Claiming bank charges and IVAs....

[ordinary_world]

Hi,
Considering the recent publicity with regards to the illegality of bank charges, I've some questions I'd like to pose in relation to IVAs.

It's highly likely that people, such as myself, who struggle to keep within their overdraft limit and to meet their contractual monthly payments each month have incurred heavy lender charges over the years. It's also likely that such people would look for a DMP or IVA when things really get out of control.

Would reclaiming bank charges before entering an IVA affect the way in which a creditor would vote?

Similarly, if one attempted to claim during an IVA would creditors have grounds to cancel the IVA? Or would the money claimed back simply be distributed to all of your creditors?

Any thoughts/advice much appreciated.

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[MelanieGiles]

It might do - but there are no test cases yet! My personal view is to let sleeping dogs lie until after the creditors meeting, as the bank's are quite sensitive to this matter at the moment, and any return you might be successful at brokering is unlikely to affect the position materially.

Once creditors have agreed to an IVA, there is no turning back, so any successful claim will probably reduce the claim of that particular creditor or swell the IVA "pot" for the benefit of all.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[go_4_broke]

Hi OW

I think it might be a question of degree.

If you only went as far as the ask-nicely (or even ask-firmly) stage it probably wouldn't have a massive effect as the two operations will be dealt with by different groups who almost certainly don't speak to each other.

If you got as far as CCJing them I expect a rather dimmer view might be taken.

The other thing you might look at is their voting significance in your IVA, and take a view as to whether you can afford to upset them or not.

I myself will more than likely be CCJing Nationwide next week thereby adding them to the long list of UK financial institutions I have annoyed and/or upset.

However at the present time I'm not doing an IVA so I have nothing to lose in that respect, except the inconvenience of having to move things across to a different bank account.

However if I was I think I would follow Melanie's advice and tread carefully.


-Best





Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[gimmewine]

This is a topic that is cropping up all over the msg boards. If I was thinking about an IVA, I would not consider claiming back from that particular creditor as the chances are if an IVA is approved they will be writing off debt to that amount or more anyway, so why upset them.

If I was in an IVA it would probably be classed as a windfall so I would have the hassle of claiming, the cost of recorded delivery, and absolutely no benefit because it will only be used to reduce the debt.

The only time I would consider claiming is if I thought my offer would not be acceptable and by reducing the debt it may be. Even then it would be risky strategy.

Different matter if you have charges with banks or store cards that are already closed and not linked to your current creditors. In that case I would consider claiming and using the proceeds to make payments to my current creditors thus reducing the level of debt prior to an IVA. Even then, it will take time and it may be time you haven't got.

You have to allow 3 months plus to bring a claim to conclusion. Fortnight from first letter, week to ten days from second letter, then possible court action at least another 28 days, then follow up action to secure the funds.

[ordinary_world]

Many thanks all, excellent guidance as always!

Well, I must admit I tackled First Direct on this earlier this year. After I sent a pleasant yet assertive letter they agreed to refund 65% of the charges without quibble only if I agreed not pursue them any further.

As for the rest, I'll take Melanie's advice and let sleeping dogs lie....until after voting! [:)]

Hi Gimmewine - totally agree with you. Although I probably wouldnt receive any of the refund whilst in the IVA (do they always take 100% of unexpected additional income?), I must admit I'd gain some pleasure from them just having to cough up after charging me all these years! [:)] There is also something logical about them having to reimburse what they shouldnt have taken...and indeed this money being used to help pay off the debt across creditors (so the charging creditor isnt the sole beneficiary of what they're having to pay out).

I think there's a moral standpoint to all of this too - why have banks over the years been allowed to systematically contribute to the plight of their struggling customers by applying illegal penalty charges?

Perhaps they would argue that 'we're a business, not a charity and you should all manage your money carefully and within budget!' So an ideology that most of us would subscribe to....but thats all it is...it doesnt reflect typical behaviour on the ground...I believe they exploit this to make big profits. For example, they help to create conditions where credit is astoundingly easy to obtain and sometimes, particularly with credit cards, balances are not easy to manage. Also, businesses are aware that customers can easily obtain more credit so will naturally push harder to sell....creating a vicious cycle.

When customers, who dont meet this ideology, are struggling heavily with their finances, the bank steps in to make things worse by applying interest and charges. Perhaps we'd all be better informed if they dropped the thin vaneer of being a caring or ethical bank and just have visible slogans saying how it is 'Mismanage your finances, over borrow or go over drawn....then we'll make your debt worse by y% over a time period of x'....and....'Lost your job, no other income? Dont owe us money? Then *****! Owe us money? We'll harass you and squeeze every last dime out of you until...'

Must stress, I'm not blaming the bank per se for my predicament...in many instances my partner and I actively sought credit....we just didnt meet the ideology when renovating property, resisting hard sells and dealing with maternity leave!

