bank loan - banks not helping reduce loan?

billy3 · 14 December 2018 at 1:36PM

my brother, took out a bank loan when he was working and decided to pay it back at a high monthly rate to clear if off. then if got released from his job - well that was 5 months ago -

he went to his bank last month month to see if they would reduce his monthly loan - they basically say no, they could not help - he would have to miss payments, get taken to court to get it reduce - he knew this would also result in him being effect for future loans, like a mortgage. OR he would have to take out ANOTHER loan to reduce his monthly payment.

is this usual practice from the bank.. i also believed that, if you were having payment issue you should talk the bank.
i am worried about my brother health as i can see he is getting stressed over this, and cannot believe that his bank is not supporting him.
he wants to make payment he just need it to be reduce till he finds a job.

is there anything else that can be done? -

AstroTurtle · 14 December 2018 at 1:43PM

billy3 wrote: »

my brother, took out a bank loan when he was working and decided to pay it back at a high monthly rate to clear if off. then if got released from his job - well that was 5 months ago -

he went to his bank last month month to see if they would reduce his monthly loan - they basically say no, they could not help - he would have to miss payments, get taken to court to get it reduce - he knew this would also result in him being effect for future loans, like a mortgage. OR he would have to take out ANOTHER loan to reduce his monthly payment.

is this usual practice from the bank.. i also believed that, if you were having payment issue you should talk the bank.
i am worried about my brother health as i can see he is getting stressed over this, and cannot believe that his bank is not supporting him.
he wants to make payment he just need it to be reduce till he finds a job.

is there anything else that can be done? -

It works both ways, if he wanted to overpay his loan they could allow him to make overpayments but they wouldn't be able to officially change his monthly repayment figure that the contract was signed on.

Who is the loan with? it may be worth informing them he will likely default and see what they can do in terms of payment holidays or freezing of interest.

sourcrates · 14 December 2018 at 5:07PM

Hi Billy,

If push comes to shove, and your brother cannot service this loan agreement, then its just another non priority debt my friend, if he has to default, then so be it, it would not go to court, it would go to a debt collection company first, they would be much more agreeable to a repayment plan, even at £1 a month if his budget shows that`s all he can afford.

His bank is talking rubbish.

billy3 · 15 December 2018 at 11:55PM

if the Debt collectors got involved, and it got that far - will he not get a CCJ ( something like that) put on his file?

Farmer_Johnson · 16 December 2018 at 8:00AM

sourcrates wrote: »

Hi Billy,

If push comes to shove, and your brother cannot service this loan agreement, then its just another non priority debt my friend, if he has to default, then so be it, it would not go to court, it would go to a debt collection company first, they would be much more agreeable to a repayment plan, even at £1 a month if his budget shows that`s all he can afford.

His bank is talking rubbish.

This is terrible advice. You are not exploring any of the options that could be tried first to avoid defaulting.

I’d suggest ignoring Sourcrates OP. Reading his / her posts he tells just about everyone to default for some reason.

Your brother needs to think very, very carefully before he does this, and yes, of course it could go to court. Anyone claiming otherwise is being dishonest.

worried_jim · 16 December 2018 at 8:34AM

Farmer_Johnson wrote: »

This is terrible advice. You are not exploring any of the options that could be tried first to avoid defaulting.

I’d suggest ignoring Sourcrates OP. Reading his / her posts he tells just about everyone to default for some reason.

Your brother needs to think very, very carefully before he does this, and yes, of course it could go to court. Anyone claiming otherwise is being dishonest.

It is extremely unlikely though.

Your brother will get late payment markers on his credit file for each month missed or late or not paid in full. After six months the loan will default which will also appear on his credit file. If the bank thinks that there is now little or no option to recover the debt most banks will look to sell the debt on.

Now the loan is owned by a debt specialist and there will be no more interest added, it's just an amount he owes. They will try to recover this amount and be willing to accept lower payments than his original bank- probably because they bought the debt at 10p to the £.

If your brother makes no effort to pay then they may start court proceedings against him to obtain a CCJ. By now his credit history is trashed for six years.

enthusiasticsaver · 16 December 2018 at 9:55AM

Normally banks are more helpful so it is surprising your brothers bank will not entertain extending the term to reduce payments, payment holidays or whatever. Is he still unemployed?

If he cannot afford the payments and they won't reduce the amount then yes defaulting will probably see the loan passed to debt collectors who may then agree a payment arrangement. It is unlikely to lead to a CCJ if he makes an arrangement but his credit record will be trashed. Realistically though is he going to be in a position to buy a house anyway any time soon? Presumably he has no savings so no deposit. Ultimately he may have no alternative and not being able to get loans is not the worst thing in the world. Does he rent?

Fireflyaway · 16 December 2018 at 10:17AM

I think it's worth phoning again. I recently had an issue with my bank. I must have spoken to around 15 different people and received all sorts of advice. Some correct, some incorrect and some things I was told were just advisors guessing. in the end I received an apology and compensation.
Ensure he speaks to the department responsible for advising those in difficulty. Most companies will come to some arrangement, probably a temporary reduction in payments to be reviewed at an agreed time.
Hopefully your brother just encountered a poor advisor. Might also be worth writing to the bank.

fatbelly · 16 December 2018 at 10:46AM

Your brother needs to put together a financial statement. It will focus him on what he pays to who. If he wants to post here most of the posters will be helpful and non-judgmental.

There's a calculator here

It's no use telling someone not to default without examining the numbers. This is a non-priority debt and as such it comes below things like rent, council tax, food, electricity and gas. But there may be savings to be made on all sorts of other expenditure that could mean he could maintain the contractual payments to the loan. We don't know at this stage

If he has to stop paying the loan - sourcrates has the right take on this.

As for court action - jim has the right take on this

sourcrates · 16 December 2018 at 1:47PM

Merry Christmas to everyone.

DawnW · 16 December 2018 at 4:29PM

Farmer_Johnson wrote: »

When you say “supporting him” do you mean letting him off without paying back what he owes, on time?

Can you help him out, or has he anything he can sell, such as a car, an iPhone or the like?

The deal he signed is unlikely to say that he only had to pay while working; what did he spend the money on, cou,d he sell that?

I see you are a new poster, and I would respectfully refer you to the forum etiquette section which is linked from the top of the page.

bank loan - banks not helping reduce loan?

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