On a DMP and want to treat one creditor differently...?

MyLastFiver

This gets a bit complicated - please try and persevere!

I'm on a DMP (so far so good) but to cut a long story short, I cannot get any sense out of HSBC, with whom I have an overdraft and a loan.

Putting aside all manner of other stuff, basically the problem is: My HSBC current account (which I no longer use) has a standing order to make the monthly payment to the HSBC loan. I am unable to cancel this SO through internet banking (presumably because it's in the favour of another HSBC account).

Once I stopped paying my salary into the CA, the account went over the overdraft limit and the SO payments to the loan were being returned unpaid. But the DMP was in place so they were getting the same as all of my other creditors.

HSBC were utter, utter retards about the whole DMP thing but I haven't heard from them for a few months, which is good. Now I've found out why. They have simply increased my overdraft limit (from £500 to £2000) which means 1. My current account isn't in default any more and 2. The SO payments to the loan are being honoured so that isn't in default any more either.

Following me so far? If not go back and reread

This is a nice accounting trick by HSBC to get my accounts off their "bad debt" books and back into order. The problem is that, even though the loan balance is falling, the overdraft balance is rising. I got a moronic collections call from them yesterday, and another today, because I am supposed to make monthly credits to my current account.

Other relevant facts:

1. Interest on the loan is "pre-loaded" so by making monthly contracted or DMP payments I'm not being forgiven any interest.

2. Despite my written requests HSBC are continuing to charge interest at full rate on my overdraft.

3. All my other creditors have stopped interest.

Now here's the dilemma:

Despite the DMP I do have some spare money every month which I was saving in order to eventually repay everything on the DMP. What I would like to do is use this to 1. Make the required credits to the current account and 2. Repay the loan early.

Why?

1. HSBC is the only creditor with whom I had problems when setting up the DMP. They refused to deal with Payplan, refused to stop interest, their autodialler called on the hour (often silent calls) and they were completely intolerable. I'd rather avoid that happening again, and so would my wife.

2. By repaying the loan early they will give me a partial refund of the interest for the full term which I paid up front. This saving will be worth far more than any interest I could gain by putting my spare money in to an ISA.

3. In a few months I can be completely rid of HSBC and the shabby bunch of idiots and liars who work for them, and will sleep better as a result.

Why not?

Once the loan is repaid, my DMP will be recalculated and the money I was paying to HSBC will be redistributed among my other creditors. Payplan will send out my new SOA to my creditors, reflecting this change. Presumably, a sharp-eyed clerk will notice that I'm no longer paying to HSBC and presume that I've settled with them.

Will this cause my other creditors to rattle their cages, and could it lead to my Plan breaking down? Or is this a fairly normal (if slightly naughty) thing to do?

All are (of course) welcome to comment but I'd particularly like to hear from anyone who has actually done this, or who knows from experience what is actually likely to happen in practical terms. I know I'm not supposed to do it - I'd like to know what will happen in practice if I do!

Thanks for reading.

insider66

Hi there,

fully understand what you're saying re HSBC, they are one of the worst to owe when you can't keep up re-payments.

I'm tempted to agree with you on your plan of action.

You can tell them to only contact you by letter in the meantime - looking for a link for you...

Jvic28

Sorry, I've got no experience myself but can see where you're coming from and if I was in your position I'd be tempted to do the same. Hopefully someone will be along shortly who has done some experience. I have some smaller debts on my DMP and when I've saved enough I think I'm going to pay them off. One of them still charges me interest so it would be nice (mentally) to get them off my list.

10past6

I would write a letter of complaint to them, heading your letter "FORMAL COMPLAINT"

MyLastFiver wrote: »

They have simply increased my overdraft limit (from £500 to £2000)

Financial insitutions have a LEGAL responsibilty to the consumer for lending, imho, HSBC have broken OFT guidlines in that they have acted irresponsible by increasing your OD, look here:

