Pay plan due to end...

Debthelp83

My husband is 3 months away from the end of a pay plan to clear his debts (loans and credit cards)

Stupidly I thought the end is nigh but PayPlan have come back saying its going to continue as there is still a balance of over £10000 of interest! Plus even if he pays for another 2 years there will be another set of interest.

Is there anything we can do to offer less but it full settlement as this could go on for years?

fatbelly

This is why it's important to get interest frozen. Payplan don't seem too bothered about this.

It sounds like he's making significant monthly payment. How soon could he save 3k if he stopped paying now?

Debthelp83

Thank you for your response

Repayments have been 500 a month. We were under the impression that PayPlan had been acting to freeze interest but this hasn't happened.

I could probably get 5000 interest free from family but not 10k is there any way to negotiate a lower settlement figure if we pay a lump sum now?

fatbelly

Debthelp83 wrote: »

Thank you for your response

Repayments have been 500 a month. We were under the impression that PayPlan had been acting to freeze interest but this hasn't happened.

I could probably get 5000 interest free from family but not 10k is there any way to negotiate a lower settlement figure if we pay a lump sum now?

Yes - that's why I mentioned 3k.

They may be less inclined to accept a deal given that they will be enjoying the interest and can see that going on for another 20 months.

But it is an option for you to now stop payments and offer 30p in the £ to conclude things, making the point that you had been led to believe that interest had been frozen and The Lending Code suggests that they should have been prepared to do that.

Subscribers should consider reducing or stopping interest and charges when a customer evidences that they are in financial difficulties. Such reduction/suspension decision should be based upon an income and expenditure statement indicating that they are unable to make repayments sufficient to meet contractual terms. Where a customer is able to make only token payments, their debt should not increase as a result of interest and charges levied. The assessment should reflect the customer’s lack of ability to pay rather than the stage an account has reached in the arrears cycle or whether they are using free sources of debt advice. Where a firm declines to allow concessions, they should be prepared to explain why to the customer or their adviser if requested to do so.

225. It is inappropriate for interest and charges to continue to be taken where the result would be that the repayment period for the customer becomes excessive. In forming a judgement on what might be excessive, a subscriber should take into account the type of product and the individual circumstances of the borrower.