Hi all - I hope someone can help with this query - thanks in advance for any advice! My situation - I've been on a Debt Management Plan for a few years and use one of my two bank accounts to make the payments. Last summer while I was making my usual DMP payments I noticed online that an overdraft facility had become available on that account, interest free for a year. I thought it'd be a good way to help pay off the few creditors who were still charging me interest, including a couple of payday loan firms. The problem is that in the coming months every time I clicked on the overdraft link online I was allowed to borrow more - taking it from £200 up to almost £6,000 now. I was stupid to keep clicking, I know... But the bank gave me this overdraft despite me: a) not paying my salary into the account; b) having multiple defaults on my credit record; c) making payments to two or more debt collection firms each month; d) using payday lenders and, e) even more stupidly, gambling online - a big part of how I ended up in this mess in the first place. So - they are due to start charging interest on this overdraft soon and it's going to tip me over the edge (again). I really don't want to default and want to find a way through it. But my question is whether I should complain about a breach of their responsible lending guidelines. Would that serve any purpose? Do I have a case? What might they do, for better or worse? I've actually had refunds from a few payday loan firms who acknowledged they should never have issued loans to me, so I'd have thought a mainstream bank must have some sort of similar view? Any advice would be very much appreciated! Thanks

hi Shaun - thanks for sharing. Seems all payday loans firms are realising they're in trouble on historic irresponsible lending. There's more on this thread (http://www.consumeractiongroup.co.uk/forum/showthread.php?397633-Mis-sold-PDL-Claim-back-interest-fees-any-experience) for anyone interested! Could be the next big PPI/reclaiming thing, maybe? (And there's a discussion about it on Moneysavingexpert too http://forums.moneysavingexpert.com/showthread.php?t=4965788)

Thanks! If your case does appear on the FOS site it would be great if you could let us know on this thread? I think that being able to read their full findings would really help a lot of people. Thanks again for your information and encouragement. If I make any progress, I'll put it here.

Hi mummyfightsback Just to say many thanks for sharing your experience and congratulations on what you achieved. I've been in very much the same position as you and the original poster (wouldn't it be good to have an update from him/her?)... And I also saw this thread on Moneysavingexpert http://forums.moneysavingexpert.com/showthread.php?t=4965788 which maybe suggests that real momentum is building around this issue? I would love to begin the process of challenging the companies that loaned to me month after month (even after I had defaulted and completed repayment plans) - it was a horrible trap to be in. I just find the whole idea of taking them on very daunting - and I really don't know where to begin. Did you complain to them, or go straight to the FSA? And is your case on the FSA/ombudsman website yet? It would be great to read their ruling in full. I'm assuming there are no templates/guides to lodging a claim like this? Anyway many thanks again!

Hi, thanks - yes, that's right - that's exactly what they've done. (Though I should make it clear that they've not done it in response to the DMP: the loan was always set up like this, from the outset. I borrowed X, the total interest over the term was Y, and my balance to repay on day one was X plus Y. My early repayments were almost entirely interest only payments. In short, all the interest was 'front loaded'. They have given me some help since the DMP in that a) they have accepted an extended repayment term with reduced payments, and b) they have promised not to add any additional interest. But because the whole contractual payment was added to the principal at the outset, that means that, however many years it takes me, they stand to get back every bit of interest due under the original contract, unlike all my other creditors. And they won't budge on that. I'm very happy to keep arguing with them about this being unfair, but I really just wondered if anyone else had experienced this situation, or can tell me whether I'm right/wrong to persue it. (And dx100uk, thanks - I will have to ask them for a copy of the original contract, but when I get one I'll post it.)

OK, thanks very much for the reply. Looks like there is no way round this, then. I'll be paying this back for many years to come!

