debt repayment and lender responsibilities

dazzammm · 16 January 2017 at 2:03PM

Hi,

im having an issue with a major bank regarding a debt repayment and im wondering if ive got case

First of all, my question is based on legal responiblity and not moral responsibility (i.e. moral responsibility of repaying the debt).

Ive got a few debts and I do all the admin myself (i.e. no debt management plan).

The above bank accepted my offer of repayment of £1 per month after i had been paying substantially more but had to redirect my funds to other debts. The problem is i forget to change the standing order so was still paying substantially more than the agreed amount.

anyway, 18 months have passed and i have overpaid close to £1000 over the agreed amount but they are refusing to give me the overpayment back (this is the legal vs moral argument).

If both parties have agreed to pay and accept £1 but I have actually paid substantially more does the bank have a LEGAL responsibility to only accept £1 (some of my creditors have rejected payments if it does match the agreed amount, even if I have paid more than the agreed amount).

one additional complication is the bank has now sold on the outstanding debt which is £1000 lower than it should be (due to the overpayment).

any LEGAL thoughts on whether i have a case to claim this overpayment back from the bank considering the bank and i agreed a smaller repayment amount ?

thanks

sourcrates · 16 January 2017 at 2:19PM

Hi,

Sorry, you have no case whatsoever.

You may of agreed £1 a month, but you didn`t exercise due diligence in changing the automatic payment amount, and unless you had a written agreement to this effect that you would repay the debt at £1 a month, you don`t have a legal leg to stand on unfortunately.

Anything agreed verbally has no meaning in law.

I realize this must be annoying to you, but as you didn`t notice for 18 months, you cant of been depending on that money for your day to day living expenses.

And when all is said and done, you did owe them the money.

LadyGnome · 16 January 2017 at 2:44PM

You can vary an agreement by course of dealing. So you agreed to pay £1 but you then paid a larger amount for 18 months. Consequently, the Bank is entitled to argue that you varied the agreement by your actions and established a new payment amount greater than £1. It may well had been different if you had noticed the overpayment much earlier e.g. after the first payment and asked for a refund at that stage.

dazzammm · 16 January 2017 at 3:14PM

sourcrates wrote: »

Hi,

Sorry, you have no case whatsoever.

You may of agreed £1 a month, but you didn`t exercise due diligence in changing the automatic payment amount, and unless you had a written agreement to this effect that you would repay the debt at £1 a month, you don`t have a legal leg to stand on unfortunately.

Anything agreed verbally has no meaning in law.

I realize this must be annoying to you, but as you didn`t notice for 18 months, you cant of been depending on that money for your day to day living expenses.

And when all is said and done, you did owe them the money.

it was in writing. my offer was in writing and their acceptance was in writing.

its a joint account so keeping track has been hard. my wife has been borrowing money from her mum which i didnt know so that money would have made a difference.

dazzammm · 16 January 2017 at 3:18PM

LadyGnome wrote: »

You can vary an agreement by course of dealing. So you agreed to pay £1 but you then paid a larger amount for 18 months. Consequently, the Bank is entitled to argue that you varied the agreement by your actions and established a new payment amount greater than £1. It may well had been different if you had noticed the overpayment much earlier e.g. after the first payment and asked for a refund at that stage.

i can understand if that is their argument but if that is the case why would other creditors reject any payment i made that differs from the agreed amount unless they had a legal reason to do so

sourcrates · 16 January 2017 at 3:43PM

dazzammm wrote: »

i can understand if that is their argument but if that is the case why would other creditors reject any payment i made that differs from the agreed amount unless they had a legal reason to do so

Ok,

That may make a difference then.

All you can do is exhaust there complaints procedure, and if they still dont agree, take the matter to the financial ombudsman service, who will decide your complaint on the balance of fairness to both sides.

If you have there agreement in writing that may change things for you.

January2015 · 16 January 2017 at 4:40PM

You might want to download and read The Lending Code (or at least the bits that relate to debt management plans).

Section 221 states:

The initial arrangements for repaying the debt should be in writing or other durable medium. This will not always betreated as a formal debt management plan, and there may be departures from this plan, if it is in the interests of subscribers and customers. There is no need for every small departure from the basic plan to be in writing (for example an agreement to accept a lower repayment for one week), but any amendments that change the fundamental nature of the plan should be in writing. If, at the subscriber’s discretion, the plan includes an agreement to accept smaller repayments, the subscriber should tell the customer whether this is regarded as ‘falling behind withrepayments’ and whether information will be passed to Credit Reference Agencies.

I've highlighted and underlined the bit that jumped out at me in this section. You may be able to argue that difference between the written and accepted offer of £1 and the amount you actually paid each month was an amendment of a fundamental nature and as such should have been agreed in writing.

