Joint debt HSBC demand letter post BR

robotwars69

Hi, this seems strange...
I went BR a month ago.
I went to my local HSBC shortly after with my wife who signed and took on the joint account as a single account including all debts (overdraft and a consolidation loan). We signed and thought that was that - she carries on paying the consolidation loan, which a monthly payment has already gone out.

BUT

Today my Wife (solvent) has received a 'final demand' letter out of nowhere (no previous letters) giving 18 days to pay the arrears (there were never any arrears) which are now the whole balance of the loan (17k ish).

Past from pillar to post because no-one could understand it, my wife eventually spoke to HSBC's finance advice team. The guy after referring to his superiors said that he would refund the last loan payment to my wife, put a note on the account that a payment plan is being set up to avoid any further letters/action until the 18 days are up when they will 'charge off' the loan because it's part of my BR. His advice was to now do nothing, and my wife will no-longer have this loan, as its part of my bankruptcy.

My understanding was that my joint debt previous to BR would be passed to my wife, not written off - but according to this, they appear to be writing it off.

So my question, does this ring true? Am I wrong in my understanding? Are they being muppets who don't know what they are doing, or are they being sneaky? i.e. are they going to come back in 18 days and actually demand the money according to this demand letter and force my wife into a situation that could be avoided? Of course this is all over the phone and the only official documentation we have, despite this is a demand letter for my wife to pay up 17k.

Any advice welcome here

Thanks

Mouse007

robotwars69 wrote: »

Are they being muppets who don't know what they are doing, or are they being sneaky?

Thanks

Muppets 100%, I suspect they received notice from OR of your BR and were sloppy in processing the information. Some fool probably flagged the loan as being in default (hence letter) because of your BR without checking the account details carefully enough.

You’re absolutely correct, she remains liable for joint debts. My wife had to do pay off our joint overdraft.

I think your wife needs to escalate this to a formal complaint before it all goes horribly wrong (for her). Nasty consequences for her credit file springs to mind.

Make sure everything is in writing from now on, record phone calls if you/she must speak to them.

robotwars69

Thanks for your contribution Mouse007. I'd be inclined to agree with you regarding the muppetry to the point of the letter - but this was the conclusion after one of the guys spoke to his superiors and rang us back, so I'm doubtful such muppetry could be so consistent! Thanks

robotwars69

Sorry, bumping my own thread back to page one just to see if anyone else has come across this - I can't be the only guy in the world to have had a joint loan, I'd be interested to know what others have done and gone through and what they had to do to resolve
Thanks

robotwars69

Update/question:

HSBC say because of my bankruptcy, the 'loan' account (still with my name, joint) has to be closed, despite my insistence that my wife hasn't had the opportunity to continue payments, despite signing our joint account over to a single account and agreeing and approving Income/expenditure in branch, and despite a payment being already being made in her name on her now single bank account.

My concern is that this forced default is unfair on my wife who is able to continue to repay (via instalments, not the full amount!)

The bank has started a complaint for me, but remain adamant that she can't continue because of my bankruptcy.

However... finally through my insistence, I spoke to someone from the India call centre 'insolvency team' - who told me that they need to create a NEW loan account for my wife, and that if she did this within the 18 days, then the default WON'T be passed to the credit reference agencies. I will write a letter asking for confirmation of this as per phone call, but does this ring true? Is this the procedure?? My concern is not so much my wife's ability to pay, even through making an offer post-closure of this account, but in a massive black mark on her credit should that really the case.

silvercar

If that is the bank's procedure on joint accounts when one of the parties goes bankrupt then you are probably stuck with it. Due to the false information given to you, it may be that they will agree a new loan in your wife's name.

In the terms of the original loan you may find references to bankruptcy. If they are now correct , it appears that there is a right for them to call in a loan where one of the parties becomes bankrupt. Not unheard of.

robotwars69

Thanks for your reply silvercar

In terms in the original loan terms, there is a reference to calling in a the loan due to bankruptcy (amongst other situations), with the caveat of 1) advance notice and 2) giving opportunity to fix before taking those steps (if they can be fixed). On those grounds, which my wife hasn't had any of those, I they've raised the complaint.

This was all before I got to speak to the Insolvency 'Team' - i.e. the same lady from the overseas call centre. If what she says is true, that her default won't be sent to the CRAs, if she acts and sets up a new agreement, then all is good. But it's the uncertainty of that really being the case, and the fact that the manager keeps telling me that when bankruptcy happens, a default notice is given and they need to charge off the existing loan account - as if that is the absolute norm, and not something exclusive to me that is something that could be 'not unheard of' if that makes sense! Appreciate your input


--- addition edit ---

Oh, and it turns out today, they keep referring to a letter sent about BR and frozen account which we haven't received, we only have this demand out of the blue which is why we're in the dark and are being passed from pillow to post getting nowhere with all sorts of different explanations and advice from HSBC - from 'do nothing' and let the loan account get charged off, to get in touch and set up a repayment offer!

robotwars69

So, after a million phone calls, and a visit to the bank where half the people told us that if my wife sets up a payment plan, the default won't be passed to the CRAs, it turns out that none of that is true, and I was passed to the wrong Insolvency Team (the one in India) - and any information regarding that was probably stated by people not aware that the final demand notice was generated because of my bankruptcy.

So, the complain is already lodged via my phone call and I will be sending details of my argument regarding the loan terms of conditions which state that notice and opportunity should be given... as well as the demand letter not being truthful in terms of why it has been generated along with zero communication of the bankruptcy behind proceedings, ending up with 3 days of undue intense stress and an unsatisfactory default enforced upon my wife.

Does anyone here have information/experience about the complaints process and the Financial Ombudsman?

HSBC has told me to expect 4 weeks for a return on information about the complaint, but could be up to 8. I understand that I cannot go to the FO until I've had a reply or the 8 weeks is up.

So what do we do in the mean time? Let this go to default when the 18 days is up, then the HSBC collection team will be chasing resolution? - it would make sense to have some sort of breathing space here before committing to the collections team if I'm disputing this. Do we go along with it or call in some sort of delay?

Next question, if it turns out my wife has a giant default black mark against her, what are the options here, being proud and paying back a full £300+ a month for 5 years seems pretty futile! Right now I feel they deserve a big slap in the face, not a regular wad of cash!

Mouse007

Muppets



Edit to add

This would be a good case to post on the Consumer Action Group forum. They have some great experts in bringing the banks to heal over such matters.

robotwars69

Thanks Mouse, not sure what the skaip thing is for, but I've posted also on the Consumer Action Group, thanks for that heads up.

If anyone else has any input, I'd love to hear from you - this 18-day period, from having to deal with muppets and getting nowhere for the best part of a week is now due on Nov 3rd!

Thanks again

debt_doctor

Hi,
When someone who is a joint borrower becomes bankrupt then the contract is broken for both parties.
A default notice is issued, and whilst the bankrupt cannot remedy the breach, the other borrower can remedy the breach by continuing to pay the instalments within the timescales you mentioned (point 1 and 2 in your post#7)
If the payments continue to be paid in the required timescale from the non bankrupt partner then the breach has been remedied and information should not be sent to CRA's. If nothing else, this non disclosure to CRA's makes sense - as why would someone continue to pay in full and on time whilst having their credit rating trashed?


In many cases, the non bankrupt can't pay either, so the default goes without being remedied, and likelihood of the non BR entering in to a DMP or their own insolvency.


It seems that you have been taken half way around the world and back to discover that the non bankrupt can simply continue to pay.


DD