Interest has me gobsmacked (is it right)?

marky68s

My wife borrowed money from a fianance company in june 2004 to help us out of debt, she was recovering from leaukemia, we got in to a bit of a mess and could not keep up payments,the fianance company knew of our situation but in the mean time my wife went to C.A.B about it and they said that they would write to the company to see if the debt could be written off, they have never had a reply and that was back in 2005.Now comes the bit that has gobsmacked me she has received a letter today (16/02/09) from the fianance company solicitor which has said that she now owes £40,523.89 at a rate of £64.40 per DAY interest.Now at this point I must clarify that the amount she origanally borrowed was (get this) just £1500 fifteen hundred pounds. Can a company really charge this ammount or is it just bully tactics.

petermb_2

I have one client who originally borrowed £8000 but ended up with a debt of £185,000 so yes it happens.

Rikki

A letter was written in 2005 but no reply received.

You shouldn't have stopped paying just because you had asked them to write off the debt. You should have continued to pay and written to them or called them until you had a definitive answer.

The debt has still been there and occurring interest all the time.

petermb_2

marky68s wrote: »

My wife borrowed money from a fianance company in june 2004 to help us out of debt, she was recovering from leaukemia, we got in to a bit of a mess and could not keep up payments,the fianance company knew of our situation but in the mean time my wife went to C.A.B about it and they said that they would write to the company to see if the debt could be written off, they have never had a reply and that was back in 2005.Now comes the bit that has gobsmacked me she has received a letter today (16/02/09) from the fianance company solicitor which has said that she now owes £40,523.89 at a rate of £64.40 per DAY interest.Now at this point I must clarify that the amount she origanally borrowed was (get this) just £1500 fifteen hundred pounds. Can a company really charge this ammount or is it just bully tactics.

Do you hav a copy of the agreement.?
Before you do anything write to the company requesting a copy of the agreement under section 77 of the consumer credit act 1974. Advise that they have 12 days to respond and comply to your request. Should they fail to respond in the prescribed time the loan will become unenforceable until such time as they do .
You must include payment of £1 with your request.

chez000

I have read about credit agreements being successfully challanged in court because they were unfair or extortionate, so this may be something that you could have an experienced solicitor specialist look at.

I dont know a huge amount about this but factors that are considered when deciding if an agreement is unfair/extortionate are thigs like dual interest rates, the total amount repayable compared to the amount borrowed amoun t of risk to the lender etc.

For example
Payday loans and similar are not usually considered ( in court) extortionate even though they are for 500% apr plus as they are usuually supposed to be repaid in a couple of weeks
Whereas I have read of secured loans being deemed extortionate when they have been for 80% + over 20 or so years

anotherpaul_2

I'm guessing there must be a number of missed payment fees, because the daily interest quoted suggests about 78% interest p.a., but the balance only gets to about 23K in the time.

If you haven't already, don't admit to them that the loan is valid. If you haven't, it's statute barred after 6 years, (probably from the CAB letter in 2005). If worst comes to worst, you may be able to wait it out and ignore the demands.

Definitiely request a true copy of the CCA, but make it clear that you are disputing that the debt exists.

overlander

I think the company has a lot of explaining to do as they left the debt unchallenged for nearly 4 years. That stinks of deliberately letting the interest build up.

ferraribabe1964

Hi,
I am the afore mentioned lady and have been awake most of the night.Altho i am in remission i have it in writing that this is a temporary remission.This loan company were asked by CAB to write the debt off because of this and chose to ignore the letter.They were contacted again and told that if no reply were received it would be taken that they no longer had an interest in it.I managed to work for a short time after but had to leave due to repeated infections.Unfortunately the person i worked for did the insurance for this person and the loan guy approached my boss about it.Surely this is wrong?
Would i be better filing for bankruptcy?Feeling really ill about it and wondering whats the point........

anotherpaul_2

ferraribabe1964 wrote: »

Unfortunately the person i worked for did the insurance for this person and the loan guy approached my boss about it.Surely this is wrong?

Sounds like a breach of data protection. If you can demonstrate (in court) that you suffered financial lose as a results you MIGHT be able to get compensation. However, DPA breachs generally lead to a fine which goes to the government, so it probably won't help.

It would be worth consulting the CAB before declaring bankruptcy. Note that if you own a house, you would potentially have to sell it to cover the debt.

Personally, if I couldn't get it declared invalid (the first step of which is the credit agreement request, suggested above), I'd wait until it becomes statute barred. If you want to do this, you must NEVER admit the the creditor or any debt collector that the debt is valid - and wait 6 years from the last time it was accepted by you.

ferraribabe1964

Further to my last posting of this.I got CAB involved and the Loan co never replied to them.However this morning the Loan company owner turned up on my doorstep and when I refused to discuss it tried to barge his way in.Managed to close door on him and reported it to the Police.

ALIBOBSY

Report this to trading standards, and the OFT and anybody else you can think of. This guy should get his licence taken off him OMG.

See what CAB think about this.

ali x