Helping a friend with debt - have I done right?

booter

Hi all. Hope you're all sitting comfortably, but I'd appreciate a little advice, and want to give you a full(ish) picture.

A friend of mine (with some problems with alcohol) was given a c.card by Lloyds TSB in 2006 when she opened a bank account. She didn't really want one, (in receipt of benefits only, not working) but had it anyway and left it in a drawer.

A year later, she found it - and then the trouble started! She basically ran up a £3000 debt on the card and was unable to pay even the minimum monthly repayments. After struggling to make payments, she contacted the bank, who told her the best thing would be to take out a loan to cover the card debt - after all the interest would be lower (!). So she did. The loan was for around £2500, and the "loan protection insurance loan" was around £800. So in total, the loan was £3300 ish. The payments should be around £95.00 a month - she was (and still is) on income support. The current rate of income support for her is £192.00 a month. Needless to say, she never did very well in repaying the loan. Over the years, her ex-husband stepped in to arrange an interest freeze/reduction in repayments on a couple of occasions - both for 6 month periods. However, he's decided he's had enough. So she ignored it all, hoping it would go away.
The debt has now been passed to a collection agency. She phones me in a total panic, and so I enter the picture. I contacted them on Friday - explained all the circumstances and gave them a detailed breakdown of income/outgoings. In a nutshell, they've agreed to a payment plan of £5.00 a month - this will repay the debt in 2052(!) if her circumstances don't change.

I asked the collection agency if Lloyds would freeze the interest now the debt had been passed to them. I was told that they usually do, but he couldn't confirm this - only Lloyds can.

Now, IMO, my friend was potentially mis-sold the credit card/loan/loan protection insurance. We're working on claiming the loan protection insurance back. Her ex did do a letter around 3 years ago to complain about misselling, but with no real response (that I'm aware of).

Does anyone have any suggestions/ideas/further avenues to consider, and any advice on whether what I've done so far is OK? And does anyone know if Lloyds will freeze the interest on this loan? Please bear in mind that with the alcohol problems, the correspondence my friend has is a bit threadbare and communication with her can be a little tricky at times!

Look forward to your input (I think!)

Apples2

I think you are doing a great thing by standing by her so thats a good thing.

On the other hand, she has been finding enough money to feed an alcohol addiction - this money could have gone toward her debt.

The PPI is an avenue to persue, there is lots of advice on this over on the RECLAIMING PPI BOARD

From what you say, obtaining the loan in the first place seems an entirely proper course of action on the part of both the bank and your friend. I can't see anything to justify mis-selling, she ended up in a better position with the loan, than before.

No idea about freezing interest, sometimes they do, sometimes they don't. Her credit rating is already through the floor by the sounds of it.

geordieracer

Im surprised they actually spoke to you when you contacted them as claimed. DPA should be in full effect there but i digress. ... Why is he only getting £192 a month in benefits? the going rate is higher then that so something is amiss there. Get her to speak to the benefits office abotu this immediately to sort something out.

booter

Hi - thanks for the replies.
geordieracer - the collection agency spoke to me after getting her permission first. The £192 in benefits as far as I understand is the amount she actually collects - from what can I gather, she's had a previous loan from the BA which is also being paid off. But as I say, with her problems, sometimes it can be a little tricky to follow what's gone on.

Apple2 - I agree wholeheartedly that her money could have gone toward her debt rather than alcohol. However, she hasn't really ever admitted there is a problem, and having never had the problem myself, I can't say what it will take to make her admit it. I don't think that the bank mis-sold the loan particularly, but IMO they should never have given her a credit card in the first place - she was on benefits then. And although this may not have been mis-selling either, it was certainly irresponsible of them. But I suppose this happens, or happened quite regularly. Thanks for the link though, as I say, reclaiming the PPI is in hand.

rhcp

booter wrote: »

I don't think that the bank mis-sold the loan particularly, but IMO they should never have given her a credit card in the first place - she was on benefits then. And although this may not have been mis-selling either, it was certainly irresponsible of them. But I suppose this happens, or happened quite regularly. Thanks for the link though, as I say, reclaiming the PPI is in hand.

LLoyds gave me a credit card when I was on benefits and I was grateful for that. I just needed it for emergencies (which thankfully I haven't needed it for - yet!!). Maybe it wasn't the bank who was being irresponsible.