Payday loan strategy

[Lamplighter_UK]

Hi

 

I was made redundant from a well paying job several months ago, and have struggled to get back into full-time employment (a matter that should change in the next month or two).

 

Since redundancy, I put in a claim for benefit, which was unfairly disallowed, and I had no income and no resources for several months, and debts, arrears and charges spiralled around me. This culminated in my bank closing my facilities and registering a default.

 

Last week the benefit decision was overruled on appeal, which has given me a small lump of backdated money with which I need to appease as many debtors as possible.

 

A few months ago, in desperation and without any cash, I took a Payday loan for £750 with The Money Shop in order to pay my utility bill and buy food and provisions. This was done via a number of guaranteed cheques drawn on the account that later went into default.

 

On the first month anniversary, I extended the loan via a £112.50 payment from my own bank debit card. On the second month, I extended again via a £112.50 payment from my wife's bank debit card, as mine was then in default.

 

On the third month anniversary, mid-November, I didn't have any funds to extend the loan, and The Money Shop wouldn't discuss the matter and told me they would present the cheques.

 

So I let it happen ... I was powerless to do anything else.

 

A fraud investigation company working on behalf of the bank contacted me, and I sent them a letter confirming that the cheques had been written (but not dated, as is the style with The Money Shop) prior to the default on the account. This seemed to appease them, and they said it wasn't the first time they'd encountered such a matter.

 

Then my ex-bank contacted me, and I explained the situation. They pointed out that it was illegal to present cheques when there wasn't sufficient money to cover them, to which I retorted that surely everyone using a payday loan does it for exactly that purpose! I didn't foresee current difficulties when taking out the initial loan. They said that they would not be honouring the cheques, and would return them to The Money Shop.

 

The Money Shop head office then contacted me and asked what I was going to do. I asked them to give me a few days to consider my position (I am waiting for receipt of an element of the backdated benefit).

 

In the meantime, they have (without permission) taken a £112.50 payment, plus additional payments of £25 and £50 (charges?), from my wife's debit card that I had used in the second month.

 

Separately, I also have around £900 in arrears on my vehicle HP agreement, which I must try to keep going until the expiry of the contract in March 2010 when I can offload the car at a guaranteed value. If they move to repossess beforehand, I will get only market value for the car, and a huge negative-equity bill. As I have missed a payment on a restructured repayment plan, they are seeking repayment of the full arrears.

 

So my difficulty is in what to do. The funds available will not cover both the Money Shop initial capital and the HP arrears. I think the HP company might be the more flexible to a partial payment, but the risk is much higher (several £1000 in negative equity) if they're not.

 

Ideally the bank would have honoured the cheques and added them to my default, which I am sorting out separately, but that's clearly not going to happen.

 

Could someone please advise on the strength of my position with The Money Shop, and what they might be prepared to do? I'm not mighty keen on paying £112.50 each month until I can repay the capital sum, but I fear this is what I probably have to do. However, knowing that the cheques will not be honoured, I imagine they too will be after full repayment.

 

Thanks, Lamp

 

Note: I am not trying to deny the debt, just to find the cost-effective and lowest risk repayment strategy.

[robjam1969]

Hi lamps

 

Not straight forward with the money shop once they have your cheques as most banks will always pay a guaranteed cheque. The short term answer is a new bank account to protect your income. You would of course incur charges with your old bank. You mention old bank so perhaps already done?

 

I am not sure they have authority to keep 'dipping' in to your wifes account, has she signed anything ? - if not then I would suggest she contacts ber bank and to go down the fraud route. Maybe worth explaing to money shop what they have done and give them the chance to give it back. She does need to report card lost and get a fresh one that they can't access.

 

As for the car finance I can't really advise. Perhaps worth another post on the general debtforum as this sort of thing crops up on there all the time.

 

Good luck.

[robjam1969]

Sorry should have mentioned that once your bank is protected you can then negotiate from a position of strength and get out of the cycle of paying bank interest only.

[MsWeatherwax]

Your wife needs to cancel her card right away. I would have a word with her bank, because I'm not at all convinced that this is legal and if that is the case the bank should be able to regain the money on a charge back.

