HELP! Just made a massive mistake acknowledged old debt when claiming PPI from LLoyds

[Coconutice]

I feel a complete idiot and need some advice!

I've just sent a letter to LLoyds banking group asking them to refund the PPI on 2 loans and a credit card. I haven't banked with LLoyds for 6 years, but knowing I'd been mis-sold PPI thought I'd make a claim. Here's the thing;

One of the loans and the credit card were settled, however with just 2 payments left on the 2nd loan, I became ill and was unable to make the final 2 payments totaling a mere £169. (it may have been one payment + charges, but this is the amount shown on my credit file).

Also during this time my current account also went slightly overdrawn (few £'s) and I began to incur bank charges and interest totaling £550. I was suffering from depression and stupidly buried my head in the sand ignoring all correspondence from the bank until eventually they added 3 defaults to my credit file (one each for the loan and two current account?!) I've had to live with this stupid mistake for the last 5-6 years holding off all attempts at getting a mortgage knowing full well i'd be refused because of these defaults.

These debts WOULD have become statute barred in August 2013, at which pint my credit file would be restored and I can finally get a mortgage. HOWEVER in my letter, I sort of acknowledged the defaults and I'm now worried that the clock now gets reset and the default will show on my credit file for another 6 years!!!

Can anyone help me with the following questions?

1) If the default was issued in Aug 2007 and I now acknowledge the debt now, will it show on my credit file for another 6 years?

2) What happens if I settle the defaults in full immediately, will they drop off my credit file in August as the 6 years has passed or does the 6 years start again?

3) Is it likely that the PPI department that receive my letter will pass this on to collections or will they not twig?

4) Will the defaults affect my PPI claim?

I'm so stupid. Until 2007 I ran my account well, never went overdrawn, never missed a payment until one breif bad spell happened. Since then I have banked with Nationwide and never gone overdrawn - I just don't want to be paying for this mistake for ever and I'm worried I may have made a massive mistake!!

[Bill-K]

Re: HELP! Just made a massive mistake acknowledged old debt when claiming PPI from LL

Hi Coconutice, and welcome to you. I can't answer your default questions 1 & 2, but I'm sure others here will. I'm pretty sure that the PPI Complaints dept. WILL liaise with Collections dept. I think it is all on a common shared database, so all recent activity will get flagged up. The defaults themselves should not have any bearing on your PPI claim - BUT - one of the reasons why the PPI and Collections depts. liaise with each other is that the lender is usually entitled to use refunded PPI premiums to 'offset' any arrears. So - just using the approx. figures you have quoted as an example. It appears that you owe Lloyds approx. £720 (and rising). If the PPI claim is successful, then they will be entitled to use it toward clearing or reducing this debt. If the PPI claim 'quantum' is insufficient to clear the debt, then the defaults will remain at least until it is cleared. If the claim quantum is more than this amount, then the debt can be cleared, and the balance of PPI sent to you. I believe you can ask for your credit files to show this - but NOT to have the defaults removed - subject to better advice from others here.

From what I have deduced, there are two possible alternative routes. It MAY be possible to effectively 'rescind' the PPI claim - and I'm going out on a limb with this. You have had the b@11$ to admit you buried your head in the sand (been there - got the kicked @$$). You MIGHT just possibly be able to get the PPI Complaints dept. to drop your claim (which I'm sure they would be only too happy to do) due perhaps to just simple human error by a well-meaning family member acting on your behalf, and sending in a claim. I'm not even sure I should be suggesting this, TBH !!!

Another route might be to continue with the PPI claim. Once it is settled, you may be able to then pursue a claim for 'Consequential Losses.' This is a hitherto unproven reclaim course, but it effectively relies on the pivotal FSA PPI Redress Handbook Rule DISP APP 3.7.2 " Where the firm concludes that the complainant would not have bought the payment protection contract he bought, and the firm is not using the alternative approach to redress (set out in DISP App 3.7.7 E to 3.7.15 E) or other appropriate redress (see DISP App 3.8), the firm should, as far as practicable, put the complainant in the position he would have been if he had not bought any payment protection contract. "

The FOS puts this in simpler terms:" In the majority of cases, we are likely to tell the financial business to put the consumer in the position they would have been in if they had taken out all of the loans without any mis-sold PPI - and to compensate them if they have been out-of-pocket in the meantime. "

This basically means that if it can be shown that subsequent penalties and interest would not have been charged if the PPI had not been sold, then the FSA reckon the consumer should be refunded those charges. I repeat and emphasise that this is still an unproven method, but there are cases ongoing.