Thanks. I manage the DMP myself, and it's been going 15 months now. The loan, though, dates back to 2009, and all the payments were up to date for the first two and a half years. The payments are as you describe: mostly interest at first. They have already defaulted me, but the annual statements are unchanged in format. They agreed not to charge additional interest for making reduced payments, which I appreciate - but that doesn't change the fact that, because they won't refund the interest which applies to the months since I entered the DMP, Halifax are set to be the only one of my creditors who receive back everything I borrowed plus every bit of interest in the original agreement (eventually....) I just wanted to know if this is standard? It doesn't seem right to me? thanks

Hi - thanks very much for the reply. To clarify, that is not what is happening here - I'm not being charged twice. It's Halifax - the way the loan was set up, all the the interest was front-loaded right at the start. The annual statements I receive just show, month by month, the amount I have paid and, in brackets, the amount of front-loaded interest that effectively applies to that month of the agreement. So I'm not being double-charged or anything - their statements just break it down so you can see how the original interest was calculated. All I asked them to do is to look at deducting/refunding the interest for the months since I entered a DMP, and that request was turned down. They say that because all the interest was added to the total balance on day one, there is nothing to 'freeze'. And they won't do refunds. I know that is their right, but it seems unfair on all my other creditors who have helped by stopping interest charges. And it means my repayments to Halifax will drag on for years... Does anyone know what more I can do, or is what Halifax are saying just standard practice, and I have to accept it? (And I don't have the original agreement to hand, unfortunately, but I will ask for a copy.) thanks again for taking the time to help!

thanks, that's very kind!

Hi - no, unfortunately not! Thanks

Hi - I hope someone can help: thanks in advance. I'm a year into a DMP now, but am having trouble with one of my creditors. All the others froze interest when the DMP started, apart from my biggest creditor, who gave me a personal loan in 2009. The creditor says that because all the interest was "front-loaded" - charged and added on to the balance right at the start - they cannot do anything to help my situation. So my annual statement from them shows me making a reduced DMP payment each month, while the effective interest rate for each month remains almost double that. I wondered if anyone else has experience of this? I asked the creditor to look at cancelling/refunding the interest covering the time period since my DMP began - in other words, I asked for the same help that my other creditors have offered. But they just said no. All the interest was added to the total in month one of the 86 month loan, a nd that's the way it stays... Is that right? Thanks very much for any advice!

Interesting! Please keep the updates coming

Hi Mise Eire I am using a pre-paid debit card for this - not linked to any bank account, and it can't go overdrawn. It seems like the safest way to deal with these firms, even if it's a little bit more hassle.

Thanks again. I will do that and see what they say. I'll post on this thread what happens, in case it helps anyone else.

Hi Sequenci - thanks very much, that's reassuring. I just wonder what they will do if I refuse to give them the details they are asking for within seven days. I guess the arrears and the charges will just keep building up I wonder how long they would leave it before escalating their action. I have to admit I find it all a bit frightening ...

Hi - thanks so much for the replies! a) No, it's not the same bank that holds my current account, which is good. b) My problem really is that I know that my income / expenditure form will show them I *can* currently pay them more than the token payment I have offered, of £10 a month. So while the form will show I cannot afford my minimum payment to them, it will also show I could pay more than £10. So they will just write back and demand more. My issue is that I don't want to pay any creditor more than any other for the next 2/3 months, and until I can stabilise my finances over the next two months and assess my income and future costs, I don't want to start a repayment plan with one creditor that I might not be able to stick to. Is that reasonable? My other creditors seem to think so. I'm just wondering what this bank will do if I write back and refuse to give them an I&E form until my income is stabilised in two months time... I wish they could have just agreed to the temporary hold like my other creditors have !

Hi - I hope someone can help! I would be very grateful for any advice on this issue. I am probably going to have to apply for a DMP with one of the free charities, because I have lost a chunk of income and can no longer meet my minimum payments to creditors. But I want to delay the process by up to three months, as I may be able to recover that income in that time. In the meantime, I have contacted creditors explaining the situation, and asking for them to hold action and accept £10 a month token payments. All of them have been prepared to do this so far - apart from the major bank who provides my unsecured personal loan. They have refused to pause collection action / charges unless I send them an income and expenditure form. I can do that, but I am unsure if it is the right thing to do. Clearly it will show I can afford to pay them more than the token £10 payment I am offering all my creditors - but until my situation is stabilised I do not want to make higher payments than that, or pay one creditor more than another, or commit to a repayment plan which then has to change if I go ahead with a DMP. Does anyone know what I should tell the bank? They have given me seven days to provide an I&E form. Thanks very much for any advice!

