Irresponsible Lending?

nfollows1982

I just read on another thread that if you look to borrow more than half of your annual income then generally you will struggle to get a loan.

I already had £16k of debt before NatWest agreed to lend me £20k on top (so effectively taking my lending to £36k) despite the fact I only earn £18.5k plus about £5k in tax credits (which I declared as part of my income when completing the assessment).

At the time I had 2 current accounts nearly £2k OD between them with NatWest and never had my account in credit for more than a couple of days. Plus my mortgage is also with NatWest so out of all the lenders they had the best snapshot of where I was financially.

I know I asked for the loan, but it is the monthly commitment on this that has ultimately led me to DMP so…………….have I got any grounds to use this irresponsible lending as a way to twist their arm regarding suspending interest and charges (assuming they reject my DMP proposal)?

DVardysShadow

While it IS irresponsible lending, it is also irresponsible borrowing. It is not an argument I like because if you push it too far, the nanny state will get involved with unintended consequences.

An example of this is interest only mortgages. The FSA clamped down on this under the 'irresponsible lending' because lots of people were getting into trouble with them. Unfortuantely, lenders have not only stopped interest only new mortgages, they are clamping down on existing mortgages where pensioners are able to afford the interest and demanding repayment, causing a lot of unnecessary hardship.

I don't think there is much to be gained form the irresponsible lending card - but wait and see whether your DMP proposal is accepted before you think too much more about this.

January20

When lending/ borrowing money is concerned, I think both parties are responsible. The bank may have been irresponsible when lending you the money, but surely, you saw the figure you would have to repay? Didn't you think about how you would repay the loan, about how much the monthly repayments would be, and how it would affect your budget?

I do think though that the way lenders choose who they are lending money to should be reviewed. It seems that the sensible people who are always in credit, who manage their financial affairs without getting into debt, are being penalised whilst those who, like you, are mostly in the red, are "rewarded" with loans and CCs, etc. (And end up in more debt).

nfollows1982

I'm not in any way shirking my responsibility here. I wanted that money and I went out and got it and at the time NatWest were the greatest people on earth for lending it to me!

My consolidation plans seemed so good and the repayment I never thought an issue at the time. It is my fault the consolidation failed, I was just asking about the IR in case it was something I could fall back on as a bargaining tool.

DVardysShadow

If you want to hurt them for irresponsible lending, go bankrupt.

January20

nfollows1982 wrote: »

I'm not in any way shirking my responsibility here. I wanted that money and I went out and got it and at the time NatWest were the greatest people on earth for lending it to me!

My consolidation plans seemed so good and the repayment I never thought an issue at the time. It is my fault the consolidation failed, I was just asking about the IR in case it was something I could fall back on as a bargaining tool.

Hindsight is a wonderful thing isn't it?
May I ask why you consolidation failed? It could be useful information to a reader, potentially in a similar situation and considering consolidation.

bargainbetty

How long ago was this? It is only in recent times that the consolidation loan has been considered less reasonable by banks, largely because of people who did what you (and I) did, in running up more debt rather than using it to clear everything.

The 50% rule of thumb is relatively new. If you told them you were consolidating, then didn't properly settle your debts so the payments were unsustainable, you know you're at fault too. Different rules then, we all got easy money. Too damn easy.

Suggest it if you wish, but don't rely on it to get you the rate freeze you want. Hope for an understanding person reading the letter instead.

I wish you the best of luck!

rising_from_the_ashes

bargainbetty wrote: »

How long ago was this? It is only in recent times that the consolidation loan has been considered less reasonable by banks, largely because of people who did what you (and I) did, in running up more debt rather than using it to clear everything.

The 50% rule of thumb is relatively new. If you told them you were consolidating, then didn't properly settle your debts so the payments were unsustainable, you know you're at fault too. Different rules then, we all got easy money. Too damn easy.

OP I too would be interested to know how long ago this happened?

I totally agree with this Betty - at one point, money was literally thrown at you from everywhere. I'm yet another one who had several credit cards & loans which when added up came to well over 100% of my annual salary......

I'm afraid I agree with the others - faults on both sides and at the end of the day, it was your choice to take the loan and either not clear your existing debts or run up new ones, sorry.

nfollows1982

Hindsight is indeed a wonderful thing!

I did actually consolidate. I paid off everything with the loan money and I closed down nearly everything.

I made the mistake of keeping 2 card accounts open albeit on much reduced limits and I spent on them which meant more monthly outgoings. Then I applied for 2 other cards to keep me going through the month with the intention of paying these back in full each month.

But what I had available got less and less each month so the balances on these cards crept up too and I eventually reached the point that there was more going out than coming in and I ran out of credit to live on.

That's why I am entering into a DMP.

I don't want anyone to think I am putting the responsibility onto the bank and shirking my part in it. I KNOW it is ultimately my fault for slipping back again, like I said in an earlier post I only asked the IL question in case I could use it to my advantage to help with the DMP.

At this stage it is irrelevant as they havent rejected or accepted anything.

For reference the loan was 8 months ago, which is also a warning to others how quickly things can snowball again if you're not completely responsible for your actions!!!

rising_from_the_ashes

Sorry - 7 months since you got the loan & you've already run up new debts? OP has now amended the last paragraph in the above post.

If that's the case, (and sorry if this sounds harsh) but you urgently need to address the reasons for the debts - speaking from experience (and 2 failed consolidation attempts before I actually sat down & worked out why it kept happening & then paid it off the hard way) - as until you do, you'll really struggle to make any progress.

nfollows1982

I know exactly why I am in this position and this is why I have taken the steps I have to go into a DMP.

This is the first time I have posted on here where I feel I am being judged in a negative way