does this sound right to you?

bittersweet

Hello - Im not entirely sure if this is something to be concerned about, In a nutshell, my parents used to own a small business. They stopped trading but not before running up a 10k debt/overdraft.
They made an arrangement with the bank to pay back £156 per month. Thata as much as they could afford as they both could only get part time jobs.
For the last 18 months my dad has been ill and my mum looks after him. Theyre just about managing to pay the 156 per month but I happened to be sat near my mum when she was checking her online bank..
it looks like every a chunk of each third payment is taken back by the bank as interest.
so she s got, for instance,

Feb 6th paid in 156
March 6th paid in 156
April 6th paid in 156
April 18th paid out - interest £124

Is that usual? So far shes paid just under 5k - theres something like £5300 remaining.
As this was related to a business overdraft (although when the repayments were arranged they told the bank they werent trading) I am assuming they wouldnt be eligible for any kind of debt management plan where the interest could be frozen.
And as they arent working , its probably not likely they could move the loan to get a better rate (they have a small pension, pension credits and pip)

Thanks

Arleen

You can always try to negotiate with the lender, there is absolutely no harm in asking!
And given that for the half of the debt they kept their end of the deal (at least it seems that way from what you're saying) then they should be in good position to get the repayment frozen for a bit, or at least the interest. Or at the very very least collection of the interest, so all they will have to keep paying is the 156 principal (but it's possible that they could get couple months pause on that too given the circumstances).

But that is just guessing, so best to give them a call (or better yet meet in person if possible) and see what you can leverage. Keep in mind that them falling behind on repayment is in no ones interest here, bank included, as chasing up people who are in arrears can be expensive (and sometimes impossible to collect altogether if they have no income to speak of).

PeacefulWaters

It's pretty standard for debts to be charged interest.

I'd expect a £5,000 overdraft debt to attract around £80 a month interest depending on the rate being charged.

What rate is being charged?

bittersweet

I dont know what the rate is - I suspect my parents probably dont either , at the time they were just keen to ensure they could pay back what they owed . Its RBS and they had a chat with quite a nice lady who arranged these minimum payments for them. They havent ever defaulted.

I'll have a look into it but if thats a fairly standard charge then my parents will probably want to leave as is -

Thanks

brendon

What type of company structure did they have? If it was a limited company, they should not be liable for anything unless they have personally underwritten the credit to the company in a agreement with the bank.

bittersweet

it was just a partnership, B&B holiday accomodation

bittersweet

hello - I was just speaking to my dad about this. Apparantly it was an overdraft which the bank converted to a loan and set the payments at £153 per month. They are really struggling to pay this and have cut down on other outgoings as much as they can.

I was going to write to the bank on their behalf but Im not really sure what I am asking about - is either of these possibilities likely

Reduce their payments to £50 a month and freeze the interest
Stop paying the loan but pay the interest

If anyone has other suggestions that would be appeciated

At the moment they both dont work as my dad has lots of hospital appointments to attend and my mum has to go with him. She will eventually go back to work once he is in better health and not at the hospital as often

Gaz83

You can certainly ask them, but the bank are the only ones who can tell you whether they'll accept either of your proposals.