 

I pay my friends Sky bill using my debit card all the time (she does give me the money first, haha!!), but that doesn't mean that her Sky bill, which is in her name, is suddenly my financial responsibility and they can take what they like from my account.

 

As far as setting up a payment plan with the MS, the golden rule is pay by standing order only. Write to them detailing what you can afford to pay, stick to your guns and don't let them bully you. Don't talk to them on the phone, unless you record your calls (actually, I would say just don't talk to them on the phone period - they'll only try to bully you into paying more than you can afford). They probably won't agree at first, but once they see that they're not going to get the full amount out of you in one hit, they will eventually give in.

 

If they continually phone you, send them the phone harassment letter in the "templates" section on here.

 

I not an expert on the HP side of things, but I am sure that I have read on here that if you have paid more than 2/3 of the amount owing on a car, they can't repossess? I'm sorry, I might have that totally wrong, but I would look around the "Repossession" section of the forum and see if there is anything else in there that might apply to your situation.

 

Please keep your chin up, and try not to lose any more sleep than you have already. You've had a rotten time of it already, these people have no right to make things worse when all you are trying to do is repay what you owe.

 

All the best, keep us posted.

 

MsW

Edited December 1, 2009 by MsWeatherwax
Spelling

[Lamplighter_UK]

Thanks RobJam and MsW for your replies!

 

Yes I've opened a new bank account (and will certainly not allow the Money Shop to get the details!), and the previous one is in default, yet their "solicitors" readily agreed to £50pcm repayment pending my re-employment, which in itself is a result as I was previously paying £280pcm to service the loan.

 

Also, I'm not seeking advice on the car HP. I believe each party's rights in the contract are clear to me, including the impact of early termination of the contract. I have not yet paid 50% of the value for a simple termination of the agreement as allowed for in the Consumer Credit Act, as the HP includes a large final installment which is just less than 50% of the financed amount, however I have paid more than 33% so the hirer cannot repossess without a court order. Shortfall losses are only covered by the hirer at the end of the agreement, hence I need to keep it going until March 2010 to avoid a negative equity situation and a bill for the shortfall. This is a bigger issue than The Money Shop, and the one I am trying to tackle first. If I am successful in negotiations, they might accept a payment which only partially clears the arrears and agree to defer or spread the balance.

 

The real question relates to The Money Shop, and what success I might have with them in agreeing some repayment outside of the monthly £112.50 carry-over charge. If I end up paying a chunk of my lump to the car HP, I cannot clear the £750 capital owing to the Money Shop as well.

1) is there a precedent to them accepting some alternative repayment method, given that the original agreement must be void as the cheques have been returned?

2) do they tend to seek a court judgement - I'd be quite prepared to voice opinion in front of a judge if they fail to accept a reasonable proposal.

3) how were they allowed to take unauthorised debit card payments from my wife's account? This means that they must have stored the CVV on their system, which I also thought was naughty. (note: I'll ask her bank for a new card!)

4) I can't find the T&Cs for my "cash til payday" agreement with them - are there any copies on the internet?

 

Thanks again

Lamp

[Lamplighter_UK]

... just out of interest, are the original bank within their rights to return guaranteed cheques because they are drawn on a defaulted account?

 

There stance is that I acted fraudulently because the cheque date is after the account went into default. However, I wrote the cheques prior to the account going into default, but omitted the date as required by the payday loan company. It was the loan company therefore that inserted the date prior to cashing the cheques.

 

I only ask as it would be the easiest solution for the bank to honour the cheques and add to the total default sum.

[MsWeatherwax]

3) how were they allowed to take unauthorised debit card payments from my wife's account? This means that they must have stored the CVV on their system, which I also thought was naughty. (note: I'll ask her bank for a new card!)

 

Hi Lamp - I'm really sorry for never getting back to you on this one, I missed your post somehow.

 

Did you have any joy getting this refunded? I'm not an expert by any means, but I really believe this to be fraudulent. I can't see how they can just use someone else's account to claim funds just because they feel like it.

[sop1974]

Hi Lamplighter

 

I am new

 

I can answer the question in relation to you car if you are 1/3 or have paid have the finance on your car then the finance company will need to get a return of goods or from the court so Ms weatherwax is right they wont just repossess it. I hope this helps