[FONT=Times New Roman, serif]4.2 The OFT has provided some clarification on what constitutes irresponsible[/FONT]
[FONT=Times New Roman, serif]lending in its general fitness guidance (OFT 969, published January 2008)[/FONT]
[FONT=Times New Roman, serif]which states:[/FONT]
[FONT=Times New Roman, serif]'Lenders may take different approaches to responsible lending in line with[/FONT]
[FONT=Times New Roman, serif]variations between the needs of different sectors of the market. However,[/FONT]
[FONT=Times New Roman, serif]lenders should always take reasonable care in making loans or advancing[/FONT]
[FONT=Times New Roman, serif]lines of credit and should take full account of the interests of consumers[/FONT]
[FONT=Times New Roman, serif]in doing so. They should undertake proper and appropriate checks on the[/FONT]
[FONT=Times New Roman, serif]potential borrower's creditworthiness and ability to repay the loan and to[/FONT]
[FONT=Times New Roman, serif]meet the terms of the agreement. The checks should be proportionate,[/FONT]
[FONT=Times New Roman, serif]taking account of the type of agreement, the amounts involved, the[/FONT]
[FONT=Times New Roman, serif]nature of the lender's relationship with the consumer, and the degree of[/FONT]
[FONT=Times New Roman, serif]risk to the consumer.'[/FONT]
[FONT=Times New Roman, serif]4.3 There is also pre-existing guidance, particularly that available in the OFT's[/FONT]
[FONT=Times New Roman, serif]Non-Status Lending Guidelines (OFT 192, revised in 1997). In terms of[/FONT]
[FONT=Times New Roman, serif]irresponsible lending, this focused primarily on issues related to the[/FONT]
[FONT=Times New Roman, serif]consumer's ability to repay any loan and to meet the terms of the[/FONT]
[FONT=Times New Roman, serif]agreement including:[/FONT]
[FONT=Times New Roman, serif]'Lenders should comply at all times with the principle of responsible[/FONT]
[FONT=Times New Roman, serif]lending. All underwriting decisions should be subject to a proper[/FONT]
[FONT=Times New Roman, serif]assessment of the borrower's ability to repay, taking full account of all[/FONT]
[FONT=Times New Roman, serif]relevant circumstances including the purpose of the loan, the borrower's[/FONT]
[FONT=Times New Roman, serif]income, outgoings, employment, age, state of health and previous credit[/FONT]
[FONT=Times New Roman, serif]history, and details of any other mortgages or loans or any life assurance[/FONT]
[FONT=Times New Roman, serif]OFT 1012 | 10[/FONT]
[FONT=Times New Roman, serif]cover or payment protection insurance. The aim should be to ensure that[/FONT]
[FONT=Times New Roman, serif]the borrower does not take on a commitment which they are unlikely to[/FONT]
[FONT=Times New Roman, serif]be able to fulfil. If brokerage or other fees, or an insurance premium, are[/FONT]
[FONT=Times New Roman, serif]to be added to the loan, the lender should assess the borrower's ability to[/FONT]
[FONT=Times New Roman, serif]repay on the basis of the total amount of the loan including any such[/FONT]
[FONT=Times New Roman, serif]charges.[/FONT]
[FONT=Times New Roman, serif]Lenders should take account of any seasonal variations in the borrower's[/FONT]
[FONT=Times New Roman, serif]income, and any likely future changes in income or employment or other[/FONT]
[FONT=Times New Roman, serif]relevant circumstances, together with the nature and extent of any[/FONT]
[FONT=Times New Roman, serif]existing financial difficulties. They should concentrate on the borrower's[/FONT]
[FONT=Times New Roman, serif]ability to repay the loan, rather than on the value of equity in the property[/FONT]
[FONT=Times New Roman, serif]on which the loan is to be secured.[/FONT]
[FONT=Times New Roman, serif]Lenders should take all reasonable steps to verify the accuracy of[/FONT]
[FONT=Times New Roman, serif]information provided on or in support of the loan application. They should[/FONT]
[FONT=Times New Roman, serif]check any apparent omissions or discrepancies, and query any unusual[/FONT]
[FONT=Times New Roman, serif]features. They should ensure that all underwriting staff are properly[/FONT]
[FONT=Times New Roman, serif]trained and supervised.[/FONT]
[FONT=Times New Roman, serif]In assessing ability to repay, lenders should ensure that they have[/FONT]
[FONT=Times New Roman, serif]sufficient evidence regarding the borrower's income and other financial[/FONT]
[FONT=Times New Roman, serif]details. What will be sufficient in any given case will depend upon the[/FONT]
[FONT=Times New Roman, serif]circumstances of that case, and is a question of fact and degree. The[/FONT]
[FONT=Times New Roman, serif]need for supporting evidence will be greater, the higher the self-declared[/FONT]
[FONT=Times New Roman, serif]income or the larger the loan relative to the borrower's income or other[/FONT]
[FONT=Times New Roman, serif]financial circumstances. If adequate documentary evidence is not[/FONT]
[FONT=Times New Roman, serif]available, and there is doubt over whether the borrower will be able to[/FONT]
[FONT=Times New Roman, serif]afford the repayments, the loan should not be made. If a lender fails to[/FONT]
[FONT=Times New Roman, serif]check the borrower's ability to repay a loan secured on the borrower's[/FONT]
[FONT=Times New Roman, serif]property, this will be irresponsible lending. It might also be regarded as[/FONT]
[FONT=Times New Roman, serif]lending on equity alone. Both of these the Office has long regarded as[/FONT]
[FONT=Times New Roman, serif]unacceptable.'[/FONT]
[FONT=Times New Roman, serif]4.4 The general fitness guidance makes it clear that the Non-Status Lending[/FONT]
[FONT=Times New Roman, serif]Guidelines continue to apply pending the development of specific[/FONT]
[FONT=Times New Roman, serif]guidance on irresponsible lending, and should still be followed where[/FONT]

