Arrangement to Pay

fermi

If you think it was unfair, then take to the FOS.

Let them decide what they think on the matter. It is that simple.

matttye

jamescull wrote: »

Yes, they asked me to pay back the overdraft. It was in their T&Cs – once you finish university, you start paying it back. Seems stupid that the paying back of an overdraft which you are naturally going to use at university is going to affect your credit record adversely...

An overdraft is supposed to be for short-term borrowing needs. They are repayable on demand.

A loan is for longer term borrowing needs.

You should pay back your overdraft in its entirety each month really. If you don't, then you run the risk of the bank demanding that you pay it back and you won't be able to. They would then be able to put adverse information on your credit report.

In your situation, the T&Cs said that you need to pay back your overdraft when you leave university. You should therefore have planned to pay it back in its entirety when you left. You couldn't, but you paid it back in instalments and Santander has put adverse information on your file because of this.

What they've done is completely justified unless the T&Cs specifically said that you could pay it back in instalments once you leave university without any adverse impact on your credit files.

Just to re-iterate:

An overdraft is for short-term borrowing needs and the bank can demand you pay it back in full whenever the fancy takes them. If you can't pay it back, they're entitled to put adverse information on your credit files.

A loan is for longer-term borrowing needs and you will agree how often and how much to pay back at the start of the agreement. The bank can't demand it all back so long as you stick to the terms of the agreement.

I wish you luck with your complaint as it does seem a bit harsh but I don't think you have grounds to have it removed.

fermi

matttye wrote: »

What they've done is completely justified unless the T&Cs specifically said that you could pay it back in instalments once you leave university without any adverse impact on your credit files.

That was the case with my old one if I recall. OD reduced from £1500 -> £1000 -> £500 ->£0 over the 3 years after graduation.

Regardless, if they offered you a repayment plan and did not warn you of adverse consequences involved in that, then it could still be arguably unfair.

matttye

fermi wrote: »

That was the case with my old one if I recall. OD reduced from £1500 -> £1000 -> £500 ->£0 over the 3 years after graduation.

Regardless, if they offered you a repayment plan and did not warn you of adverse consequences involved in that, then it would still be arguably unfair.

Every overdraft is repayable on demand and the repercussions of not paying it all back immediately will more than likely be in the terms.

That's why I say it is harsh but I don't think Santander have done anything wrong. It's worth a shot at going to to the FOS though for sure.

fermi

Don't get me wrong. I too think it unlikely, but the FOS sometimes sees these things in a surprising way.

Always worth making the complaint and taking it all the way as you never know.

matttye

fermi wrote: »

Don't get me wrong. I too think it unlikely, but the FOS sometimes sees these things in a surprising way.

Always worth making the complaint and taking it all the way as you never know.

Yeah definitely worth a go.

I wrote to Halifax asking them to swap an arrangement to pay for a default so that it would drop off my credit files 5 months early next year, and they wrote back saying that there's no record my account was ever with their collections department so they're removing all negative information and paid me £150 as an apology. This was despite me accepting, in writing, that I was in such an arrangement with them.

Just goes to show how bad some records are!

CLAPTON

matttye wrote: »

Every overdraft is repayable on demand and the repercussions of not paying it all back immediately will more than likely be in the terms.

That's why I say it is harsh but I don't think Santander have done anything wrong. It's worth a shot at going to to the FOS though for sure.

student ODs are generally for a period of time and are not expected to be cleared each month
without specific reason it could be construed unfair to repay a student OD immediately.

thomathy

CLAPTON wrote: »

student ODs are generally for a period of time and are not expected to be cleared each month
without specific reason it could be construed unfair to repay a student OD immediately.

Surely the specific reason is the OP is no longer a student? OP in the wrong, sadly. The system is indeed not obvious, but we all have to learn it.

rizla_king

No. Normally student overdrafts extend for a while after graduation.

thomathy

But the original poster quite clearly says this is what happened, that the overdraft was withdrawn at the end, and also that it was in the Ts and Cs of the account. Unfortunately, they were unable to pay. They also make mention of being in financial difficulty.

They describe making an arrangement to pay, but are dissatisfied that as a result 'arrangement to pay' markers are placed on their file. They feel this is unfair because they have made the arrangement to pay and tried their very best to fulfil it and do so quickly.

This is naive and unrealistic.

They also feel that when they made an arrangement to pay, the bank should have informed them that I) they would report this as an arrangement to pay and II) that this may have an adverse impact on their apparent creditworthiness.

But this again is pretty naive.

The bank is highly unlikely to continue marking a status of up to date / paid each month, if this is not the case. Indeed, the banks systems are unlikely to be able to do any such thing. And if they were, is it really reasonable to expect the bank to provide incorrect information? And is it fair to other consumers for them to do so, just because one consumer would like them to?

And as for warning of adverse effects on credit scoring systems, this is just a red herring. Since the UK has no universal scoring system, there is simply no way for the bank to know this. Common sense says that many credit issuers are very likely to perceive an arrangement to pay as being a negative factor. But there is no credit score and therefore nothing of substance for the bank to say, except to continue to indicate they will make accurate credit reports. When you take out another credit card, should the company inform you that some issuers may now find you less creditworthy as you have taken out more credit? This is simply not how the system works. Each issuer makes their own judgments.

There are unfortunately two sides to everything. The OP indicates that they feel that the fact they tried hard to pay their debt ought to somehow be taken into account. And that they ought to be warned of any adverse effects from recording accurate information on their file.

But personally, I find the banking and credit recording system hard enough to deal with and understand. How much harder would this be if, instead of simply having to pay on time and know that items would be recorded accurately, the credit file reports would also be based on how hard the credit issuer felt you were 'trying'?

Such a system would be the stuff of nightmares.