I may not have helped much, but I hope I've presented some options !!!

[Celestine]

Re: HELP! Just made a massive mistake acknowledged old debt when claiming PPI from LL

gust 2013, at which pint my credit file would be restored and I can finally get a mortgage. HOWEVER in my letter, I sort of acknowledged the defaults and I'm now worried that the clock now gets reset and the default will show on my credit file for another 6 years!!!

Can anyone help me with the following questions?

1) If the default was issued in Aug 2007 and I now acknowledge the debt now, will it show on my credit file for another 6 years? No, they can only default you once per debt.

2) What happens if I settle the defaults in full immediately, will they drop off my credit file in August as the 6 years has passed or does the 6 years start again? See answer above. They may ask for the money though, but they can't re-default you.

3) Is it likely that the PPI department that receive my letter will pass this on to collections or will they not twig? Highly unlikely, Lloyds TSB are the most incompetent bank I've ever known, indeed it's unlikely the PPI department even know where the collections department even is!

4) Will the defaults affect my PPI claim? Nope, not at all. Get your money back and any credit card charges they've thwacked on your 'debt'.

I'm so stupid. Until 2007 I ran my account well, never went overdrawn, never missed a payment until one breif bad spell happened. Since then I have banked with Nationwide and never gone overdrawn - I just don't want to be paying for this mistake for ever and I'm worried I may have made a massive mistake!!

Lloyds remind me of those huge river crocodiles that lurk beneath the surface as the zebras try to cross the river. One mistake....SNAP! Well done for getting away from them, Nationwide are a very decent bank overall.

Hope you feel better for knowing you haven't screwed up xx

[Coconutice]

Re: HELP! Just made a massive mistake acknowledged old debt when claiming PPI from LL

Thank you both so much for your advice.

Bill your point is exactly the point i tired to make in my letter. I made the assumption that they would look at my file and see an outstanding amount still owed. I also accepted that they would probably deduct this from any PPI refund (if they uphold my claim!) My PPI calculations suggest they owe me about £3.5k, so I figured even if they claim back charges I'd still be owed something (again only if they agree with the mis-selling!).

This is what I wrote in me letter: It is my belief that had the PPI not been added to the loan amount borrowed, the loan would have been settled earlier by my previous monthly payments and a subsequent default would never have occurred. Likewise all associated charges and interest would not have arisen.

Alternatively, had the PPI had been not been miss-sold and added to the loan in the first place and I had taken the loan over the same length of time, the monthly re-payments would have been calculated lower from the offset and therefore more manageable. When my circumstances changed it is likely that I could have managed the final re-payments easier and settled the loan.

I've basically admitted point blank that there is a debt and I owe it. The fact at least £500 of this debt is bank charges and interest, I would hope that they acknowledge my honesty.


[QUOTE=Celestine;309447]Lloyds remind me of those huge river crocodiles that lurk beneath the surface as the zebras try to cross the river. One mistake....SNAP! Well done for getting away from them, Nationwide are a very decent bank overall.

Celestine - You're so right! I was a model customer for 15 years; and one mistake and they have massively affected my life. I've been saving with Nationwide for a house deposit for 5 years, but until these defaults come off my credit file I'm screwed!

I hope you're right and the default runs is course whether its settled or not. I can't wait another 6 years to buy a house - private rent is crippling me!

Thanks once again for your help!

[Bill-K]

Re: HELP! Just made a massive mistake acknowledged old debt when claiming PPI from LL

I'm so glad you had our Cel's response, CI !!! She has been there and got the T-shirt. Much as I enjoyed her response to point #3 - and I truly would LUUURVE it to be the case - I fear that LTSB are actually several steps ahead of us all. They are not as thick as they pretend to be, I contend.