[FONT=Times New Roman, serif]relevant.[/FONT]

Regarding:

MyLastFiver wrote: »

They refused to deal with Payplan

HSBC have also broken OFT guidelines, by failing to deal with your third party appointed representitve, include the following letter with your complaint to them:

Your Address

DAC / Creditor's Address

Date

Ref A/C xxxxxxxx

On the top of your letter state very clearly in big bold letters “FORMAL COMPLAINT”

Dear Sir / Madam

I refer to the above account, held with yourself's.

I have informed your company on numerous occasions I am experiencing financial difficulties.

I am acting in a responsible manner re my current situation, by seeking the advice from XXXX, I have informed your company of this, which has fallen on deaf ears.

Due to the continued harassment I'm experiencing from your company, I have taken advice from the OFT, I am informed your company is in breach of the following guidelines:

Deceptive and / Or Unfair Methods.

2.8 Examples of unfair practices as follows:

C: Refusing to deal with appointed or authorised appointed third parties, such as, Citizens Advice Bureau, Independent Advice Centres, or Money Advisor's.

Contacting debtors directly and bypassing their appointed representatives.

I have informed your company, that (give the name of the organisation and account number of whose managing your DMP), is my authorised third party appointed representative.

If I do not receive a satisfactory reply to my complaint from your company within 7 working days, from the date of this letter, I reserve the right to refer my complaint to the OFT for adjudication.

MyLastFiver

10past6, many thanks for taking the time to draft that letter. I have already been down the complaints route with HSBC due to lies and harrassment several months ago, and I achieved some partial success. The problem is that HSBC are institutionally idiotic, possibly as a result of being too big an organization to deal with their customers as individuals. They are not nasty - they are just stupid. The person who rasied my overdraft limit probably had no idea of the complaint, or even my fin diffs or my DMP, despite all of that info being on their system. He had a target to meet to get delinquent balances off his department's books. And he did it.

Whilst you are right in principle, I don't have the stomach for another fight with them. I owe them money.
They are charging me interest.
They are being a pain.
I can afford to pay them back.
I should pay them back...
...providing I can get away with it without my other creditors finding out...?

MyLastFiver

<<<<<bump>>>>>

fatbelly

a dmp isn't legally binding on any party to it.

I don't see a problem with your proposal.

Your aim is to get debt-free as quickly as possible, and it seems to me that your proposal does that.

MyLastFiver

Thanks for all replies - food for thought.

As I suspected, no-one can tell me what will actually happen if I show preference to a creditor. I have a plan:

I will phone Payplan and explain. I will ask them to keep making the loan payment, but to credit the money to the current account. I can then pay off the loan, and all that will change on my SOA are an account number and sort code which I doubt any of my creditors will pick up on.

As for the actual DMP payment which was for the loan, I will plough this money back in to the DMP by raising my income on the SOA to reflect this.

Thoughts, anybody?

Deep_In_Debt

I'm on a dmp with CCCS and have done a similar thing with no problems. I've offered a couple of F&F on debts that I can afford to pay off.

My other creditors are now receiving more money so, can't see the problem. The creditors wanted more money in the first place and are getting it now s they are happy too and CCCS were fine about it - even sent me standard letter templates.

insider66

I doubt payplan will agree to this, may be better to leave the HSBC debt off and pay it yourself..

Realistically, the only problem you may have is if your other creditors check your credit file and see you are up to date on the HSBC debt when they are getting less.

However, they won't know that the DMP company haven't treated the HSBC debt as "secured" - which can be done on a DMP if you would stand to lose something - such as your job - do you work for HSBC for example??

IYKWIM

MyLastFiver

DiD and insider - this is the reassurance I needed - thanks. I now have the confidence to ring Payplan and discuss this without worrying that they'll dismantle my plan.