insurance loan -help please

billygirl

My insurance collector offered me a loan about 15 years ago for 300 and said it would come off my insurance at the end of the policy. There was no agreement and so I forgot about it. Since then the company was taken over about 1995 and they no longer do these loans. Thing is they have now sent me a letter saying I owe 1000 pounds with interest added on and offering me the option to pay it or they will continue adding on over 7% interest. Nothing was said about interest and I don't know if this is the new company;s policy and whether it is legal. Can anyone help please?

jonesMUFCforever

Did you expect to get a free loan then?

Yes it is legal - you obviously have had the money so there must have been some kind of agreement.

fermi

Even if this debt did exist, then it may possibly be "Statute Barred".

A debt can be "Statute Barred" if there has been no acknowledgement of the debt by you making a payment or in writing within the relevant limitation period.

If you are in England/Wales then the limitation period is 6 years and you should read:

Link: Factsheet | Liability for Debts and the Limitation Act (England/Wales)

If you are in Scotland then the limitation period is 5 years and you should read:

Link: Factsheet | Liability for debts & the Prescription & Limitation (Scotland) Act 1973

If you feel the debt is "Statute Barred", then there is a letter to write at the end of each factsheet.

Additionally, the Office of Fair Trading has stated that it is unfair to pursue people where the debt is "Statute Barred" and continued pursuit may constitute harassment.

OFT Debt Collection Guidance

The Office of Fair Trading (OFT) has issued debt collection guidance which looks at whether a debt is being collected fairly. They say:

• it is unfair to pursue the debt if you have heard nothing from the creditor for six years;
• the OFT thinks it is fair to keep trying to recover the debt if the creditor has been in regular contact with you during this time;
• it is unfair to mislead you by saying the debt is still legally recoverable when it isn't;
• it is unfair to keep pressing for payment after you have told them you won't be paying the debt because it is statute barred.

If this is happening then you can complain to your local trading standards department in the council. They can take up your case for you. You can also complain to the OFT. Their address is at the end of the fact sheet. The OFT does not usually take up individual cases but their debt collection licensing enforcement team collects information that can be used to take action against problem creditors, who can even lose their consumer credit licence.

If you are unsure then give National Debtline a call on their free number. 0808 808 4000.

jonesMUFCforever

I don't think it applies here - the loan would have been secured against the proceeds of the policy.

fermi

I did say "may". If billygirl talks it through with a professional debt advisor, then they should be able to work out what the correct position is.

billygirl: Have a talk to one of these:

Consumer Credit Counselling Service - Website: CCCS Telephone: 0800 138 1111
National Debtline - Website: National Debtline Telephone: 0808 808 4000
Citizens Advice Bureau - Website: Citizens Advice or visit your local CAB centre (find nearest
Community Legal Advice - Website: Community Legal Advice Telephone: 0845 345 4 345

They will be able to help you work out whether these people are trying it on.

jonesMUFCforever

Billygirl needs to come back and advise when the policy matures and what the surrender value is now.

billygirl

Thankyou for the advice I will try some of the numbers and see how I stand. It is a life policy so matures on death only, not that I should worry but I do think this stinks as the company that took over 15 yrs ago did not mention that they were adding interest at such a high rate or I would have settled then. As it stands now the interest has made the debt increase by 200%, and this is supposed to be a reputable company.

fboy2

I have an elderly relative who has just received a similar demand, trouble is they do not remember anything about it. The debt is also some 14 years old and secured against the policy (payable on death), has interest charged of almost 200%, but the letter does state that a loan agreement would have been signed. First thing to do as I see it is to ask for a copy of this agreement. Please post your findings billygirl when you have some.

billygirl

Fboy2, I sent away for the so called agreement and there is no such agreement the company said it is no longer kept. I remember nothing was signed and I didn't get an agreement it was just supposed to be some of the interest from the policy.
Contacted CCCS and they say if there is no agreement it is unenforcible so taking it further.

fboy2

Thanks Billygirl.

I have had the same back today, there is no signed agreement (well they say they can't find one as opposed to that it was not kept) although they have produced a specimen copy of an agreement they say would have been signed.

It was also my understanding that written notifications of changes to interest rates charged should have been sent out as well every time the interest rate charged changed. They have no records of, or explanation for, the lack of such notifications either. All they are able to produce in total is a 1 line computer printout.

I was already of the view that without a signed contract the alleged debt would be legally unenforceable, you have now seemingly confirmed this on the advice you were given. It does seem that we may be dealing with the same company - strikingly similar scenarios.

billygirl

Hi Fboy2 I am going to see a financil advisor during my holidays to try and sort something out because I think it is all a bit dodgy.