advice needed re loan taken out for now exboyfriend and problems with repayments

amandaindie_2

HI, I am posting this on behalf of a friend who is having problems with a loan she took out in 2009 from Barclays. Her then boyfriend had a bad credit rating and couldn't get a loan himself, so he talked her in to taking out an £11000 loan out for him, which she did. The loan was paid in to her account, she then transferred it to his account and he was paying her back monthly via a standing order. They had a child together in 2011 and they split up shortly afterwards. They have had some problems since and he is now refusing to pay back the loan, and he cannot be made to see reason and is being very nasty about the whole matter.

My friends circumstances have changed since she took out the loan and she is now a single mum on benefits and cannot afford the monthly repayments. She has been in touch with a company called payplan who have been n touch with barclays on her behalf and have told her called her back today with 2 options either bankcruptcy or pay 100 to the loan each month and they Will ask barclays to freeze the interest.

She rang barclays back herself and they said they wouldn't be able to freeze the interest or lower the payments (meant to be £166) At a push she could manage to pay back £100 but definately not £166. Barclays advised to get a loan to pay off this one, but they wouldn't accept her as she don't earn enough. The outstanding balance of the loan is £3578.

She has been in touch with CAB and booked appointments with them on several occasions but they keep cancelling her appointments at the last minute. Payplan are calling her back on monday for her decision on whether to start bankruptcy proceedings, which she doesn't want to have to do. Surely it would be in Barclays interests to take the reduced payments and freeze the interest as if she were to be made bankrupt they wouldn't get their money back at all.

Can anyone offer any advice?

Apples2

Nobody goes bankrupt for £3.5k, it is madness, I am amazed Payplan have even suggested that as an option.

Worse case, just default on the thing and deal with the collections dept. Her credit file will of course take a pasting meaning she won't get credit for at least 6 years.

Even letting it run to a CCJ is a World better than going BR.
£100 a Month is entirely reasonable for £3.5k debt so they wouldn't get far taking it to Court for more.

Is there anyone else who could help her out? forget the ex boyfriend for now, there may be an avenue if there is any evidence but it wouldn't come to anything in the short term.

amandaindie_2

Unfortunately no, she doesn't have anyone who is in a position to help her out.

amandaindie_2

SHe;s just told me that the 3500 doesn't include interest, so with interest it is more like 6k

stephane_2

Of the outstanding balance of the loan is £3578....then it can't be £6000. An outstanding balance include the interest

amandaindie_2

My mistake, I thought she'd said it was the outstanding balance. She has written ''There is 3578 left but that's not including interest which they add 6.9%
Meant to finish Oct 2015 I think''

Paul_the_Painter

That's how most loans work, outstanding balance £3578, interest added monthly which would be around £20, then payment taken off.
Is her back account with Barclay's? If so she should open another one, otherwise Barclay's will take what's owed out of her current account.
It's quite a small amount to ruin her credit record for, if she is going to go ahead and default on the loan, it may make more sense to do it properly and just pay back £5/month until she is more on her feet.

dalesrider

amandaindie wrote: »

Unfortunately no, she doesn't have anyone who is in a position to help her out.

I would talk to Stepchange They are a FREE charity used to be known as CCCS.

Looking at payplan, and how they get paid is very unclear :mad: Clearly they are taking a cut from somewhere..... Best guess they take a chunk of the payment to creditors.

But at the end of the day they have money to make so may not make the best decision for your friend... Only waht is going to get them some £££ into their hands.

Payplan_company_representative

Hi Amanda,

At Payplan we do not assist clients with bankruptcy proceedings and nor can we start any type of proceedings on behalf of a client. While bankruptcy may be an option for the client, with this level of debt it would be unusual for someone to do this without attempting another repayment option.

Based on what you have said, could we have discussed the option of a Debt Relief Order, a type of bankruptcy, with your friend? This solution is usually an option for people who have low levels of debt, low level income and little to no assets.

amandaindie_2

I'm not sure, she said bankruptcy to me. What does a debt relief order mean for her?

Payplan_company_representative

A Debt Relief Order is an alternative to bankruptcy and is an option that may be suitable for her. There is some information about them on our website. Or you can look at the CAB website... http://www.adviceguide.org.uk/england/debt_e/debt_help_with_debt_e/debt_relief_orders.htm