Apologies, I'm in the last week of my annual leave and woke up a grumpy so and so...and got on my crumbling soap box! I'm quite tired too, money worries dont half knock you out of your sleep rythms! [B)]

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[Lapdog]

Halifax sent me a very nice letter yesterday informing me that they have overcharged me for a period of approximately 6 months and will be refunding my money.

Very nice of them considering they are one of my major creditors [;^)]

[go_4_broke]

Hi lapdog,

That's a good example of the type of thing I'm talking about.

If Halifax worked in a 'joined-up' fashion they might have put 2 and 2 together and pocketed the money.

Financial institutions, in common with the rest of the world, work in such a completely proceduralised way these days that 'upsetting' them is virtually impossible, which is why I always say people embarking on an IVA should not worry too much about this.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[ordinary_world]

Hi G4B
Excellent guidance! Hopefully, FD and HSBC wont talk for another couple of months![:)]

I guess this is one advantage (if there ever can be) when one is experiencing financial difficulty and with a big interconnected outfit where the cogs movely slowly. On the flip side, however, when solvent and wanting to act quickly (e.g. switch accounts) then it can be quite frustrating.

Just another question for you (apologies!): I have a mortgage with Nationwide and an unsecured loan I'm about to default on (as moving towards an IVA). After I've moved everything over to my parachute accounts, I will stopping paying the unsecured loan. Do you think they will cancel my mortgage?

This concerns me as I'm in year 2 of a competitive 5 year fixed deal and would like to see this to the end before entering into an agreement with a lender for people with adverse credit.

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[Adam Davies]

Hi O_W
Nationwide cannot just cancel your mortgage, as long as you are paying it and its upto date.It is not unusual to have both secured and unsecured product from the same lender.
Just a point that James Falla made is that once in an IVA your house is at risk because if you fail the IVa then the IP may commence bankruptcy proceedings on behalf of your creditors.There again your house is at risk at anytime if you fail to pay the mortgage on it.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[ordinary_world]

Many thanks Andy, reassuring to know they cant just cancel.

On the point about an IVA failure, wouldnt the IP move you across to a DMP if the IVA fails to save the house? Or is the IP obligated to 'liquidate' the debtor?

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[MelanieGiles]

That depends upon the terms of the IVA but it is usual for the Supervisor to petition for bankruptcy in the event of IVA failure if there are assets which could be realised to pay creditors. Another reason why you need to consider all implications of entering into such arrangements with your creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[tracy.h]

May be im daft but even though you are going to enter into an iva can you still not make token payments to all creditors just to keep them at bay whilst you go through the iva process.
Im only saying this as obviosly the creditors realise you cant make your contractual payments as if you could you wouldnt be insolvant,but to just give them token payments,if you have surplus income[only if you have no upfront ip fees to pay]would this not make it less stressfull,and show creditors you are offering somthing until your iva is completed,
I think its when you stop all payments its more stressfull,with all the nasty phone calls and threatning letters.Personally my ip advised me to stop paying creditors immediatley and to pay them,obviosly i did this.But since all my problems have been sorted out and my iva no longer stands ive spoken to my creditors explained my situation offered them token payments,while i sort my situation out,and they have excepted hence no nasty phone calls [so far]when i just stopped paying i had hassle 24/7
I no im no expert but if you have no upfront fees to pay will creditors not wonder where your money is going,especaily if the iva takes months to sort out,or is it at the discretion of your ip

[scaredkez]

even when making token payments the calls do not stop as they want more and more off you, i have had several calls today off a few creditors well the agents they have sold the debt to asking for full balance then i said no, explained going BR and they asked for a token payment i said you are already getting it through my DMP with myvetsa but they insisted not enough and want more its a no win situation, they always want more.
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

[tracy.h]

Oh well Kerri maybe they have been reading my posts and feel sorry for me[not]but maybe one department doesnt corespond to another so as you said in one of your posts one company excepted an amount after speaking with myvesta[think thats how you spell it]then you have someone from the same firm asking for double the amount and threatning alsorts.
To be honest im shocked that ive had no phone calls 9 out of 11 have even said they will stop interest for 6months,obviously it wont be no where near 6 months i hope,maybe ive got a fault on the line that doesnt except calls from bullys,would be a good fault.
Oh well we can live in hope cant we,by the way i think ive become addicted to this site,i meen its easter friday and im happily sitting here reading posts and i find it really helps me cope better,im learning more each day and will not be so green when i resubmit another iva
Tracy

[MelanieGiles]

From my professional experience, it makes little difference to the level of pressure exerted by creditors whether you make token payments or not.

The reason why most IP's give advice to clients not to pay is that this ensures absolute fair treatment to them all ie noone gets paid anything. For my own part, I always like to think a client can also put a bit of money aside, in advance of the IVA being accepted, to deal with future contingencies or misaps - because there will be some along the way.

I'm so glad that you are finding the forum useful - and agree that it is definately addictive!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk