About a year ago my daughter was sharing a flat with her partner and they
jointly got into financial problems. Like many offspring she thought she
knew best and they took out a joint personal loan with a finance company for
£1500 over three years. To this was added some £500 for insurance and the
whole amount charged at an apr of 38.9% !!

The boyfriend went on his merry way some time back and left the area,
although his parents are still local. She has seen him passing through a
couple of times but he has refused to pay anything towards the loan.

Apparently she spoke to the company after he left and they have allowed her
to pay half the premium as she cannot afford more on her income, but this
will obviously never repay and nothing was given in writing.

I have written to the company on her behalf asking for a statement as to the
current situation but in the meantime I have two (obvious!) questions for
the group:

Is she now saddled with the full outstanding amount which is presumably
getting larger every month?

Does she have any legal means available to recover the ex boyfriends half of
the debt ?

I suspect I know the answer to the first one but I cannot help feeling that
the finance company themselves have contributed to this situation by
advancing credit when it was pretty obvious that even if they had stayed
together they would have been struggling to repay - or are the young and
foolish considered fair game?

Thanks for any advice.

LJ

"L J" wrote in message
...
About a year ago my daughter was sharing a flat with her partner and they
jointly got into financial problems. Like many offspring she thought she
knew best and they took out a joint personal loan with a finance company
for
£1500 over three years. To this was added some £500 for insurance and the
whole amount charged at an apr of 38.9% !!

The boyfriend went on his merry way some time back and left the area,
although his parents are still local. She has seen him passing through a
couple of times but he has refused to pay anything towards the loan.

Apparently she spoke to the company after he left and they have allowed
her
to pay half the premium as she cannot afford more on her income, but this
will obviously never repay and nothing was given in writing.

I have written to the company on her behalf asking for a statement as to
the
current situation but in the meantime I have two (obvious!) questions for
the group:

Is she now saddled with the full outstanding amount which is presumably
getting larger every month?

Does she have any legal means available to recover the ex boyfriends half
of
the debt ?

I suspect I know the answer to the first one but I cannot help feeling
that
the finance company themselves have contributed to this situation by
advancing credit when it was pretty obvious that even if they had stayed
together they would have been struggling to repay - or are the young and
foolish considered fair game?

Thanks for any advice.

LJ

The loan company has got your daughter over a barrel! It's called joint and
several liability - which means that they can get either or both of them to
pay up. As your daughter is making some effort to pay they will not pursue
the other half.
Not sure if the amount is a typo or is really £1500? Could she not apply for
a credit card with 0% or low interest card for life of balance transfer and
pay off this loan. If she repays she should receive a part refund of
insurance premium.
As for making him pay towards the loan I think you will have to sue him
(small claims court?) but obviously if he has no money then he cannot pay,
but he will have a ccj against him if a court found in your favour making it
very difficult for him to obtain credit elswhere.
Eric

The loan will almost certainly say that the two people are "jointly and
severally" liable which means she will have to pay the lot. She can probably
sue the other party. If you have the money settle the loan and then help her
sue her ex.

Peter Crosland

I do seem to vaguely recall reading the news about cases where judges
annulled loans with ridiculous interest rates. Perhaps it is an unfair
term? Maybe one of the other posters here can talk about this more...

"Peter Crosland" wrote:

The loan will almost certainly say that the two people are
"jointly and severally" liable which means she will have to pay
the lot. She can probably sue the other party. If you have the
money settle the loan and then help her sue her ex.

Or better, if allowed, buy the loan from the bank and continue to
charge the ex-boyfriend 38.9%.

Stu

In message .com,
Random Observer writes
I do seem to vaguely recall reading the news about cases where judges
annulled loans with ridiculous interest rates. Perhaps it is an unfair
term? Maybe one of the other posters here can talk about this more...

39% is expensive but not for a high risk loan, which this loan obviously
was.. It isnt a 'ridiculous' interest rate.
--
John Boyle

"Random Observer" wrote:

I do seem to vaguely recall reading the news about cases where
judges annulled loans with ridiculous interest rates. Perhaps it
is an unfair term? Maybe one of the other posters here can talk
about this more...

