Help! HSBC managed loan

golddustmedia

Hi,
My partner and I are trying to clear up the mess her sister has got into with HSBC and advice is greatly appreciated.

Her circumstances:
She took out a loan to consolidate debt after splitting with her partner. This was an unsecured personal loan and she paid the whopping cost of insurance on the loan. Approx repayment £265 per month.

Since then she was made redundant from her full time job and is currently trying to make ends meet with part time work, amounting to about £80 per week.

She has some other small debts (phone bill - £15 per month 0% and provident loan £5 per week HUGE%).

She has been accepted to university and needs to get her affairs in order asap.
She has no assets. Whatsoever. Absolutely nothing.


The situation:
Since she's missed some loan payments since being redundant HSBC have threatened her with the bailiffs, even though she has no assets and is living with parents.
We wrote to HSBC explaining the situation and asked for help. Noted university place and the potential for a graduate income in the future. Asked about an interest holiday from the loan, OR paying interest only or any other help. We were basically told they were not willing to help!!!
By now they were threatening bankruptcy proceedings, which seems daft since with no assets they would lose their debt?

Anyway, since then we've been chasing the bank over and over trying to resolve this. That's when we found out about the interest on the loan. We've asked to make a claim since she was made redundant and told we're not eligable since 90 days had passed since she was made redundant. Other persons told us we can claim but may not get anything.

Since the insurance is taking the loan from £10k to nearly £14k and she cannot meet the payments something needs to change.

We've now moved to a "managed loan" at 12.7% over a longer term but this brings the payments down to £137. However they tell us in order to go onto that we have to accept we will not make a claim on the insurance policy?

Now it seems daft that the claim may take months so why keep on a bad loan which payments cannot be met upon while a claim goes through, when it may not be successful anyway. Also surely an insurance policy is valid for the insured period? So even if we cancel the policy now we're still allowed to claim since the claim relates to a period when the policy was valid?
(Think car insurance, if your policy ends in October but car stolen in September you can still claim in november since the car was insured when it was stolen).

Anyway, she is now in the position that her credit rating is messed up, HSBC claim she cannot claim against an insurance policy she paid for to manage her loan in the event she lost her job. She needs a reliable banking partner for her time as a student but it seems obvious HSBC will not support her in anyway.

Also, point of note HSBC have some of the rudest, obstructive and least helpful staff I've encountered.

I'm still blown away that advising the bank there is a problem and asking for help before things got worse was met with "sorry, we are unable to assist you "!!!

Is this a matter for the FSA?

Seraphim

Is it worth you giving the CCCS a call (consumer credit counselling service). They are a charity who provide free advice about everything debt wise, including debt management plans (which would be miles better than bankruptcy ). Even if they can't help, they will probably provide a friendly ear and should be able to point you in the right direction as to where you need to go?

Their number is 0800 138 1111

BullyCornedBeef

I have a HSBC loan with protection (PPI) and im sure redundency is covered.

jonesMUFCforever

Can I ask how your sister in law intends to pay for her course fees whilst at University?

golddustmedia

BullyCornedBeef wrote:

I have a HSBC loan with protection (PPI) and im sure redundency is covered.

Yes, redundancy IS covered. However the point is they have told us many differing answers. Such as she cannot claim since it's 90 days since she was made redundant. She cannot claim since she still has an income (she had 2 jobs, lost the full time one and still has an evening bar job).
Also the major alarm is that it may take months to make a claim. SO, since she cannot make the payments now it seems appropriate to try to manage the loan while awaiting the outcome of a claim. However they say that moving the loan to a managed loan means we are then not eligable to make a claim. In other words in order to claim we need to wait, still defaulting on payments, for the outcome. During which time the bank has threatened bailiffs etc which is daft since they know we want to resolve the problem and are making a claim. They just cannot process a claim while making any other improvements. Seems you have to agree to make things worse in order to await a lifeline.

golddustmedia

ejones999 wrote:

Can I ask how your sister in law intends to pay for her course fees whilst at University?

She is an independent student (she's 22 and has been working since 18) so her contribution should be assessed at the lowest level.
Add to that the student loans scheme and that should cover her fees and most of her costs. Additionally she will continue to work part time earning £80 per week. Also the course is a sandwich course so during the 2nd year she would have a full time income which helps recover the costs of the first year.

The whole debt should be quite manageable if the bank would just assist. Unfortunately they bounce calls from one dept to another resulting in incorrect information. Meanwhile everytime a payment isn't enough they slap on a charge making the problem worse. The simple fact is her income is only marginally higher than the loan cost.

ArchieB_2

You can only claim on the unemployment part of the PPI if you are signed on and seeking work. It sounds really strange that HSBC are being unhelpful - were they informed as soon as she lost her job? If so they would have sent a claim form out.

Most banks will be helpful so long as at the first sign of a problem they are informed. Does she live in an area of 100% employment - if not then she needs to find a job that will enable her to service the debt.

I'm not being funny but if I was made unemployed and I needed money I would clean toilets.

golddustmedia

Unfortunately she's not the brightest of bulbs so she didn't understand about the PPI being on the loan, it was only once I got involved I pointed it out so it's about 2 months after. They have sent a claim form out but even if they are able to process it within a month it's still another payment missed and charge, however in the mean time the bank is harassing her with final notices etc despite her making a claim. It seems daft that the depts of the bank do not communicate with one another.

She is not signed on since she has a part time job but of course while it pays more than job seekers allowance it's far less than she would need to pay the loan, which was based upon circumstances of working full time.

Employment in her area is not 100% and she is actively seeking other work. However as stated she does have some work, in our area all the "toilet cleaning" jobs are snapped up by the non english speaking community etc hence she's got the problem she's over qualified for the bad jobs and under qualified for the good ones.

I'm just dissmayed that it seems the bank would rather throw a court summons and bailiffs at her than listen to reason and assist in altering the conditions of the loan. Anyway, for now the loan is managed and the payments reduced but just seems wrong that they claim in doing that she gives up her right to make a claim on the PPI for the period when she lost her job?