4u · 4 November 2008 at 12:27PM

I do find it ironic that a government owned bank, complying with the rules of a government appointed regulator can make a monthly charge for an account being in arrears when the customer is paying an agreed payment.

A charge for failing to comply with an agreement - yes (although £55 is surely disproportionate).

I strongly recommend that you write to them (Northern Rock), copying in the court, asking them to waive all these charges while you continue to pay the agreed amounts.

Possibly a crusade for Mr Lewis here?

silvercar · 4 November 2008 at 12:30PM

Just because you don't like what I said, doesn't make me wrong.

I didn't know in your opening post that you had an autistic son or that you were pregnant; in which case the advice to get a job is not appropriate. Check you are getting all the benefits that you should be entitled to.

have been told by the National Debtline that banks are obliged to treat customers fairly and assess each of thir financial situations individually, those rules have been laid down by the FSA

This doesn't mean that lenders can't charge for arrears. Even the bank charges on overdrafts etc is going through a lengthy court battle at the moment. Just because there is an obligation to treat customers fairly, doesn't mean no charges. If you believe that NR aren't treating you correctly, then follow their complaints procedure. If that doesn't get you anywhere get a letter of deadlock from them and complain to the FSA. They will then look at your case and decide.

what I want from people on this board is any help or words of wisdom from someone who has been in this situation themselve, not be preached to by those who know nothing of being in difficult situations!

What you actually want is people to agree with you. I wasn't preaching at you, just telling you how it is.

The bottom line is that I suspect you cannot afford the mortgage on your current income. If this is true, and if there is no prospect of more income in the future, then you need to think carefully and take professional advice on your next steps.

dunstonh · 4 November 2008 at 12:36PM

I have been told by the National Debtline that banks are obliged to treat customers fairly and assess each of thir financial situations individually, those rules have been laid down by the FSA

That is correct. However, it does not stop them adding admin charges. It helps reduce the chances of them repossessing.

what I want from people on this board is any help or words of wisdom from someone who has been in this situation themselve

There has only been very limited success in challenging these charges. Mainly as they are not packaged as penalty charges but admin charges. Therefore the justification rules dont apply in the same way that penalty charges have.

Lisadp1970 · 4 November 2008 at 12:51PM

Here are some figures for consideration

41yrs to clear the arrears at current rates in that time at £55p.m £27500 will have been added to the mortgage in charges. If that seems fair to anyone here then please lets hear it.

beecher · 4 November 2008 at 12:59PM

Lisadp1970 wrote: »

Here are some figures for consideration

41yrs to clear the arrears at current rates in that time at £55p.m £27500 will have been added to the mortgage in charges. If that seems fair to anyone here then please lets hear it.

Isn't the solution to pay more off of the arrears? Taking 41 years to pay off 10 months of arrears isn't really practical, and presumably at some point in the future you'll be able to pay more.

Sounds like you're in a difficult position and it must be really hard to go down to an average wage when you're used to so much money coming in. Have you posted a SOA on the Debt Wannabee Forum to see what you can get rid of - ie cars, satellite, mobiles? Then you can free up more money to get rid of the arrears

toonfish · 4 November 2008 at 1:01PM

you'd be better off going bankrupt - how else are you ever going to get it repaid?

Lisadp1970 · 4 November 2008 at 1:05PM

toonfish wrote: »

you'd be better off going bankrupt - how else are you ever going to get it repaid?

If we went bankrupt then we would clear off some other debts but we would have to allow the house to be repossessed and sold before it would help with that. There again I would need advice as to whether bankruptcy would write off a mortgage debt after repossession because it wouldn't while we are still living here.

lisyloo · 4 November 2008 at 1:08PM

If that seems fair to anyone here then please lets hear it.

Well you won't want to hear it.
You are a very risky borrower.
You husband has been making very good money, but it's seems there has been little contingency planning.
Not a lot in the way of savings or insurance has surfaced.
IT contrating is not the most secure career. I workin that industry and I know that if you contract you should put money by in the good times so that you can afford periods out of work. We see no evidence of this at all with big problems after a very short period of months.

I'm sorry you are stretched. I take no pleasure in your situation, but it appears you have taken on debts on the basis on an income that has proven to be unsustainable.

Those of us with sustainable incomes, fall back plans, insurance, savings, sensible family planning and contingency do not want to subsidise people who take risks like you.

You probably think that's really harsh, but you did ASK and I personally think there are some very valid reasons that you should pay a lot more than sensible folks, £55 per month for someone who might eventually go bankrupt and default does not seem like a lot to me.

If you don't want to hear the truth or opinions then don't ask.

The sensible IT contractors I know pay themselves a much lower income and then put by a reseve in case they are out of work for an extended period (I'm not talking a few months). If you had based your debts on that lower income then you would firstly have lower debts but also the contingency put by. 18 months would be a reasonable contingency fund for his job and debts based on a smaller salary.

There again I would need advice as to whether bankruptcy would write off a mortgage debt after repossession because it wouldn't while we are still living here.

Bankruptcy will wipe out all debts but there are some consequences that you need to understand so you need proper advice on this.
I don't understand the bit about "still living there".
You won't be still living there if you are either bankrupt or repossesed.

Northern Rock and arrears charges

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