Lender has terminated my loan in error, where do I stand

Conrad2

Over the last month, I have received two letters from my lender indicating that I have defaulted on a repayment for a personal loan. I would like to state here that there has been no default, and that all payments have been made as scheduled.

The first letter bore no information other than to say that my house will be called on a specified date, and threatened to take money from my other accounts if a payment wasn't made. Thinking that this letter may have been sent to tee me up for a personal information scam, I contacted the lender to warn them, and came to the conclusion that it may actually be for real - I told the call center staff that the lender was obliged to contact me in a civil and informed manner to which I would reply.

The second contained a default value (not the same as my regular repayments) and account number but no date for the non payment, ie giving me no reference to check against. It also gave me a deadline to pay the 'defaulted' sum or the agreement would be terminated. Following this letter, I made a complaint to the lender via their website, quoting the account number and recounting the events; I received no reply in the promised five days (and still have not). Two days before the deadline I received a letter from a collections company, dated five days before the deadline, requesting the full outstanding amount of the loan - I have taken this to mean that the agreement has been terminated and that the lender decided not to give me the time promised.

On 1 October, despite also seeking full repayment, the lender attempted to take the next due payment for the cancelled agreement using a DD facility set up for it, which I had cancelled on 27 August. I have been informed by my bank that the money will not be paid.

Please, can anyone tell me where I stand, being completely innocent in this (I know this sounds unlikely, but I have checked my current account and previous annual accounts for the loan, and I have not missed a single on time payment as per the now cancelled agreement.

What obligations do the lender have to put things right in terms of unfair accusations of default, negotiating a new agreement and damages for distress?

What obligations do I have as an innocent party, receiving unfair treatment from the lender, to negotiate a new agreement?

I understand that the court have some powers to adjust the way repayments are made due to an unfair relationship between lender and borrower, does anyone know some examples of what this may be?

This seems to be a very unusual case!

DevCoder

The lender, if what your are saying is true, has to put you in the same position as you were before this happened.

Anything else is goodwill.

Why didn't you put your complaint in writing (or did you)? and then follow the complaints procedure.

Tixy

I would write to your lender and send by recorded delivery.

State that in your opinion all payments have been on time and ask for a full transaction history of the account. State clearly that the account is in dispute.

If they have made an error then they will likely correct it and allow the loan to continue. If a default has been registered before it is sorted then they will remove this if they are found to have made an error.

You are unlikely to receive anything for 'distress' or 'accusations of a default'.

In terms of your obligations - you are not obliged to enter a new loan agreement with your lender - you would be entitled to repay the full loan balance outstanding if you wished to do so.

Apples2

Why did you cancel the DD on 27 Aug?

Is it just me reading this thread as if all this hassle has happened since you cancelled the payments?

Conrad2

Cancelled the DD because the lender had presented me, via a collection agency, with a collection order for the full amount of the debt. I took that to mean that the agreement had been cancelled and therefore they had no right to expect further regular payments via direct debit.

e.g. If I had paid off the full amount, they would still have taken the regular payment for an agreement that didn't exist.

Conrad2

krisdorey wrote: »

The lender, if what your are saying is true, has to put you in the same position as you were before this happened.

Anything else is goodwill.

Why didn't you put your complaint in writing (or did you)? and then follow the complaints procedure.

I made one complaint via the lender's website, to which (in the two weeks since it was sent) they have still not replied - if they had done so, the error could have been avoided. Even without replying, there was enough information in the complaint to identify the account and the issue.

On receipt of the collection notice from the collection agency (28 Sept), I made a further complaint in writing to the lender's collections manager.

As I see it at the moment, there is no agreement, and that is in no way my fault. I do not refute that I still have a debt with the lender, but they have taken repayments out of my hands, leaving me in a difficult and stressful situation.

I do not see that it is down to me to correct the error made by the lender other than to bring it to their notice that they have made the mistake. In any other relationship that would not be seen as unreasonable.

I strongly feel it is now down to the lender to contact me to put a new agreement in place, as they have cancelled an agreement that was acceptable to both parties through their own error, ignoring
complaints (by phone and by their own online channels) made by myself. If and when they come to me I am ready to talk, but I feel that it is down to them to come to me.

What I was hoping to find out here is whether their actions have given me some sort of advantage to negotiate a new agreement.

I am very surprised that the lender should not be penalized in some way when they have acted as they have (e.g. ignoring complaints, jumping deadlines, failing to protect customers from system bugs, causing distress). They will no doubt be preparing a raft of charges and penalties to be applied to my overall debt. It seems a little unfair if any repair they may make is purely a matter of good will.

That suggests an uneven relationship between lender and borrower to me.

Eonel

Cancelling the DD is still an unusual reaction to the situation. Several other of your reactions also seem unusual for someone who suddenly & inexplicably has a loan defaulted purely by admin error of the Lender.

I suspect that you do know the Lenders reasons for the default, but disagree with it so feel there is no relevance to putting it in this post.

But if you want the best advice from the Internet, you will need to give us the complete picture.

CKhalvashi

Eonel wrote: »

Cancelling the DD is still an unusual reaction to the situation. Several other of your reactions also seem unusual for someone who suddenly & inexplicably has a loan defaulted purely by admin error of the Lender.

I suspect that you do know the Lenders reasons for the default, but disagree with it so feel there is no relevance to putting it in this post.

But if you want the best advice from the Internet, you will need to give us the complete picture.

Cancelling the DD is a potentially lethal situation, even if lender is fount to be in the wrong.

Instead of updating the CRA's with correct info, they can claim that after the initial issue, OP has made no attempt to pay, which could result in a (correctly issued IMO) default.

CK

pvt

Conrad2 wrote: »

I took that to mean that the agreement had been cancelled

Oooooh! I think you probably know that isn't the case.

The lender is probably invoking (albeit in error) clauses in the agreement that say "if you fall into arrears we have the right to demand all our money back". That's far from cancelling the agreement.

Taking your argument to its extreme, if the agreement is cancelled then there is nothing that requires you pay them any further money at all. Which, of course, is nonsense.

Tixy

Conrad2 wrote: »

using a DD facility set up for it, which I had cancelled on 27 August.

Conrad2 wrote: »

Cancelled the DD because the lender had presented me, via a collection agency, with a collection order for the full amount of the debt.

Conrad2 wrote: »

On receipt of the collection notice from the collection agency (28 Sept),

Why did you cancel the DD a month before you received the collection notice that was the reason for you cancelling the DD?

Conrad2 wrote: »

This seems to be a very unusual case!

If you can provide the just the factual details of what happened and the dates etc without the stuff about unequal relationships and emotional stuff about how its making you feel then people might be able to best advise you how to get out of the mess with minimal damage to your credit file.

SeanG79

Irrespective what caused the error, once you cancel your direct debit and no longer make payments on time, you are at fault and all future defaults, etc. will remain on your profile even once you have resolved the situation.

Effectively you have damaged your credit profile for the next 6 years even after you manage to rectify the situation with the lender.