What is the difference between default and arrears?

tillie123_2

Im sorry if Im posting in the wrong place but cannot find how to start a new thread. I am enquiring on behalf of my son and apologise for the long winded post.


My son went to his bank in January to draw money out his card was declined on ringing the bank they told him that his account had been closed after a review but would not give him a reason I told him to go to the branch who again would give no information apart from that his account had been reviewed and they no longer wanted his custom. I found this hard to believe but after further grilling think it was because stupidly he had been letting his friend use his bank account for betting and there had been large amounts of money transferred between the two accounts. Anyway they would not budge on it and insisted that they had sent a letter saying that they would be closing his account previously such a letter was never received the money that he had in his account they took straight away thus leaving him without any money to pay his bills and live on.


He has an overdraft with them and a loan but in the 14 years he has been with the bank he has never missed a payment. His loan was due on 30th Jan but he was unable to pay this they apparently then sent a letter demanding total payment of his overdraft £1000.00 again a letter that wasn't received I know this to be the case as he lives with me and gave me permission to open his mail whilst he was at work so we could act on anything that came in. Strangely enough the only thing that he received from the bank was a letter and a welcome pack to his new account (apparently sent in error). The next we heard was when we got a letter from Metropolitan collection services (who apparently are a part of HSBC) saying that they required full payment of this debt £4743.97 that includes the overdraft and that there is now a default on his credit file but again he received no letter saying that this were their intentions it seems a bit strong to me as his payment was only due on 30th January and the letter was sent on 18th February I could understand a late payment/non payment being applied but can they actually issue a default for the loan or the overdraft. He has made an arrangement for this to be paid off at £200.00 per month and it was always his intention to pay it off. The only thing he is guilty of is being stupid enough to let his friend use his bank account for gambling but it seems that he now may have damaged his credit file permanently. We have tried speaking to HSBC who say you need to speak to Metropolitan and vica versa. please can someone help

Tixy

Hi

tillie123 wrote: »

Anyway they would not budge on it and insisted that they had sent a letter saying that they would be closing his account previously such a letter was never received the money that he had in his account they took straight away thus leaving him without any money to pay his bills and live on.

Did he actually have any money in the account? or do you mean the difference between the overdrawn balance and the overdraft limit?

Unfortunately they are allowed and able to freeze/close an account with immediate effect in some circumstances and an overdraft is always repayable on demand.

With regards to the default - if he is unable to repay the overdraft in full then a default was always going to be the result. And actually the sooner the default is registered on his file the sooner it will drop off his file. Whilst he may have had an argument to say that they default was filed a month or so earlier than usual it won't really help him to do so in the long run.

If they have also registered a separate default for the loan after a single missed payment then that isn't very fair, and is against the ICO guidance on filing of default notices. If he checks his credit reports and find that there is a default for this (not just a missed payment) then he may want to try writing to them to state that his loan account was only ever less than 30days in arrears and that he is able and willing to continue to pay the loan (and the arrears) according to the original T&Cs of that account - that is assuming he can afford to do so.

We have tried speaking to HSBC who say you need to speak to Metropolitan and vica versa

He needs to write not speak to either.

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