PPI Success...HSBC giving money to Metropolitan! HELP...

Tseten

Hello,

This is my first post on this forum, or atleast the first in a very long time, so I hope you can help me...


My mother defaulted on a loan (possibly two) with HSBC. Going back through her documents she owed £9,xxx

They passed her debt over to Metropolitan Collection Services Limited and she has been paying back £50 per month for quite some time, we estimate that she has around £7,500 left to repay.

Two months ago I completed a form with her to reclaim PPI with HSBC, today she received a letter offering £3,600 for two loans.

The catch being they say the money will be used to pay towards her remaining debt (they're giving it too Metropolitan!)

Is there anything we can do about this? Shes retired and she was very excited to see £3,600 but devastated when she read the last page.

it says on the acceptance form "...Understand that this amount will be used to reduce my outstanding debt with HSBC"

I figure that Metro bought the debt from HSBC? So the debt isn't with HSBC anymore? but with Metro...

IS there anyway she can get the money herself? - Shes already entered into a repayment plan so I don't see why not.

Or we were thinking of phoning Metro and saying that they can accept the £3,600 in full and final settlement of the debt and she will not pay anything else? - If they say no, she won't accept the offer...

Also if she accepted the offer, she would be legible to pay tax, which if my calculations are correct would enter into the hundreds of pounds, money which she doesn't have. So although £3600 of her debt would be settled, she is not in a financial place to be able to pay the tax, if she had the money herself, she could pay the tax and pass the remainder to Metro.

What do you guys/girls advise, any help and/or ideas would be welcomed!

Thanks

-taff

You can't argue with them if they have already said they're going to use it towards her debt.
She should get the associated interest though. On which she will have to pay tax, but they may take it out of it before they give it to her. [She will only have tp ay tax ont he interest, not on the capital]

http://www.moneysavingexpert.com/banking/setting-off

[Deleted User]

Lots of threads about setting off lately...

Sarros

I know this probably won't make you feel any better but at least your Mum's debt will be greatly reduced with this setting off and it sounds like she may be able to keep some of the interest as Taff states above.

Tseten

So as I understand it, she would only have to pay tax on the 8% interest?

The letter did say that it would be used towards her remaining debt, with no mention of her getting the interest?!

[Deleted User]

Tseten wrote: »

So as I understand it, she would only have to pay tax on the 8% interest?

Yes, but only if she actually receives the interest of course. You need to clarify if any interest is being paid to her direct.

Tseten wrote: »

The letter did say that it would be used towards her remaining debt, with no mention of her getting the interest?!

The Bank are not required to award you the interest, they can off set the entire redress towards outstanding debt and it seems that is what they are doing;
http://www.moneysavingexpert.com/banking/setting-off

Effectively this means that your Mother's debt will reduce from £7000 down to £3,400 and she will not be liable to pay any tax on money she doesn't receive personally.

On a positive note, her £50 a month repayment plan will now take five and half years to pay off her debt instead of eleven and a half.