needing advise on my mothers debts

SXGuy

I wonder if any one can advise me on the best route to take regarding my mothers credit card debts.

Some background info for you firstly,

My mother has around 6 credit cards all of which have increased her interest rate to between 30% - 40% over the last year, she is self employed and as such her income has seriously been reduced this year due to economic reasons we are all aware of.

Egg and Citi have both terminated the use of her credit and have asked her to carry on repaying the minimum repayments.

All credit cards were taken out BEFORE 2007.

Up until now, she has been able to meet the minimum repayments on all her credit cards however now due to a reduction in her income she can not afford to meet the payments.

The debt is to big to move over to a loan without it being secured and she can not apply for any other credit cards to transfer the balance, because of her age, she tends to be declined.

Before i take her down the route of writing to them asking for a DMP, i wondered if it was first best to follow the route of asking for true copies of each consumer credit agreement, to look in to whether any of these debts are unenforceable?

I have been reading alot of threads on this forum regarding unenforceable debt, and wondered if i did help her to apply for true copies of a CCA, would they view this as the start of a lengthy battle to argue the case for enforceable debt and would she be penalised for this if they were found to be justified (i.e hike her interest up again or close her account).

Any help would be really apreciated.

RAS

Hi

There are several things you need to do.

1. if any of the cards increased their rate and she did not spend anymore on the card, she can insist that they close the account and revert to the previous rate.

2. Get all the CCAs.

3. Scan the default and termination letters that she already has and post them up here, with all personal details, bar codes and account numbers removed.

If any of the documents in 2 or 3 are faulty, she can fight any legal action taken by the creditor.

4. Find out if she had PPI on any of these accounts. As a self-employed person, it is almost certain this would be unsuiotable and she can recalimit at 8% interest.

5. Consider reclaiming fees.

SXGuy

Thank you for your reply.

I shall do what you said, and will update this thread when the info becomes availible to me.

SXGuy

Just a quick update for you regarding the credit cards incase anyone is interested or faces the same situation.

She has contacted 3 out of the 6 cards so far, and a few of them have been quite willing to help, however 1 of them has not.
Mint and Citi have both said that they will send her a form to fill in and once complete they will drop the interest to 0% (citi will drop it for 6 months, mint for 5 years)
Mint will keep her account active while citi will terminate it.

MBNA however, are refusing to budge on anything unless a debt collection agency is envolved, i found this quite ironic as my mother is a self employed accountant, she does not need anyone else to work out a balance sheet, she does it for her own clients everyday.
In addition to this, MBNA started asking her questions such as, what was the large withdrawl you made 2 years ago (like she can remember this now?!), they also threw some random debt figure at her saying this is what they think she owes in unsecured debt (i dunno where they got that from, maybe 1 credit report and not all 3)
So my advice to anyone facing the same problems is, if you have to encounter MBNA, be ready for a very tough time.
Oh i should also mention, that as a result of her saying that "in the future i MAY have some diffulties meeting repayments", they told her on the spot they are terminating her account, i found this very annoying as she hasnt even defaulted once in her life.
I shall be writing a letter to them shortly asking that all interest on her outstanding debt be fixed, as a result of them terminating her account for no reason other than a simple maybe in the future comment.

Deep_In_Debt

MBNA are well known for being bar stewards.

It's not necessarily a bad thing for the debt to be passed to a DCA as they tend to buy the debts for peanuts and accept lower payments and freeze interest. I would suggest that your mum pays them what she can afford, and send them her I&E.

SXGuy

Another update

So far most credit cards have been very understanding and have all agreed a payment offer based on my mothers financial statement.

MBNA after going through my mothers financial statement have still refused to accept any payment offer.

My mother then explained to them, that if they did not accept a payment offer she would be forced to just send them what she could afford based on her surplus amount.
She also reminded them that every other credit card has agreed an amount and if they decided to pass it to a DCA or take her to court, it would not be in their best interests as they would probably get less than what she is offering them now.

To cut a long story short, the woman on the phone basically said to her, that they didnt care, and if she decided to pay something rather than what is due each month, then it would continue to default on her credit report, and after 6 months, they would either pass her debt over to a DCA or issue a court order.

They also said to her, that no one else should have accepted any type of payment offer, and any offers she made to them should have been the same amount for each.

Sounds like she spoke to someone who has no clue what so ever in regards to how payment offers work.

Its my understanding that if she had decided to, she could have easily set up payment offers under a Pro Rata basis, and this would NOT mean she pays them all the same, but a proportion realitive to her debts with each card.

But as other lenders have agreed to fix interest at 0%, i cant see how what this woman is saying, is valid in any way to my mothers case.

She even had the cheek to accuse my mother of "Causing this problem for herself"

I find this very rude, as if MBNA hadnt decided to increase my mothers interest by another 30% she would be more than able to repay any debt she had amounted with them in the first place!

I have instructed my mother, to pay them what she can afford when her next statement is due, and i shall write to them on her behalf, explaining again her situation and why she has paid them a jesture offer, and shall also ask them to reconsider their decision.

I doubt it will get her anywhere, but the way i see it, is she has done everything she can to get them to agree, they have refused point blank, and all this is only going to give her the much needed anmunision should they refer it to a court judgement.

2 quick questions

If MBNA do decide after 6 months to refer it to court action, can my mother just send a letter to the court, explaining the situation, detailing that other lenders have agreed a payment plan, and enclose a financial statement?

Do you think its more likely they will just pass the debt to a DCA instead?

Tixy

Most likely it will go to a DCA rather than court. That said it could go to court, if that happens and she gets court papers come back here for advice on completing them and other options.

In future suggest she doesn't ever speak to MBNA on the phone, keep all communication in writing, if they ring refuse to talk to them/refuse to confirm her name & address. If they ring too often you can send out letters asking them to stop all call.

Make sure she does pay them something each month as this looks better if it does ever go to court.

Oh and you are right, if you can't meet minimum payments then it is normal to pay everyone pro-rata based on the outstanding balance and the total amount she can afford to pay.

SXGuy

Thanks for your advice, i will do just that.

one question though, i understand the pro rata bit, but the other lenders have decided not to go with a pro rata basis, and have instead just frozen interest for 5 years at 0%.

So should she pay what she can just afford to MBNA or should she work out a pro rata payment based on what the payments are with other lenders?

Tixy

So what is she paying the others? the original minimum payments (presumably a percentage of her balance).
That might be slightly more difficult as MBNA have a much lower minimum payment (as there's is 1% whereas most are 2-3%).
Can she afford MBNAs minimum payment each month? or is she paying less than that?

SXGuy

As far as i am aware, she is paying the other lenders the minimum repayment, less the interest. Which they have agreed.

I think only 1 of them have agreed a figure, with interest at 0%.

All are going towards paying the total balance of the debts.

As with MBNA she offered them £180 per month, instead of £282 per month, (£277 of it was interest alone!)

I guess you can see that with the interest being so high they wouldnt want to help, as she was only ever paying £5 per month off her balance, and with a payment of £180, it falls short.

Up till now, she has struggled to meet the payment of £282 per month, family and friends have been helping her pay the difference between that and £180.