Re: Overdraft authorised without knowledge = Court Summons

mlp1979

Hopefully you can help

My girlfriend set up a small business with a friend a couple of years ago.

Back in July my girlfriend went away to work and her friend told her she would close down the account with HSBC as it only had £46 in it.

My girlfriend has returned to find that her business partner has taken a £500 overdraft on the account used it all up and has not paid it back. Now my girlfriend has received a court summons for the full amount.

We have tried to contact the other girl but to no avail. My girlfirend can prove she was out of the country and not accessed this business account.

Ultimately she does not want to ruin her credit rating. We could pay it all but why should we??? The address for the account is her friends address.

What do you think would be the best course of action?

Thanks

MLP

RayWolfe

I think there is little that can be done. A joint account means that each signatory is jointly and severally liable for any borrowings.
You only have redress against the other person who may have acted fraudulently but not against the bank.

JohalaReewi

mlp1979 wrote: »

We could pay it all but why should we???

Because it is a joint account and all the account holders are jointly and individually liable. If the account is in arrears, the bank can come after who it likes for the money. Your GF seems to be the easiest to contact and has the money so the bank are chasing her. All she can do is pay up (or make an offer?) and set about getting the money back from her friend. Don't forget to have the account frozen so it can't be used again (she probably won't be able to close the joint account without her friend).

sillystudent_2

Yep have to agree I'm afraid As poster above said, a joint overdraft means both parties are each liable for the full amount - the bank are legally entitled to pursue whichever party they want for the whole balance (especially if they can't find this other girl.)

My advice would be to pay it and chalk it up to an expensive lesson - having a joint debt with someone is a risky move unless you trust them 100%.
However, you might have a chance of claiming the money off the other girl through small claims if (again covered by post above) there's been fraud or your gf and the other girl had some kind of written agreement that the account was to be closed and no more money taken out of it. But in the meantime I'd still settle the debt - leaving it will only trash your gf's credit rating and at the end of the day the law's totally on the bank's side I'm afraid Then you can think about going to small claims.

Sorry I couldn't be more positive, hope this helps a bit at least!

blueberrypie

What everyone else has already said - your girlfriend is legally responsible for the debt, even though it wasn't her who incurred it.

And an additional bit of advice: your girlfriend should get a copy of her credit report because, having had a joint account with the other person, she will now be financially linked to her. She can get the link removed, but if she does not, it will remain there and very possibly affect her own chances of getting any kind of financial services in the future.

mlp1979

Thank you for all the replies. The account cannot be used anymore and will be make sure the link is removed from the credit report. I take it we go to experian or someone for that?

We will pursue the small claims court but we have been in touch with the girls father today.

We have spoken to HSBC and offered to pay instalments and they are saying no and they want the full amount.

Any suggestions how to approach HSBC?

Thanks a lot

Voyager2002

Before doing anything with ths small claims court, I suggest you have a chat with the police. If they regard it as fraud then they are likely to put far more effective pressure on her than the court process would.

jonesMUFCforever

2 points - Was the business set up as a partnership with the bank?
What does the bank mandate say about not only signing rules on the account but liability for any overdraft or loans? Would both have had to sign an overdraft letter??

Secondly a bank would not close an account on one signature even if it is either to sign on the account - she left herself open to abuse and looks like she will have to pay the price.

Fiddlestick

Voyager2002 wrote: »

Before doing anything with ths small claims court, I suggest you have a chat with the police. If they regard it as fraud then they are likely to put far more effective pressure on her than the court process would.

.

If it was a joint account then they are both jointly liable for this.

The other signatory had full legal authority to obtain the overdraft and the bank has full legal authority to pursue the OP's partner for the debt.

Where is the fraud?