Your advice needed

Charlotte99_2

I took out a loan for £1000 in 2007 to be paid £56 per month over 3 years. For a while I made the correct payments but then my husband was out of work [and still is] so I asked the loan company if it was ok to make payments of £10 per month which they agreed. They took my debit card details and £10 was automatically taken out each month for about 3 years until my debit card expired and I was given a new one. Of course the number on my card was different to the one on their records and the payments stopped. I contacted the loan company to make the £10 payments but they declined saying that the payments were too low and that I had to make the payments of £56. I explained my predicament but they would not accept it. I automatically started paying £10 each month anyway for the last 6 months but now a debt management company [Direct Legal Collections] have now written to me saying that their solicitor has enquired with the Land Registry and see that as I am a home owner they will be putting a charging order on my house. I rang them yesterday and they sort of bullied my into paying £110 per month over 10 months otherwise they said they would put a charge on my house and get the bailiffs in. They wanted the money there and then but I said I didn't have it so they said that I could start paying £110 as from next month. They said that they would contact their litigation department to stop the process of gaining a charging order. I cannot afford the £110 a month but I don't feel I have any other option as I don't want to lose my house and I don't want them to take me to court and I end up getting a CCJ. Can I tell them I can't afford £110 a month or is it too late?

pooch

Charlotte99 wrote: »

I took out a loan for £1000 in 2007 to be paid £56 per month over 3 years. For a while I made the correct payments but then my husband was out of work [and still is] so I asked the loan company if it was ok to make payments of £10 per month which they agreed. They took my debit card details and £10 was automatically taken out each month for about 3 years until my debit card expired and I was given a new one. Of course the number on my card was different to the one on their records and the payments stopped. I contacted the loan company to make the £10 payments but they declined saying that the payments were too low and that I had to make the payments of £56. I explained my predicament but they would not accept it. I automatically started paying £10 each month anyway for the last 6 months but now a debt management company [Direct Legal Collections] have now written to me saying that their solicitor has enquired with the Land Registry and see that as I am a home owner they will be putting a charging order on my house. I rang them yesterday and they sort of bullied my into paying £110 per month over 10 months otherwise they said they would put a charge on my house and get the bailiffs in. They wanted the money there and then but I said I didn't have it so they said that I could start paying £110 as from next month. They said that they would contact their litigation department to stop the process of gaining a charging order. I cannot afford the £110 a month but I don't feel I have any other option as I don't want to lose my house and I don't want them to take me to court and I end up getting a CCJ. Can I tell them I can't afford £110 a month or is it too late?

It was kind of the lender to allow you to reduce your monthly payments from the agreed £56 per month to just £10 per month for a period whilst your husband found himself unemployed.

However, I doubt the lender had any desire for this to go on ad infinitum, and after 3 years I can understand they now want you to address the amount loaned.
Be aware also, that unless agreement was reached otherwise, your lower repayments were simply adding more interest to the amount originally loaned.

After 3 years, you really need to get this debt under control.
I don't think anyone will give much credence to your cries of not being able to afford more than £10 per month when you have agreed to pay over a ton next month.

I suggest you visit the Debt Free Wannabe board where there will be many who can help you address your debts.

CAB_Swansea_Bay_representative

Hi Charlotte99, thanks for your query regarding your advice needed.
I am presuming that the loan you have taken out is an unsecured personal loan regulated by the Consumer Credit Act and that when you were not paying the contractual amounts you received a default notice which is why they are now threatening court action. Unfortunately debt collection agencies often threaten court action and enforcement but this is seldom used if you are in contact with them and making a regular payment. A charging Order is an enforcemen order made by the county court to secure a unsecured debt onto your property so that if you sold the property you would have to pay the debt from the proceeds of sale and also it allows the creditor to apply to the court for an Order for Sale which forces a sale of your property, although this is very rare.

When dealing with non-priority debts it is important to make sure any offer of repayment you make is affordable and sustainable so I would suggest you complete a budget sheet and write to DLC with the budget sheet and an offer of repayment. You can find template letters and details on completing a budget sheet at www.adviceguide.org.uk. The creditor will then have the option to accept the offer or reject the offer and take court action but you will have the opportunity to make the offer of repayment to the court and also to explain your circumstances and that you have been making regular payments for a long period of time and it is likely with a relatively small debt such as this that the court would set up a payment arrangement for the offered amount and as long as that is maintained no Charging Order can be sought by the creditor.

I would suggest that if you have other debts you cannot afford to pay or receive a summons to court that you seek advice from a debt specialist as soon as possible and you can find details of your local Citizens Advice Bureau at www.citizensadvice.org.uk.

Hope this is of assistance