Secured Loan debt advise needed URGENTLY

ashee

I would appreciate any advise with regards to the following loan


My ex husband and i took out a joint loan with Paragon on 18/10/2007 for £22500 over 300 months @ 11.7% APR , we later divorced and i have been making payments of £222.45 since then however i called paragon recently to find out how much i owed and have been told that the balance stands at £25,489.38!! i requested a SAR and have the documents here with me when looking through them i see they have added numerous late payment fees and telephone fees for when the payments were late whilst me and my husband divorced , he has made no contribution to the loan since we divorced and i thought by paying the monthly payment my balance over the last 8 years would have reduced atleast by something not that i would be owing more than we took out!

I can see on the statements that they have sent that every month when i make a payment of £232.45 they add a £214.71 pence interest so my balance will never reduce.

i am trying to get back on my feet and out of debt but am really struggling with this loan and its logic... please can someone help me clarify this , if required i can PM copies of the loan and statements.

I REALLY would appreciate any help on this matter

many thanks

Tixy

Were payments missed/paid late for a period?
Are the late payment charges applied in accordance with the original terms of the agreement?

Is the interest rate on the loan still 11.7% (often these type of loans have a variable interest rate).

Do you still own the property on which the loan was secured?

Is it still owned in joint names with your ex-husband?

How was the property and loans secured on it dealt with as part of your divorce?

If you had not missed any payments on the loan and incurred not late charges then the balance after 7.5 years would have just under £21k. So for the balance to be £25k would suggest additional charges & additional interest incurred of approx £4k.

Stevie_Palimo

It seems a very high amount to still owe on the loan taken out and can only presume that your ex paid very little if anything at all hence the hugely inflated amount still owed.


£25,489.38 x 11.7% per anum is £2982.26 per year or 248.52 monthly without any payments being taken into account.


Can you not squeeze your ex to pay half of the loan ? - If not and looking at amounts and payments being made I would personally look at other avenues here.


Maybe being a joint loan can you not write to them and state that they need to peruse your ex for this loan also and if not then I think setting up an IVA may help as they will then get a smaller portion back against the full amount and whilst this is not a good thing for you at least if you own a house you can then have a chance at keeping it.

Stevie_Palimo

Didn't think about it being secured, Ignore my post above.

ashee

Hi tixy thanks for your response

Were payments missed/paid late for a period? yes they were during our separation and divorce this was for a period of three moths and paragon began repossession proceedings which i managed to stop

Is the interest rate on the loan still 11.7% (often these type of loans have a variable interest rate). it states on the agreement it is 11.7 but can be variable nowhere on the documentation does it state what interest rate is being applied at present.

Do you still own the property on which the loan was secured? yes i still live in this property with my two children the property is solely owned by me but the secured loand has both our name on it, not sure how this works as he did the application etc at the time the loan was taken out

Is it still owned in joint names with your ex-husband? the loan is still in joint names, the property has always been soleoy in my a=name

How was the property and loans secured on it dealt with as part of your divorce? we wer not married legally in the UK and divorced abroad in the country where we married so this property and loand were not delat with as part of that

ashee

hi Stevie

yes its is secured loan :-)

Caz3121

ashee wrote: »

I can see on the statements that they have sent that every month when i make a payment of £232.45 they add a £214.71 pence interest so my balance will never reduce.

the interest amount should reduce each month as the balance reduces. With a long term loan like this you will always pay mostly interest in the first few years
Your missed payments and fees would have set you back but if the payments had all been made on time with no fees you would own £20k+ now
this is a good calculator to see the reductions
http://www.theguardian.com/money/loan-repayment-calculator-interest-rates

David301

If all went to plan and payments on time your first payment would have been approx
interest £223
capital £12
total £235

after 8 years monthly payment would consist of
interest £204
capital £31
Total £235

Then after 20 years monthly payment would be
interest £107
capital £128
Total £235

Tixy

From the bank's point of view if you are making the payments they won't chase your ex. And if you stop making payments then they will focus on repossessing your house not chasing your ex. So unless you can persuade him to contribute then it looks like you will be dealing with this alone.

Given the high interest rate and long loan period then this loan was always going to cost a fortune in interest. If you could afford to overpay the loan that would help reduce the interest you will pay and the term.

Are you in a position where you could remortgage at a cheaper rate to pay off this loan? I assume you also have a mortgage on the property? have you looked in to whether that might be an option?

What is the house worth and how much do you owe on your main mortgage? Is this the only other secured debt on the property?

ashee

Tixy wrote: »

From the bank's point of view if you are making the payments they won't chase your ex. And if you stop making payments then they will focus on repossessing your house not chasing your ex. So unless you can persuade him to contribute then it looks like you will be dealing with this alone.

Given the high interest rate and long loan period then this loan was always going to cost a fortune in interest. If you could afford to overpay the loan that would help reduce the interest you will pay and the term.

Are you in a position where you could remortgage at a cheaper rate to pay off this loan? I assume you also have a mortgage on the property? have you looked in to whether that might be an option?


What is the house worth and how much do you owe on your main mortgage? Is this the only other secured debt on the property?

Unfortunately i am unable to pay more as i am now afull time carer to my mum who has alzheimers and because of the defaults when we split up i now have bad credit too, i do have amortgage on the property yes but cannot remotgage due to bad credit.

the house is worth about 105,000 and i owe 82,0000 on a mortgage with this loan being the only other secured debt on it apart from the mortgage

David301

Before any arrears that loan would have cost you

Total Borrowed
£22,500
Total Interest
£48,094.36
Total Payments
£70,594.36

It would be interesting to know what the missed payment charges are and also was there any insurance with the loan? set up fees? or hidden extras that they piled on at the start?