PLEASE HELP! Payment plan cancelled, being blackmailed to pay interest - Lloyds TSB

HillyBillie

Short version: 4 years ago, I set up a payment plan with Lloyds TSB on my credit card and the account was frozen. I've paid it down from 8500 to 2500 in that time.
They sent a letter today saying it was reverting to being an active account with interest and charges payable, unless I couldn't afford to. I can't so I rang them and did an income/expenditure. They agreed I could set up a new payment plan BUT that if I did, my account would be passed to a debt recovery firm and registered as a default, which would last on my file for 6 years!
I said that could hardly be fair, as I'd kept up my payments for the last 4 years and shouldn't it have been put in default then, if necessary? Hardly seemed right that they should cancel the plan, then treat me as a default, when I'd followed our agreement all these years.
She just kept saying it was bank policy and has escalated it to a supervisor. I'm waiting for them to call back. Any advice? Is this legal??
I should add, the only way for me to avoid all this is to accept interest on the account again. Big surprise eh? Blackmail or what.:eek:

You-kip

I take it you don't work because the interest lloyds will charge you on 2.5k will hardly be crippling.

opinions4u

Any agreement for them to waive interest is voluntary on their part.

ChopperST

Are you still on your DMP?

HillyBillie

They cancelled everything to reinstate the active account so there's no plan in place.
I know it's voluntary but what I object to is it being cancelled for no reason, after years of running well and helping me to pay off the balance and then being treated as a default, when nothing has changed from my side of things.
I'm doing what I can to pay off my debts, this one included so it's a shock when something increases instead of going down, especially when money is so tight.

ChopperST

Do you have an income?

HillyBillie

I do. I'm self-employed and, like many people, the recession has hit quite hard.

Clive_Woody

HillyBillie wrote: »

Short version: 4 years ago, I set up a payment plan with Lloyds TSB on my credit card and the account was frozen. I've paid it down from 8500 to 2500 in that time.
They sent a letter today saying it was reverting to being an active account with interest and charges payable, unless I couldn't afford to. I can't so I rang them and did an income/expenditure. They agreed I could set up a new payment plan BUT that if I did, my account would be passed to a debt recovery firm and registered as a default, which would last on my file for 6 years!
I said that could hardly be fair, as I'd kept up my payments for the last 4 years and shouldn't it have been put in default then, if necessary? Hardly seemed right that they should cancel the plan, then treat me as a default, when I'd followed our agreement all these years.
She just kept saying it was bank policy and has escalated it to a supervisor. I'm waiting for them to call back. Any advice? Is this legal??
I should add, the only way for me to avoid all this is to accept interest on the account again. Big surprise eh? Blackmail or what.:eek:

I suspect they see it as you have now had 4 years interest free on this debt and they were hoping by now that your finances would be in a better place so they are going to start charging interest again.

You could try one of the free debt charities to see if they can offer any advice but I am not sure you have many options other than accepts the interest charges or take the default.

ChopperST

I suppose technically you are in default as you didn't stick to the original agreement. Could a friend or family member loan you the £2.5k to clear the card and start a fresh?

bengal-stripe

HillyBillie wrote: »

I know it's voluntary but what I object to is it being cancelled for no reason, after years of running well and helping me to pay off the balance.......

You said, you have been able to pay back 6k in 4 years, that is £125 per month. You can continue to pay £125, although, depending on the interest rate, it will take longer than 20 months to clear the debt.

The bank has supported you for 4 years by waiving the interest, and so the bank now thinks, if you can afford to pay £125 a month, you can afford to pay the interest due. (After all, you are not on a £1 per month arrangement).

I realize that is not what you want to hear, but I cannot find the bank unreasonable to ask now for interest at this late stage with less 1/3 of the debt remaining.

view

why can't you just keep paying them the amount that you were paying before interest was 'defrosted' ?

the same thing happened to me, almost exact figures, and although I was charged interest and it took longer to pay it off, pay it off I did. I kept the direct debit as the same and just kept paying and paying until it was gone.