can anyone help - payplan and court claim

liz1376

Hi
I've been on a DMP with payplan for the past 3 1/2 years.
When we first set up the plan, 4 out of 5 creditors agreed to accept our offers, and agreed to freeze interest. we got a ccj for the 5th creditor, but since then everything has been going smoothly and we were really pleased with how much we've reduced the debt.

On friday, I received court papers for one of the companies that agreed to our offer -Tesco finance. We had no warning that they intended to do this, we've not even had a letter from them for 2 years, yet they have said on their declaration that we have failed to respond to default notices.

Also, they are claiming for the loan, plus 5 years worth of interest, even though we only took the loan 4 years ago (this was the loan that pushed us over the edge and foged us to enter a DMP).

I spoke to payplan and asked how they can do this with no warning, and are they allowed to claim for all the interest when they agreed to freeze it, but payplan said that they can.

Surely thats not right?

We thought we had £7,000 left to pay, but tesco are claiming £12,000 so obviusly a huge difference.

Does anyone know anything about this type of situation?

chevalier

I think that this must be the first time that I have heard of this one to be honest.
I would try and talk to payplan again and see if you get a different response with another employee

Bear in mind that if this went to court, and you showed a judge that you are in a DMP with Payplan and that you have been paying that each month for
3+ years, I can't imagine that the court is going to order a variance.

It also may be that this is just an automated letter from Tesco, that has been sent out by mistake.

I am sure the experts will be along shortly
chev

Donedoingdebt

From personal experience, when a credit card creditor agrees to freeze interest, then that is exactly what happens, ie no interest or charges for the agreed period of time.
When a loan account is defaulted, & a DMP is entered into, generally the creditor will ask for the total amount repayable in the original agreement (original amount borrowed + interest payable over the full term) over the agreed longer period of time. When they say interest frozen on this type of account, they mean they will not add extra (compound) interest or extra charges on the amount owed. Hope this makes sense.

Jolinar

My sympathies.

I would give payplan a call and see what they say but you will probably find if you read the credit agreement that if you are defaulted they reserve the right to have the total interest added on as well. Something similar happened to me with Northern Rock, although they did this at the beginning of my DMP by adding on the interest to what I owed them which is fair enough at least they were up front about it. It does seem a little harsh to do it after 3 years of being on a DMP.

lonely_2

This is really worrying. I'd speak to Payplan again and ask WHY they can do this - and how it would look in court. I know that a DMP is not a legally binding agreement, but if they have accepted the offer and frozen the interest, why would a court rule in their favour now?