I think the problem you may have is that you had already been paying the higher amount and never ever actually reduced to the £1 offer. The lender may potentially argue the £1 offer was seen as a 'small departure' (even though you put it in writing) from the agreed higher payment and as you never actually dropped to that amount and did manage to continue making higher payments for 18 months they believed this was affordable to you.

I must admit I have no idea of the 'right' or 'wrong' in this instance and the above is only my interpretation of one bit of legal documentation the financial institutions are supposed to adhere to (I say supposed to because we all know they don't always do what they are supposed to). I don't even have an idea of whether I think you are right or wrong. I changed my thoughts several times as I was reading your posts. Whatever, best of luck if you decide to try and argue your case:beer:

MrsTinks · 16 January 2017 at 5:21PM

I'm really not sure how much of a legal leg you have to stand here... writing or not then you asked to pay less, they agreed as per the conditions of your account which would have resulted in a default, but then you carried on paying? And you didn't notice for 18 months. One or two months I think would be different, but it may be interpreted that you didn't in fact have the issues you stated or you would have noticed?

Ultimately you still owe the debt, I'm trying to play devils advocate a little here, because I think you will struggle to get them to cough this up and if you push too hard then I would think the bank would be more inclined to push through for a CCJ which might not be what you want?

Also not sure whether an informal agreement to break the terms would over ride the contract terms in the event that you kept paying them... by all means complain, but just beware you might poke them into following a course of action you would rather not?

January2015 · 16 January 2017 at 6:06PM

MrsTinks wrote: »

I'm really not sure how much of a legal leg you have to stand here... writing or not then you asked to pay less, they agreed as per the conditions of your account which would have resulted in a default, but then you carried on paying? And you didn't notice for 18 months. One or two months I think would be different, but it may be interpreted that you didn't in fact have the issues you stated or you would have noticed?

Ultimately you still owe the debt, I'm trying to play devils advocate a little here, because I think you will struggle to get them to cough this up and if you push too hard then I would think the bank would be more inclined to push through for a CCJ which might not be what you want?

Also not sure whether an informal agreement to break the terms would over ride the contract terms in the event that you kept paying them... by all means complain, but just beware you might poke them into following a course of action you would rather not?

Mrs Tinks - brilliantly put

somuchindebt · 16 January 2017 at 6:39PM

I am not an expert but would think that bank agreed that you pay £1 as gesture of good will. They might have treated extra money as overpayments, say you thought you couldn't manage your normal payment plan so asked for £1 but then your situation has got better so you paid more that the minimum agreed?
If that was the case, you probably wouldn't have much of a legal stance but you could ask if they would be kind enough to refund the money as due to this mistake you have fallen on some priority bills etc?...

Sorry. another addition, all that said, you probably didn't fall behind with other bills as you would have noticed it earlier. And if you were able to pay that much bank would probably say that token payment wasn't really necessary. But you may have had a good reason and may genuinely need this money for some priorities...

dazzammm · 16 January 2017 at 7:40PM

January2015 wrote: »

You might want to download and read The Lending Code (or at least the bits that relate to debt management plans).

Section 221 states:
The initial arrangements for repaying the debt should be in writing or other durable medium. This will not always betreated as a formal debt management plan, and there may be departures from this plan, if it is in the interests of subscribers and customers. There is no need for every small departure from the basic plan to be in writing (for example an agreement to accept a lower repayment for one week), but any amendments that change the fundamental nature of the plan should be in writing. If, at the subscriber’s discretion, the plan includes an agreement to accept smaller repayments, the subscriber should tell the customer whether this is regarded as ‘falling behind withrepayments’ and whether information will be passed to Credit Reference Agencies.
I've highlighted and underlined the bit that jumped out at me in this section. You may be able to argue that difference between the written and accepted offer of £1 and the amount you actually paid each month was an amendment of a fundamental nature and as such should have been agreed in writing.

I think the problem you may have is that you had already been paying the higher amount and never ever actually reduced to the £1 offer. The lender may potentially argue the £1 offer was seen as a 'small departure' (even though you put it in writing) from the agreed higher payment and as you never actually dropped to that amount and did manage to continue making higher payments for 18 months they believed this was affordable to you.

I must admit I have no idea of the 'right' or 'wrong' in this instance and the above is only my interpretation of one bit of legal documentation the financial institutions are supposed to adhere to (I say supposed to because we all know they don't always do what they are supposed to). I don't even have an idea of whether I think you are right or wrong. I changed my thoughts several times as I was reading your posts. Whatever, best of luck if you decide to try and argue your case:beer:

i expected the lending code to saying something like that and I hoped to find someone knew it better than me. thanks

debt repayment and lender responsibilities

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