Please Help... too good to be true, whats the catch??

nfp20

In 2001 I had a huge change in circumstance that effected my long term health and as a consequence future. My finances went to pot and I sought assistance from my bank. I had a credit card which was nearly £6,000 two bank current accounts both with overdrafts (student account £1500 and Gold service £600).

I managed to arrange to pay £40 a month off my credit card based on a long term interest free (till the debt was repayed) agreement on my credit card and am now with a few extra payments down to £2028. Last year Lloyds cancelled my original agreement and removed my DD which was set up to pay my debt off but after an argument they offered to replace it with the same £40 per month interest free but changed the name to an informal plan refusing to send out any correspondance confirming my agreement - despite the fact it was arranged with them. I had to set up a standing order as they would no longer allow me to use my DD facility to pay my £40 per month and I was advised by the staff to ignor any correspondance because it was system generated and they were unable to cancel it. I started to receive statements that showed I had an amount 'available to spend' despite the fact the credit card was closed and only on a repayment plan. It also showed interest set with their usual rates but with 0% interest to pay in the section showing the interest total for that month. I queried the available spend and was advised just to ignor the statements again they were system generated and they were unable to stop them being sent or make amendments, neither would they send me anything that showed the agreement that had been made with regard to repaying my debt.

A couple of months ago I started to notice more changes to my statement. Showing that I had an outstanding balance on my account. I have NEVER missed a payment not a single one and neither has it been late. So again I questioned why this outstanding balance was showing on the statement as it stated that if the outstanding balance was not paid I was defaulting my agreement by failing to pay the minimum monthly amount. Again I was advised by Lloyds staff in collections to ignor the statements. This month my statement advised me that my account was in default and that my agreement was therefore cancelled! I contacted the bank and they now advise me that as my debt is nearly at the 2% that the majority of people pay they will be adding interest to the account and that my choices despite my circumstances not having changed financially are:

• Pay the minimum 2% +interest on the remaining debt
• Have my account sent to recovery and pay a hardship % which will add approximately £600 to my current £2028 debt and increase my remaining months from 50 to 68 as well as adding a default notice of none payment to my credit file
• have my account sent to recovery department and have the debt written off

Which ever option I choose my debt with my credit card is being sent to recovery and my credit file which I have been desperately trying to keep intact is going to be ruined by a failure to pay default notice despite the fact that I made a formal arrangement with my bank that was supposed to last until the debt was cleared and have never failed to make a payment. The bank keep changing the goal posts and I appear to be totally unable to do anything about it.

The last option which is the one they are pushing me into accepting sounds to me to be too good to be true and that old saying keeps coming to mind 'if its too good to be true then it probably isn't'. And as the bank has the option of me paying back the money I don't understand why they would offer me this third option when the other two both involve them making a profit???

I have an arrangement on my graduate account that is a reducing overdraft at £15 per month and currently nothing on my gold service account. In the last few months they have added an additional fee for overdraft usage and interest on top of that despite it being an arranged facility so my costs have gone up when my budget which is very low has not.

Ideally I would like to accept the write off as that would reduce my debts by £2028 and put the money I have been paying to that into reducing my graduate account debt but I am worried that doing that will have consequences I am not aware of that I will regret. My bank won't give me a straight answer and have been sending me round the houses! Neither will they send me a copy of my original agreement or the amount of PPI if any was paid on the accounts so...

My question is: What are the consequences of accepting this gift horse???

The bank are pushing for an answer and not giving me much time to ask for help so I am hoping someone on here will be able to advise me.

I do feel like my bank have not been behaving honorably by pushing my account towards third party recovery companies when an arrangement was in place that I have honoured. I feel that I have stuck to my part of the agreement but that they have not.

JuicyJesus

I think by written off they mean sent to their collections team (internal or external). It's written off to Lloyds then, but not as far as the company they sold the debt to is concerned.

nfp20

thats what I thought but they assured me and confirmed it is written off completely there would no longer be a debt but that it would show on my credit history as a defaulted payment, there would be no selling of the debt onto a third party unlike with option two where the debt would be sent to recovery a fee added to it and then sold on to one of their third party recovery companies who I could set up a payment plan with.

This is why I wondered about it being a gift horse... they did say its because of my circumstances and that I could choose which option to take again why I wondered what the catch is???

JuicyJesus

Ah. The catch with that is you have a default on your credit file, which is pretty appalling credit-wise, right up there with a CCJ. It will restrict what you can do to a massive degree.