does the bank have to consolidate my debt if I am struggling

gemmacots

Hello, I have a credit card, agreed overdraft and loan with my bank,Lloyds. I have set up a new business and although it is going well, I am struggling to keep up with these payments as they add up to about £800 per month with fees and interest. So I asked the bank if they could help me by consolidating all 3 debts together so I can pay it over 7 years, with a lower interest I could be saving about £300+ per month. But the bank said no. I checked my credit rating with experian and it is 999, and excellent. So I don't understand, it feels like the bank does not want to help so they can make all this interest off me. I have applied for a loan secured against my property with another bank they have said yes, and this would be paying only £420 per month, so I would be paying about half the amount I am paying with lloyds, but this loan is subject to 3 months banks statements and my accountants certificate proving my income. Now I know they will say no once they see my 3 months statements as I am living in my overdraft due to these high interest fees. Plus my accountant has been so for only a few months as I have only just started my new business. What I don't understand is, I have managed to pay my monthly payments, only just, so they know I will pay back the new loan even better as it will be a lower amount to pay, so why won't they help me. Do they have a legal obligation to help? or can they just insist I continue to pay them back these high interest rates when they can see I am struggling? any advice welcome, thankyou

zppp

gemmacots wrote: »

Hello, I have a credit card, agreed overdraft and loan with my bank,Lloyds. I have set up a new business and although it is going well, I am struggling to keep up with these payments as they add up to about £800 per month with fees and interest. So I asked the bank if they could help me by consolidating all 3 debts together so I can pay it over 7 years, with a lower interest I could be saving about £300+ per month. But the bank said no. I checked my credit rating with experian and it is 999, and excellent. So I don't understand, it feels like the bank does not want to help so they can make all this interest off me. I have applied for a loan secured against my property with another bank they have said yes, and this would be paying only £420 per month, so I would be paying about half the amount I am paying with lloyds, but this loan is subject to 3 months banks statements and my accountants certificate proving my income. Now I know they will say no once they see my 3 months statements as I am living in my overdraft due to these high interest fees. Plus my accountant has been so for only a few months as I have only just started my new business. What I don't understand is, I have managed to pay my monthly payments, only just, so they know I will pay back the new loan even better as it will be a lower amount to pay, so why won't they help me. Do they have a legal obligation to help? or can they just insist I continue to pay them back these high interest rates when they can see I am struggling? any advice welcome, thankyou

They are under no legal obligation to consolidate at all. If you are struggling, I suggest you see the CAB to look at the options available to you.

gemmacots

Sorry, don't mean to sound thick, but what is the CAB? thanks

BoGoF

In answer to your headline question - no they don't.

Your credit score with Experian means nothing, a waste of £5 or whatever they charge.

Whether you like it or not you are a high risk to any lender and the fact your monthly payments may be lower is of no interest to them.

Can they insist you pay them back at the agreed rates? Yes you signed on the dotted line

gemmacots

ok Citizens advice, thanks, but how could they help, can they sort out a loan? or will they just give me advice? thankyou for your prompt reply

gemmacots

To Bogof, why am I classed as high risk when I have never in my life defaulted on any payments? I have always paid my debts, and the banks can see that by looking through my account over the last 15 years. I am just running through a difficult time right now, which could be massively helped by consolidating my debts? Just do not understand why I am classed as hight risk, I also have a mortgage and the equity in my property is just over £150.000. thanks

zppp

gemmacots wrote: »

ok Citizens advice, thanks, but how could they help, can they sort out a loan? or will they just give me advice? thankyou for your prompt reply

Citizens Advice will be able to give you advice on the best way of goin about dealing with the problem. They cannot do a loan as they are advisory, however, they can sometimes reduce interest, set up payment plans etc. They won't charge for any services, so IMO you need to see them to look at your options.

BoGoF

Ok, how much do you owe in total ?
What is your income ?

Surely anybody who is using an overdraft for everyday living is in trouble, you may call it 'a difficult time' to any lender it's a turn off.

The fact you have equity means nothing for an unsecured loan, as you have found out you can get a secured loan.

The reality is the banks are very wary these days

gemmacots

Yes, I can see where you are coming from, I just thought the bank I have the credit card and loan with, Lloyds, could see that by consolidating the loan and credit card would help me get ahead of myself as I have been with them for 15 years and it is the first time this has happened partly due to the recession. At the end of the day they know my history as I have only ever banked with them. I can understand they are weary but I sort of get the feeling that they also know they gain to lose about £400 per month if they give me a better interest rate by consolidating the loans. They know I always pay. Just feel like the first time I have run into trouble and they don't seem to want to help to get me out of debt. As I said earlier, I have never defaulted on one single payment in my whole life, so find it a bit strange thats all. Plus I was never after an unsecured loan, I am willing to have a secured loan if that is what it takes

zppp

gemmacots wrote: »

Yes, I can see where you are coming from, I just thought the bank I have the credit card and loan with, Lloyds, could see that by consolidating the loan and credit card would help me get ahead of myself as I have been with them for 15 years and it is the first time this has happened partly due to the recession. At the end of the day they know my history as I have only ever banked with them. I can understand they are weary but I sort of get the feeling that they also know they gain to lose about £400 per month if they give me a better interest rate by consolidating the loans. They know I always pay. Just feel like the first time I have run into trouble and they don't seem to want to help to get me out of debt. As I said earlier, I have never defaulted on one single payment in my whole life, so find it a bit strange thats all.

I know it is frustrating, but there is no point in dwelling on their (lack of) decision. Is there not a way to transfer your credit card to another interest free? If not, I think I refer to my advice previously and stated by it as sound advice.

BoGoF

I think you're giving to have to have a serious look at your income and expenditure, perhaps have a look at the Debt Free Wannabee section and post up you SOA for some advice.

Short of going down the secured loan option you need to start making inroads into your credit cards and overdraft.

Good luck