HSBC Managed Loan

amjack

Hi all,

I have an HSBC Managed Loan (current balance about £2,900), and have had it since April 2004. I have never defaulted on a payment. I'm paying in £70 per month, and this money is covered by my Child Benefit. Realising that I'm going to be paying this off for at least another four years, I spoke to HSBC. I have applied for a "normal" personal loan to cover the remaining balance, and have been declined due to being a stay at home mum.

I phoned the National Debtline once, who suggested that if the interest is getting me down so much, I open a basic bank account elsewhere and empty my HSBC account into it, also making sure my Child Benefit payments go into the new account too. Then, I default on my managed loan, which should mean that HSBC eventually pass it to a debt recovery agency. He said that in 99% of cases the interest is frozen, meaning I could continue to repay £70 each month, but with the full amount going towards the balance and not the interest.

Whilst this sounds good in theory, I thought I would check in here to seek your opinion. Should I really be "bad" and default? Is going to debt recovery agency a good idea in this case? Or should I just bite the bullet and keep up with the seemingly endless repayments...?

My current monthly incomings amount to about £400 thanks to Tax Credits and money from my partner. I have a HBoS current account, in my overdraft there, paying £31 per month charges on that.

With thanks,
A.

Tixy

Whilst I generally think national debtline give good advice I would say if you are thinking of intentionally defaulting on a loan then you should actually be talking in more detail to one of the charities (especially as you can actually afford the loan).

Are you aware of the impact the default will have on your credit file?, are you financially linked to your OH? if so is he aware of the impact it will have on his ability to get new credit, good mortgage deals etc.

As you also mention you have another debt I would suggest you might be better off talking over all your finances in detail with one of these - https://forums.moneysavingexpert.com/discussion/2077631

rolleypolleypud

I also have one of these loans but my balence currently is £24,000:eek: I've been paying for 4 years at £352/month and have hardley made a dent in it. I had kind of resigned myself to the fact that I will be paying this loan till kingdom come. The only thing at the moment is that this loan tracks 7 points above the base rate so at the mo our intrest is only 7.5% which is actually less than my Nationwide loan.
The only good thing about my situation is that I only have a year left on my Nationwide loan and then I will be able to pay more towards the monthly payments to HSBC hopefully it might reduce the term slightly and I won't still be paying it by the time I come to collect my pension in 39 years time.:o