Money paid into our account incorrectly

rahit14

Hi
This is my 1st time using this forum so apologies in advance for any mistakes etc.
I run a business with my father and towards the end of November 2014 we had contacted one of our buyers to request payment of an o/s debt which they had failed to pay and was in the region of £1800.
A few days before xmas a sum of £1800 was deposited into the business bank account. At the time my father or I didn't think to check where the payment had come from as we have a number of transactions coming in and out and just assumed the client in question had paid.
2 days ago we have now been contacted by our bank to say the money was paid into our account incorrectly.
Unfortunately for us and our stupidity that we didn't check at the time when we received the money, we have just come to realise that our client has bumped us and is now not contactable/traceable. And on top thd bank now has asked us to pay the money which rightfully is theirs.
However i would like to know what our rights are and whether we will have to pay back immediately or can we do it on our terms.
Unfortunately the business is not doing well at all and we are struggling to make ends meet as it is. There is no way that we can pay back this amount of money in one go. I am stressed out about how to proceed and what to do. I could possibly consider monthly instalments but it would be no more than £50 per month. We cannot afford more than that per month which meand it will take us 3 years to pay this back. Granted it is our mistake for not checking where the payment had come from and just making an assumption that this client had settled their debt however it was a busy time of year for us and these kind of transactions were not out of the norm.
However due to a few bad deals and competition our business has gone downhill really badly these last 2 months leaving us in a financial mess.
can any1 please advise what rights we have and can we return the money on our terms without causing ourselves any more financial problems. Please help??
ThAnk you.

grumbler

You owe money, but can can negotiate a payment plan to pay it back. Unless it's the bank's money, they can't take it from your account, but he other party theoretically can take legal actions if you don't come to an agreement.

NotRichAtAll

can you not open criminal proceedings against the person/company who defrauded you?

agrinnall

If the money has come from an individual then I doubt if they will be happy at the prospect of getting £50 a month, so expect legal action to be taken. You only need to read a few of the threads started on here to see how much distress is caused to people who have mistakenly transferred money to the wrong account. Your failing business is no concern of the person who paid the money, the responsibility for operating your account lies with you.

Voyager2002

agrinnall wrote: »

If the money has come from an individual then I doubt if they will be happy at the prospect of getting £50 a month, so expect legal action to be taken. You only need to read a few of the threads started on here to see how much distress is caused to people who have mistakenly transferred money to the wrong account. Your failing business is no concern of the person who paid the money, the responsibility for operating your account lies with you.

That is true, but the person who made the mistake in transferring the money will fear that it is a total loss and so will be relieved by any offer to return it. As with any debt, you are obliged to make arrangements to repay it but cannot be forced to pay money that you simply do not have.

Voyager2002

Is it pure coincidence that the payment made in error was for precisely the amount owed to you? I suspect not, and that your bad customer did something to make it appear that they had paid while they arranged to leave... In which case you could contact the police (Action Fraud) and ask them to investigate: they might be able to trace the people who cheated you, and the problem might have moved from Civil Law to Criminal.

jamesd

rahit14 wrote: »

towards the end of November 2014 we had contacted one of our buyers to request payment of an o/s debt which they had failed to pay and was in the region of £1800.
A few days before xmas a sum of £1800 was deposited into the business bank account. At the time my father or I didn't think to check where the payment had come from as we have a number of transactions coming in and out and just assumed the client in question had paid.

This is critical information that dramatically affects your legal position. Ensure that your bank is aware of this.

The relevance is that you had reason to believe that the money was yours and that this has caused your position to change. In such circumstances it can be impossible for the party that paid the wrong account to recover any of the money.

rahit14 wrote: »

we have just come to realise that our client has bumped us and is now not contactable/traceable.

This is critical information as well. The wrong payment caused you to stop debt collection because you believed that the debt was paid. Three months later you appear to be in a far worse position to collect the debt and may suffer not just from the belief that the money was yours in a usual change of situation case but also an actual debt collection loss.

rahit14 wrote: »

2 days ago we have now been contacted by our bank to say the money was paid into our account incorrectly.

Liability is with the payer, not you. You clearly had ample reason to believe that the money was yours.

rahit14 wrote: »

And on top thd bank now has asked us to pay the money which rightfully is theirs.
However i would like to know what our rights are and whether we will have to pay back immediately or can we do it on our terms.
Unfortunately the business is not doing well at all and we are struggling to make ends meet as it is. There is no way that we can pay back this amount of money in one go. I am stressed out about how to proceed and what to do. I could possibly consider monthly instalments but it would be no more than £50 per month. We cannot afford more than that per month which meand it will take us 3 years to pay this back.

Point out to the bank the two critical pieces of information that I described above, notably that the error that caused debt collection to stop may have cost you an actual loss of £18,000.

Make an offer of £25 a month to be reviewed quarterly based on the business performance, any progress in collecting the debt from your customer, or whether it appears from debt collection activities that the debt would have been collectable if you had not been misled by the payment, but is no longer collectable, so that the wrong payment caused you an irrecoverable loss. You could also offer to assign your customer's debt to them so that they can attempt collection if they wish to do so.

For background on this, read what the Financial Ombudsman Service has to say about it in the final section here. You apparently sustaining an actual loss that was avoidable as well as having an honest belief that the money was yours are critical to the success of any complaint to the FOS that you may end up making if the bank does not recognise its position. It will do no harm to point the bank to the FOS document to make it clear to them that you are aware of the situation.