Lloyds TSB sold 'debt'

felixdahousecat_2

Hi all

My girlfriend had a Lloyds TSB overdraft of about £1000 after charges, and a Lloyds TSB loan of £4000.

She never missed a payment on the loan, but they stopped taking payment. After talking to the bank they agreed that they had stopped drawing on the direct debit, but no explanation why. My girlfriend's bank (Barclays, moved to after dreadful service from Lloyds) confirmed that that the DD was active but hadn't been drawn on.
The overdraft was over the agreed limit, but they then combined the two sums and passed them to a debt collection agency.

I was in correspondence with the bank, who agreed it was wrong, as a default notice was never issued for the loan (as a payment was never missed).

So..........

We are now in the situation where the debt is owned by a private company who have interest in the history.
My instinct is to write to them and invite them to take us to court, but will i then need every scrap of paper and details of phone call etc.

This is the third or fourth debt collection company which this has been passed to, none of whom have been willing to discuss the history of it.

Is it legal for a bank to add a current account overdraft to a loan which was still active ?

Any advice gratefully accepted.

jonesMUFCforever

Can you please clarify that when she first took out the loan the D/D was coming out of a LTSB account?

Tootsie_Roll

In strictly legal terms it is your girlfriends responsibility to ensure payments were made to Lloyds regardless of the method of payment she chose - It is unclear why she didn't start making payments herself until the DD was set back up again. Reading between the lines - Did the DD problems start when she changed banks ? Has any claim for the loan been made on the Barclays account ?

It is also unclear why your instinct now says to let them take her to court - Why? They have either bought the debt which Lloyds were entitled to sell to them regardless of whether there were any arrears or not (it is the norm for centralised lenders to sell mortgages on), the default issue is irrelevant. Does she now dispute the debt for some reason ?

felixdahousecat_2

OK, the direct debit was moved to Barclays, where Lloyds drew some payments, then stopped (the direct debit is still set up).
A call to Lloyds revealed that it had been sent to Wescot for collection, Lloyds then refused to discuss it.
Barclays said there was nothing they could do as it was up to Lloyds to draw on the direct debit.Barclays also confirmed that no payments had been refused.

The reason my instinct tells me to go to court is that until now we have not been able to get an answer from anyone. Lloyds were incompetent, Wescot indifferent and verging on threatening. Perhaps a county court judge would sit and look at the facts, or am i being naive ? :rolleyes:

Surely if a bank breaks the terms of the credit agreement by stopping drawing on the direct debit, adding a current account balance, selling the balance to a third party, all without notification, it is as bad as the customer breaking the terms ??? To then deny any responsibility for their actions and leave us at the hands of some very aggressive debt collectors seems morally, if not legally suspect.

jonesMUFCforever

Felixdahousecat - You still have not responded to post 2 in this thread.
If your girlfriend was over her agreed overdraft limit then there is no way Ltsb would have allowed repayments on the loan to further deteriorate the current account position (ie payments to the loan were bounced).
It needs 3 payments in arrears before the bank will start to take action.
When your girlfriend opened her aqccount with Barclays did she get confirmation from the Ltsb loan that they had accepted the new D/D details?

felixdahousecat_2

The payments were coming out of the Barclays account, successful payments had ben made from it.
No payment was ever refused when requested by LTSB.
A request was made to LTSB to freeze the current account, and to stop adding weekly or monthly charges so that it could be settled monthly, LTSB refused to do this. LTSB were then asked if they would add the balance to the loan, they refused to do this.

So, it seems that the action by LTSB was a heavy handed way of settling the current account debt, fair enough in that respect. But, the loan was a completely separate matter, never in arrears, a payment never missed.

Before it was sold on to debt collectors LTSB staff admitted on the phone that no payments had been missed, one even promised to pass it to her manager to sort out, obviously this never happened.

somerandomguy_2

You imply that the O/D has been subject to charges, and that you made an attempt to resolve being over by combining the debts - which LTSB refused?

Have a look at the Bank Charges - Illegal? thread, you could dispute the bank changes on the O/D, which would put the entire debt into dispute (as LTSB have now combined them). You can then contact the debt collection agency and let them know it is in dispute, they should then stop giving you grief.

Not sure how you would continue paying the loan though, as LSTB combined them...or even who to pay? Certainly you do need to repay, but at the agree payment schedule when you took the loan out.

Tootsie_Roll

felixdahousecat wrote:

Surely if a bank breaks the terms of the credit agreement by stopping drawing on the direct debit, adding a current account balance, selling the balance to a third party, all without notification, it is as bad as the customer breaking the terms ??? To then deny any responsibility for their actions and leave us at the hands of some very aggressive debt collectors seems morally, if not legally suspect.

Felix

Sorry to say but you are clutching at straws. Lloyds are perfectly entitled to sell your account to whomever they wish - this law has been around for centuries. Have they actually sold the debt to Wescot or are they just collecting it on their behalf ?

It would be unusual form them to pass on the loan without it being in arrears, it would also be unusual for them to combine the two accounts without your knowledge as they would have to get a new loan agreement for the joint amount signed by you. Something definately doesn't add up here but I don't think we have enough facts to base an opinion.

felixdahousecat_2

Tootsie Roll, the fact that 'something definitely doesn't add up' is precisely my point. Remember, people come to sites like these to ask for help from peers, so have nothing to hide.

It is very easy for the bank to act, move, get rid and deny responsibility.

You say it would be unusual for the bank to pass on the loan without it being in arrears..........
It wasn't, the current account with charges was the problem, they obviously decided they'd had enough and wound up the relationship. How many people does this happen to ? I guess most don't visit money forums so just incur the wrath of the banks in ignorance.

My point was that if the bank had broken the terms of the credit agreement, then I had just cause to question the validity of their claim, why is this 'clutching at straws' ?

Depending on who we spoke to at Wescot, the debt had either been sold "You owe us", or referred "Our client wishes........."

Somerandomguy: Thanks, I've read the illegal bank charges thread now, seems that the source of the original current account difficulties may well form a part of the counter-claim or defense against LTSB.

Anyway, don't wish to sound ungrateful for the advice offered, please keep it coming


Felix