A friend represented a woman a while ago, whose husband had died
and she couldn't afford to make the mortgage payments. So she
contacted the lender to say the house would be sold, and they'd be
paid off at that time, but she wouldn't be able to make full
monthly payments in the interrim. The bank refused, and started
foreclosure proceedings at the first opportunity.

A thorough examination of the terms of the loan disclosed what
appeared to be a minor, technical violation - the stated APR was
not calculated in strict compliance with the statute and was
slightly off.

But for a consumer transaction that was all that was necessary to
get a court to void the mortgage, and convert all past interest
payments to principal. In the end, after payment of attorneys
fees, the bank ended up with nothing.

As they say on Wall Street, the bulls make money, the bears make
money but the pigs lose.

Stu

Random Observer wrote:

I do seem to vaguely recall reading the news about cases where judges
annulled loans with ridiculous interest rates. Perhaps it is an unfair
term? Maybe one of the other posters here can talk about this more...

I recall this too.

I also recall reading that the practice of "adding on" (in this case
£500) ridiculous amounts for insurance and / or fees was frowned upon.

I'd take this up with the CAB.

OD

About a year ago my daughter was sharing a flat with her partner and
they
jointly got into financial problems. Like many offspring she thought she
knew best and they took out a joint personal loan with a finance company
for
£1500 over three years. To this was added some £500 for insurance and
the
whole amount charged at an apr of 38.9% !!

The boyfriend went on his merry way some time back and left the area,
although his parents are still local. She has seen him passing through a
couple of times but he has refused to pay anything towards the loan.

Apparently she spoke to the company after he left and they have allowed
her
to pay half the premium as she cannot afford more on her income, but
this
will obviously never repay and nothing was given in writing.

I have written to the company on her behalf asking for a statement as to
the
current situation but in the meantime I have two (obvious!) questions
for
the group:

Is she now saddled with the full outstanding amount which is presumably
getting larger every month?

Does she have any legal means available to recover the ex boyfriends
half
of
the debt ?

I suspect I know the answer to the first one but I cannot help feeling
that
the finance company themselves have contributed to this situation by
advancing credit when it was pretty obvious that even if they had stayed
together they would have been struggling to repay - or are the young and
foolish considered fair game?

Thanks for any advice.

LJ

The loan company has got your daughter over a barrel! It's called joint
and
several liability - which means that they can get either or both of them
to
pay up. As your daughter is making some effort to pay they will not pursue
the other half.
Not sure if the amount is a typo or is really £1500? Could she not apply
for
a credit card with 0% or low interest card for life of balance transfer
and
pay off this loan. If she repays she should receive a part refund of
insurance premium.
As for making him pay towards the loan I think you will have to sue him
(small claims court?) but obviously if he has no money then he cannot pay,
but he will have a ccj against him if a court found in your favour making
it
very difficult for him to obtain credit elswhere.
Eric


Thanks for the response Eric and all.

The first problem is that it has caught us at a difficult time or we would
have simply helped her pay it off. The second is that she couldn't make the
full payment when first left in the lurch, and before she advised the
company of the situation they had registered this with the credit reference
agencies. The ex is registered as a financial association with a poor record
which compounds the problem.

If we took Court action is it likely to be worthwhile - the ex does work but
certainly moves around a fair bit and from job to job ? The other ironic
thought is that if we obtained a ccj against him would this go on record
against her also due to the financial association logged with the agencies ?

I always thought kids were supposed to get easier as they grew up !

LJ

"L J" wrote in message
...
About a year ago my daughter was sharing a flat with her partner and they
jointly got into financial problems. Like many offspring she thought she
knew best and they took out a joint personal loan with a finance company
for
£1500 over three years. To this was added some £500 for insurance and the
whole amount charged at an apr of 38.9% !!


Your daughter should think quite hard about going bankrupt, especially if
she has other debts. These days it's pretty much an automatic discharge
after a year.

If she can face that prospect, then you are in a very strong bargaining
position with the finance company. She can make them a pretty low offer to
get them off her back. If they don't take it, they get nothing because she
goes bankrupt, and gets rid of her liability altogether, including any other
debts she has.