Bank says I am in arrears with my loan repayments.

auntmay

I took out a loan a few years ago when I was employed. The final repayment is due in mid 2017. I never missed a payment until I lost my job in July last year. Then in November the bank refunded nearly £3000 into my loan account due to some error that came to light on their part. This more than covered the missed payments and brought the balance remaining to under £1000.

If the original repayment schedule was followed and the bank had not refunded any money, it would still take 8 months from now to get the loan balance to where it actually is today. To me, that means I am at least 8 months in front with the loan repayments even though I have not made a payment since last year (that's taking into account any interest payments)

However, the bank say I am in arrears for the entire remaining balance and are making demands for payment. Surely, if the final payment is not until 2017, then I cant be in arrears for the entire balance.

As far as I see it, I am in front with the repayments but, as far as the bank sees it, I am in arrears. Who is right?

bris

You defaulted on the payments so they can call it in. Their refund makes no difference to this.

Dobbibill

You said you would pay X amount each month when you took out the loan but have been unable to do so, therefore you are in arrears.

[Deleted User]

auntmay wrote: »

Who is right?

The bank. .

rtho782

Even had you given them an extra £3k from savings (so a partial early settlement) you'd still have to pay next month, you couldn't just go "Sorry I was paying you the next 10 payments in advance".

So in this situation, you definitely are in arrears.

ALIBOBSY

The bank won't be saying you are in arrears for the whole amount, but as soon as you miss a few payments they will likely have treated you as breaking the agreement and therefore defaulted the account at which point the whole amount becomes due. All their refund does is reduce the balance due.

Basically you need to make an arrangement to restart the payments to them or they will more than likely sell the account to debt collectors to chase up or possible take you to court for a CCJ.

TBH unless its a large amount they rarely take court action these days, but its always a possibility.

Debt collectors have little powers and even if they come to your door you can tell them to hop it, BUT again they can pursue court action if the figure outstanding is enough to make it their while and if they have a phone number for you will harass you day and night with calls.

May be best to try to make an arrangement to pay the bank what you can afford each month to at least stop further action.

Unfortunately the refund didn't clear the balance, so you still owe the rest and aren't currently making payments so they are within their rights to pursue the balance.

Don't think I am a bank supporter or defender btw, but unfortunately with the t &c's they get us all over a barrel tbh.

Have you ever told the bank you have lost your job, or tried to make some kind of arrangement with them? Some banks are rubbish at this, some seem to be much better.

Good Luck whatever happens
Ali x

auntmay

"Even had you given them an extra £3k from savings (so a partial early settlement) you'd still have to pay next month, you couldn't just go "Sorry I was paying you the next 10 payments in advance". "

If a large sum is not counted as making several payments in advance, and you still have to pay next month and keep to the payment schedule thereafter, that would mean by the end of the schedule you would have overpaid by a large sum.

jellie

auntmay wrote: »

If a large sum is not counted as making several payments in advance, and you still have to pay next month and keep to the payment schedule thereafter, that would mean by the end of the schedule you would have overpaid by a large sum.

No it won't, you'll just finish paying the loan sooner.

[Deleted User]

No, the loan would be paid off earlier so the term would end earlier

auntmay

I'm not understanding this. Some are saying you have to carry on paying as you agreed which would mean the agreed monthly repayments for the agreed length of time, which would put me a few hundred pounds in credit, and now some are saying you don't have to stick to the repayment schedule.

Paying the loan off early has to be requested by me and agreed by the bank. I am happy with the repayment schedule and never requested an early settlement. Can one be forced on me?

[Deleted User]

You didn't stick to the repayment schedule so they are asking for repayment of the debt.

If you had stuck to the schedule AND made an overpayment, your term would have finished earlier. You wouldn't have needed to request it.

But given you failed to keep up with payments, it's all academic.