Worrying letter from HSBC....

Sammy3008

Have also posted this in the Loans part of the forum, but wondered if any advice here too

Ok, my DH has been paying into a DMP for the last 5/6 months, for his outstanding loans.
We have been looking into BR, however we were hoping to wait a couple of mths to save up the fees etc, but now I'm worried about this letter from HSBC DH has received...

This is what it says:
'I have been unable to pay the £201.59 instalment on your personal loan today, as we were not prepared to agree to any further informal overdraft requests on your current account' No idea what this meant!?
'Your current account is £2550.34 overdrawn. I am therefore obliged to send you the enclosed default notice in respect of your personal loan.

The default notice:
' Details of Default; Term breached: the term or terms of the agreement form requiring you to make payments.
Nature of breach: Failure to make payments as required under the agreement'

Action required:
On or before the 3 sept 09 you are required to take the following action to remedy this breach.
'To pay the arrears of £1,052.94'

If you do not take the action required by this notice before the date shown then the further action below may be taken against you.

FURTHER ACTION:
Recovery of all moneys outstanding under this loan agreement.

Amount owing including interest and charges up to 23 August 2009 £11,349.93
Less rebate due to you: £1,666.30
Total amount to be repaid: £11,683.63.

They have also sent out a proposal form, which asks for details on:
Money owed (Finance provider etc)
Assets
Monthly Income
Monthly outgoings

So what are HSBC looking to do?

Sorry for the long post, but thought it best to put everything down that the letter states.

Thanks.

peachyprice

They're threatening to call in the loan unless you fill in the form and come up with a proposal to pay regularly. They want you to fill in the income & outgoings form to assess how much you can afford.

The bit about your O/D means you're over your agreed limit and they're unwilling to pay the loan making you even more O/D.

If you're saving for BR fees you should have stopped paying your DMP and be keeping the money for the fees.

HTH

GotToChange

If the loan payment can't be paid by some means other than increasing the overdraft further, they are "calling the whole loan in".

Is this a secured loan? How far are you into the BR process? If you are definitely going BR then be careful about paying them as the OR will see is as preferential payment although I can see you are between a rock and a hard place.

Is this account used for wages/benefits to be paid in to? Again, be careful as they can start swapping money between accounts and you don't have access to what was once readily available.

You need to look at a new bank account (Co-operative or Barclays) so that you are able to receive wages/pay bills once you have defaulted properly on HSBC (i.e. gone BR).

Additionally - it may be me but look again at the maths for the sum they say is due as the the amount owing less the rebate seems to be more than it should (unless I'm missing something).

If you aren't going BR though then you need to look at making an arrangement with them sooner rather than later to avoid a CCJ as they will probably already class this as defaulting; depends what you're planning.

Sammy3008

Its not a secured loan. We've not yet started BR proceedings, as we were awaiting a Financial Advisor getting back to us, to see if they could get us onto an IVA, minus our Unsecured loan with our Mortgage company (didn't think this would be possible) this was last Thursday I spoke to the guy, and we've not heard back from him as yet, so not quite sure which way to turn....

We are no longer with HSBC, we have already changed bank accounts to Lloyds, but my DH was going to open a Co-Op account (as one of his debts are with Barclays) but he put it on hold, to see if we could either sell this house first, before going BR, or get onto an IVA.

By the sounds of the letter that HSBC have sent then, do you think they are going to make my DH BR thereselves?

And of course, if they put a CCJ on this, my DH won't be able to put that debt through BR, oh god!!!

I have also spoken to the company that the DMP is running with, and they have told me to send the letter and any documents with it, through to them, so I no longer have the proposal form, I've sent that with everything else, I'm now off to bang my head against the wall.

Thank you for the advice

Tinytim

Hi Sammy,

The first to say is that you should seek lots of advice, including talking to CCCS, National Debtline and/or CAB. They will be able to explain your options to you and point out the advantages and dissadvantages of each. There can be very good reasons for considering an IVA instead of bankruptcy, but just for your own peace of mind, you need to hear this from someone who doesn't have a vested interest. Most commercial companies who arrange IVA's and debt management plans will have a vested interest, as will any of the increasing number of financial advisers who have added debt management to their portfolio of services.

It is very, very unlikely that HSBC will try for Bankruptcy for an unsecured loan. It will cost them a lot of money, and they will then have to stand in line with all other unsecured creditors. They will more likely try for a CCJ with a "Forthwith" judgment and an immediate charging order. If they do not get a charging order, then the CCJ will be included in the bankruptcy.

In such cases, knowing what will happen and the time limits involved is essential, as it keeps your options open.

If HSBC decide to go for a CCJ, you will be sent a claim form. If you ignore this, or return it admitting the claim then judgement will be entered against you automatically after about a month, and there is every chance the creditor will be successful in getting an immediate interim charging order. However, if you reply to the claim saying you intend to defend (and there is always some reason for defending - the default notice above looks as though it may be defective for instance), you will have a further fouteen days of so to submit a defence. As HSBC is unlikely to have sent all the relevat documents, your defence is a simple holding defence. The case wil be transferred to your local courst, and a further few week will elapse until the stage of allocation questionnaires. Then follows a further period of a month to allow for negotiation, and then, maybe, you will be informed of a court date, probably a further two months away. This buys you enough time to make sure you have fully investigated whether an IVA or BR is suitable