@ Dx100uk Just to say that sadly that method - telling a bank not to make payments / withdrawing continuous payment authority does not work with Santander. I've written about it elsewhere on these forums - but Santander refused requests to do that on the phone, by secure online message, and ignored the letter I sent by recorded delivery. I quoted all the FSA guidance, and their own terms & conditions - and they denied all knowledge. In the end they told me to complain to the ombudsman if I wasn't happy. They said that as soon as I sign a contract with a PD loan company, there is no way for Santander to stop them taking their money, even if the money is not there. I just wanted to make sure the moderating team here know that this is happening. In theory the legislation is on our side. In practice the banks aren't interested. (And very best of luck to Huxleypig in getting your situation sorted out)

Hi - I'm still stuck in an ongoing battle to get out of the payday loan trap, with no help from the banks etc (but plenty of help from people here, so thanks)... I just came across this firm 'Instant Loans Direct.com' via Google, who seem to do payday loans but at a much cheaper rate. I've searched this forum, but can't see anything about them here. I'm interested because if I can move my short-term debt to them and their rates, I will actually be able to clear it. Does anyone have any experience of them? I'm assuming their credit checking is probably much harder to get through than Wonga/Quickquid and the rest - hence the lower interest rate? thanks very much

Hi Sequenci. Sadly I have done all that and got nowhere. They deny that payday firms use CPA, but in any case, they would honour any payment as I clearly have a relationship with the lender. So I guess now I do have to take it up with the ombudsman. What a nightmare.

Yes I have. But they said they have no power to intervene and that all payments would be honoured because I clearly have an existing relationship with that company. I've run out of options. Either the payday company will remove all my money via multiple normal transactions, or the bank will charge me £20 a go for every failed transaction they try. And they said blocking the card would make no difference too.

Hi - thanks. I have tried everything with my bank to cancel these payments - they refuse. They say they are normal card payments, not CPAs. And I can't close the account in time. I give up. Don't know what to do. If I empty my account to try and stop the loan company taking payment, and so the bank blocks the payment, won't the bank then charge me £20 for a failed transaction? And if the payday company keeps trying to take payments all morning, as they often do, isn't that £20 for every failed transaction? argh

Sadly I have experience of having payments taken out by payday lenders even when i have deliberately emptied my account The bank just honours the payments and puts me in an unauthorised overdraft. I feel totally stuck. I spoke to my bank who again denied any knowledge of their own terms and conditions. They said the only way of stopping a payday loan payment would be to have my debit card blocked. That cannot be right can it? I am prepared to do that, but I'm afraid it would be a waste of time, and that the payday loan company will still just take all the money anyway via the continuous payment authority? What a nightmare. I don't know how to convince my bank to stick to the law / their own terms. And I also really don't understand how anyone ever defaults on a payday loan! This seems to be a watertight way for payday lenders to raid your account, even if it is empty....

hi Tomtom - it is incredibly frustrating, yes. I'm not sure what's going on at Santander as it is spelt out in their current account terms and conditions (http://products.santander.co.uk/bankaccounts/legaldetails.html) that customers can cancel CPAs. It says: If you are stopping a recurring debit card transaction (that is, a continuous payment transaction on your debit card initiated by a payee and authorising us to make payments) you must also tell the payee. You should provide us with a copy of any notice of withdrawal of consent given to the payee. We will stop the payment provided that we receive notice from you no later than close of business on the working day prior to the date the payment was due to be made. But when I try and do it they say there's no such policy. I've queried it again. We'll see. And sequenci - I understand about setting up another bank account / moving wages etc. But isn't that irrelevant if a payday lender uses a CPA to take their payment? The bank will pay out to the payday firm regardless of whether there is or isn't any money in your account, in my experience. So even if I move my wages elsewhere, I'll still have a negative balance plus overdraft charges in my old account...

Thanks Tom - please let me/us know how you get on. The weirdest thing is that this clause - matching the FSA ruling - is in Santander's own revised terms & conditions - it just seems no-one has told the staff...