Debt recovery - extortion in disguise?

JGroats

To summarise...I got into financial problems in 99/2000 which meant I defaulted on a couple of credit cards, a loan and overdraft. Taking advice from the CAB I offered my creditors a repayment plan which they accepted and all but one froze interest. Barclaycard/Mercers Debt Recovery have been charging me 3% interest which, I know is low but doesn't really help when you are in financial difficulties. Anyway, despite a few minor discrepancies I've kept up the repayments and to date have paid £1724.64 (although this may be more as I am missing some records of payment). The debt when I defaulted was £1973 but, instead of owing them just £248.36, I still owe a little of £973 because of the interest!!!

Now, I know I'm no angel and banks and credit cards companies have to make profits but this seems all wrong. To charge interest on the account of someone who is obviously struggling with debt seems to me to be rubbing salt into wounds. The worst thing is that I no longer work and my wife is paying these debts. To her credit, she has never complained but I'm sure she would rather have the money herself (I still don't understand why she has to pay for my misdoings). Unfortunately money is very tight and I'm (we) are not in a position to be able to offer a final settlement to any of my creditors despite the fact that my total outstanding debt is now down to just over £2000 (not bad from the original of nearly £6000!).

I suffer from depression (which was part of the reason I got into debt in the first place) and this doesn't help. We've been paying pack the creditors for 5 years now and I estimate that it will be another 2 and half years before I'm debt free, yet with a couple of grand (or less) I could end all this tomorrow...thanks for letting me rant.

Xbigman

Where as I'm one of the first to stick it to banks and other financial institutions, especially when they are unreasonable in pursueing debt, I think you have been treated quite fairly in this case. Only one creditor charging interest, and that at a reduced rate, is a result many of us would almost kill for. You should sit back, relax, and look forward to being debt free.

And tell you wife from me she is a star.
Regards



X

idiot_3

whilst it is widely acknowledged that interest is often stopped when you get into difficulty, there is no obligation for any financial institution to do so. i think perhaps you should be grateful that the vast majority stopped interest. and as for barclaycard charging 3%, that's only around the rate of inflation, all they are doing is future proofing the debt, so they actually get back what you owe in real terms (i.e., what the money is worth today, rather than 5/6 years ago.)

don't give up now, you are most of the way there, and i'm sure it will be great to be debt free. i don't even know when i will be! one thing is for sure it will be more than 2 years!

JGroats

Thanks for the encouragement. I know 3% isn't that bad it's just that sometimes it's hard to see the light at the end of the tunnel. What really bugs me is that all my loans cards etc were protected with the same insurer which I tried to claim on when my debt problems first started due to illness but although they paid out on all the other cards and loans (reducing the initial debt) they wouldn't pay out on the Barclaycard, if they had, that debt would now be gone! Still, I can't change whats happend.

JGroats

Also, one other quick point, while banks etc are under no obligation to freeze interest, if I were to stop paying my creditors and let them take me to court, the judge would actually order them to freeze the interest on the accounts. So, because I am being nice, saving them money (but not getting them to take me to court) and making regular monthly payments, they penalise me by charging interest, perhaps it's time not to be so nice with them!

Xbigman

What a lot of companies do is load debts up with interest and charges and only then go to court and let interest be frozen. In my own experience I saw a 10k loan turned into a 22k debt.
Regards



X

Murtle

mmm I think you have been incredibly lucky that you haven't been paying interest on what you owe for that long!! Not everyone is nearly that lucky, and as Xbigman says the banks have ways around people not paying!!!

JGroats

No, actually I consider myself to be very unlucky. Having spoken to National Debtline earlier today, they informed me that there is no reason to still be paying interest on any debt. Yes, if the original debt was for a fixed term with a fixed interest rate then the creditor could add this onto the debt and then freeze any future interest, however, if the debt has a variable interest rate like, for example, a credit card ,than the norm is to freeze interest. It is actually in everyones favour to freeze interest as the amount a debtor can offer his creditors may be less than the amount of interest being added, which would only lead to spiraling debt which may never end up being repayed. In a nutshell the National Debtlines advice is never pay interest!

Xbigman

National debtline are talking out their backsides. Some companies even refuse to stop interest charges for those who can't pay anything. Others deliberately load interest and charges on in order to reach the magic 5k debt so they can go down the property seizure route.

Anyone can request a freezing of interest but no company has to accept until a judge tells them too, at which point its often too late.
Regards



X

wisbech_lad

Registered (I'm a lurker) to reply to the OP.

You spent other peoples' money that you didn't have, and now equate paying it back (at a low interest rate - the bank is losing money) to extortion?

I know it was a rant, but agree with others that you have been reasonably treated.