Lloyds TSB

NettyJD

I'm not sure if I'm looking for an answer or a platform for a moan!

I have been paying via a debt management plan with step change for 4 and a half years now. My debt free date would be Feb 2014 if it wasn't for the fact that I had a baby 4 months ago and am now on maternity leave - this will probably extend my debt free date to Dec 2014 ish....

Anyway, as I'm sure many of you will have experienced, my income took a bit of a bashing not long after my daughter was born, this subsequently has affected the amount of money paid to Step Change.

When I began the debt management plan my overdraft balance with Lloyds TSB was approx' £3000 owing. This is now at a balance of just under £400 - something I am very proud of! All this time they continued to charge me interest and overdraft usage fees whilst they reduced the overdraft limit monthly, which I accepted. However.... now that my payment to them has dramatically reduced, they have decided to what feels like "punish me", and send the account to their recovery department, subsequently placing a default notice on the account.... I feel like I have been working so hard to become debt free, and that this is now a further set back to my hope one day to obtain a mortgage (OK, quite far down the line) as my plan was to save the £300-£400 a month that I have been paying for the last 4 years, once the debt it cleared...

Can I complain about the default? Do I just have to accept it?

Thanks in advance for any advice help.

Netty

*Foolish*

This is unfortunate. Do you have any other defaults as a result of your DMP? I am surprised your account stayed with Lloyds' collections department for so long, from my phone call with them this week, I was told that an account will only remain with their collections department for a maximum of 6 months, in which time the debt is expected to be paid off and all interest and fees will continue to have been added, however there would be no default. If the account will take longer than 6 months to clear, then it is referred to their recovery department, where they will issue a default and freeze all interest and charges.
In your case, I would argue that once you started your DMP, your account should have been referred to recovery straight away and the default issued (this is what has just happened to me, although it took me to write a letter of complaint to get them to do this, but also got all charges/interest/fees refunded and a £50 cheque for compensation).
I am not sure they will revert you back to collections, I would complain to them that you should have been issued a default 4 and a half years ago, and that you want a refund of all interest and fees. Then if they back date the default, you'll only have it on your file for another 18 months.
Hope this makes sense!

NettyJD

This makes a lot of sense thank you!

I raised a verbal complaint on the phone earlier, and subsequently a "supervisor" called me back to explain again that there is nothing they can do.... She did actually say that collections only deal with accounts short term... when I questioned why the account had been with them for 4 and a half years she kind of back tracked! I've been very good at keeping Step Change up to date with my income and have been very honest meaning that my payments to my debtors in that time have only ever increased as a result of pay rises, clearing family loan etc....

I have questioned a number of times with Lloyds why they deal with debt the way they do... to answer your question I do have two other defaulted accounts... one is a loan with Egg that defaulted as soon as I entered the DMP - happy with this, as was to be expected. The Lloyds loan I had however took almost 2 years to default and for the interest to be frozen due to the way they calculated "arrears", which mean the debt balance stayed the same for that time despite me paying them almost £1500.

I will write a letter of complaint as they have had an awful lot of "extra" money off me since I threw my hands up, admitted my mistakes, and asked for help.

Thank you again for replying.

Back_on_budget

I think you are right to complain. If you scan throu the DMP Support thread there are examples of letters. If your complaint doesn't go anywhere, try contacting Group Executive complaints. Ben.taylor@lloydstsb.co.uk was who I dealt with. Make sure you threaten the FOS, and go there if you have to.
I expect that will try to fob you off, but if you keep the pressure on, they will probably give in, as they know they are in the wrong.
I managed to get a refund of interest and charges, plus £100 compensation.

You never know, if you can get the charges refunded, your DFD may come sooner than you thought!

If the default the account, It's also worth trying to get at backdated the 4.5 years. Then you will only have it for another 18 months.

Good luck - and try to enjoy the fight! I begun to think of bank bashing as a new hobby!

NettyJD

Excellent! Thank you! I had been saying to them all along that the way they were dealing with my debt was not helpful. I will look for letter help as not too sure on what to say etc.

Thanks again.

Lynette

matttye

Are you saying you've been paying reduced payments to lloyds for 3-4 years via a DMP?

If so, they should backdate the default to 3-6 months after they demanded you pay back the overdraft.

NettyJD

Yes Matttye, that is what I am saying. I thought this was just their very unfair way of getting their money back.

I'm writing a letter of complaint now, has anyone got any tips please?

Back_on_budget

Try something like this....

Dear ....

I am writing to make a formal complaint refering to the bank’s unwillingness to help us in our current financial difficulties with respect to interest and charges on the overdraft of account sort code.... Number....... and refusal to follow the lending code to which you subscribe.!!

I would like to draw your attention to!The Lending Code!to which you are subscribed:

224. 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.

Section 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!".! As the balance on the loan is currenly increasing not decreasing, I suggest that the repayment period will be excessive.

section 224: 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.

We ask that all interest and charges are stopped whilst we continue to be struggling with our debt, and request a refund of all interest and charges incurred since we informed you of our financial distress in **month & year** are refunded.!!We are, of course, more than happy for this refund to be paid directly against the outstanding debt.
If the bank does not agree with this request, I will take our case to the Financial Ombudsman Service."

*Foolish*

Netty, I've replied to your PM. I was hoping that Lloyds wouldn't be your only default because that would suck after not having any for 4 and a half years! However, hopefully you'll win the fight and they'll backdate the default, so it will run along with your Egg one.
If you are successful, they will refund your interest and charges to your account, which I would imagine will clear it, then you should get the remainder, but they may use it for your Lloyds loan.
Good luck.

matttye

NettyJD wrote: »

Yes Matttye, that is what I am saying. I thought this was just their very unfair way of getting their money back.

I'm writing a letter of complaint now, has anyone got any tips please?

The ICO's guidance on adding defaults states that an arrangement to pay should last 3-6 months, after which the account should be defaulted. It says that those who make an effort to pay back what they owe should not be put in a worse position than those who make no effort to pay.

In this case, if you hadn't paid anything towards your overdraft at all, then you would have been defaulted roughly 3-4 years ago. You have therefore arguably been put in a worse position than someone who made no effort to pay.

Type 'ICO default guidance' into Google and have a read of it yourself. You can quote paragraphs from the guidance in your letter of complaint.

NettyJD

Update people!

They have agreed to refund me unplanned charges applied as a result of the delays in each 6 months review. This amounted to £350! So as a gesture of goodwill.... they have refunded the total account balance outstanding (£361) and at my request are closing the account! One step closer!!
xx