What interest rates should apply? CCJ, the Bank of England or else?

ExTra_2

Just wondering if anyone know what interest rates should be used in my situation. Sorry guys, I am not indebted to anyone, instead I am owed some money and I am in a position where I am not in control of what will happen as I have no lawyer represents me nor we have ever been to court for this matter. So I have been up against a team of lawyers at my uni. Any advise is appreciated.

Basically, my uni insisted I should pay the Oversea fee even though I am a Home student. So the different is £8,400 / per year, make it a total of £25,200 for 3 years. Yap, my mum used all her saving because she is a very traditional mum thinking education should come first. I am grateful.

Finally, after 4.5 years of debate, they finally have agreed to pay me back the money + interest. My question is, what interest rates should apply?

Originally, when the decision was first made before X'mas last year, they told me to find the Interest rates of my bank account and use that, so I did. When I presented them the total sum of interest, which was about £2,050. The interest rates I used were between 0.5% - 4% varies. They said they can't use it as it's a legal matter. So they told me they will have to use the County Courts Judgment Debt interest rates. I have no idea what should that be, but I have heard it's about 8%. Now they have just come back to me today asking me if I would be happy with £3,000 interest. Clearly £3,000 isn't what it should be if CCJ is applied. I have calculated the total interest if CCJ is 8%, it comes to a totally of just over £8,000. Which I knew from day one they won't want to pay me that much.

I have asked them where did they get that £3,000 figure, they said it was proposed by the head of legal affairs, so clearly it's a number they think it's fair on them, but how about me and my mum? All this stress for the pass 4.5 years?

So again, my question is, what interest rates should they use? I personally don't think it should be the CCJ as I said, we have never been to court. And technically speaking, they were never indebted to me until the decision were made on 16 Dec 2009 as the case was still in discussion, so we can't use any rates of a loan. So what rates should apply?

Finally do you guys think £3,000 is a fair amount for the amount of money we are owed? We paid £8,400 extra per a year for 3 year and I graduated in 2008, so they have been keeping my total refund of £25,200 for an extra year until the case was finally resolved end of last year.

Any opinion is appreciated.

Thanks

DarkConvict

For CCJs the legal interest rate is set at 8%. If they will not accept the variable interest rate (which is in their best interest and is fair), the only other rate that can be applied is the 8%. As they have admitted this was a mistake, you could try for the CCJ and 8% interest if they refuse, you would probably win.

Remember, you and your mom had to really save for this period, so it could well be considered compensation for the struggle you had at university, not just financial loss.

Ill work out some numbers.

1% compound interest

Start Year 1: £8,400.00
End Year 1: £8,484.00

Start Year 2: £8,484.00 + 8,400.00
End Year 2: £17,052.84

Start Year 3: £17,052.84 + 8,400.00
End Year 3: £25,707.37

Total Interest: £507.37

4% compound interest

Start Year 1: £8,400.00
End Year 1: £8,736.00

Start Year 2: £8,736.00 + 8,400.00
End Year 2: £17,821.44

Start Year 3: £17,821.44 + 8,400.00
End Year 3: £27,270.30

Total Interest: £2070.3

8% compound interest

Start Year 1: £8,400.00
End Year 1: £9,072.00

Start Year 2: £9,072.00 + 8,400.00
End Year 2: £18,869.76

Start Year 3: £18,869.76 + 8,400.00
End Year 3: £29,451.34

Total Interest: £4251.34

MrsTinks

I'd point out to them that 8% is the CCJ rate of interest and maybe they'd like to revise that figure and see what they come back with
Personally I'd see what the maximum interest your mum could have earnt on that money in the maximum savings account would be and then maybe add 1% for the stress?

magpiecottage

If it was awarded by a court, it would be 8% simple, not compound. Slightly less but if they tell you (ideally in writing) they will pay it then accept it.

ExTra_2

Thanks for the reply. DarkConvict's calculation is very similar to my calculation, but the main issue here is my mum has paid them total of £25,500 extra by Sept 2007, but the mater has only just been resolved in Dec 2009, so there is a 15 months gap where they have the £25,200. If we apply 8% for this period alone, that's £2520. I think the thing I am most unhappy with is they don't have anything to support they decision of £3,000.

So the CCJ interest is defo 8% flat, right?

DarkConvict

In which case at 8% , based on 8400 was just the over payment.

Comound

Total Interest: £4251.34 for the 3 years.

Then another 2 years on the £29,451.34 total.

So there you go £34,352.04

£25200 - (3*£8400) = £9152.04

Not Comound

25200 , 8% = £2016.


If your unsure, see a free solicitor for 30 mins, If he says you have a case take that back to the uni, state the 8% interest, and the fact if they are going to refuse you may have no choice but to add solicitor costs ontop.