Lowell chasing HSBC overdraft

[WaylonJ]

Hi Everyone.

Some help on how to proceed with the following would be very much appreciated as I don't want to say the wrong thing to them.

Back in 2009/10 I got in to some financial problems, mainly due to a very high interest rate on my mortgage. I managed to arrange a payment plan to pay off the arrears on my mortgage which I am still doing.

However, I also had an overdraft and loan from HSBC. I couldn't keep up the loan repayments and received numerous default notices from HSBC which ended up in June 2010 with HSBC closing my loan and overdraft.

The combined debt was £16,522.42. HSBC combined the two acounts and closed them. Ii have attached a copy of the closing statement that Lowells have just sent me.

Several DCA's tried chasing the debt but I just ignored them and each of them gradually went away. Then earlier this year I received a letter from HSBC saying they had sold my account to Lowells. I then started getting letters from them demanding payment of £16,468.47, which again I ignored until I got a letter from Hamptons Legal talking about Bankruptcy. At this point I sent a CCA request on 22nd May 2013. Lowells responded on 28th May acknowledging the request and saying that they had contacted HSBC for the documents and the account was on hold. They sent letters on 29th May, 7th June and 17th June saying that they were still waiting for the documentation.

On 11th July Lowells wrote saying that as the account was opened so long ago that HSBC no longer had a copy and that they were closing the account and would not contact me again unless a copy of the agreement was found.

Then on 6th September Lowells wrote saying that they had requested copies of my statements from HSBC and the amount they were now claiming was just £6,395.70, i.e. the amount relating to the overdraft and excluding the loan.

Finally yesterday I received a letter enclosing the statements, saying that as it was a running account it was not covered by the CCA 1974 and asking me to contact them. I have attached a copy of this letter as well.

Sorry to make this so long but I wanted to give you good people as much information as I could.

I really don't know where to go with this now. I could offer them a cash settlement, but to do this would acknowledge the debt and restart the statute barred clock, plus if I make an offer so early are they likely to hold out for a higher settlement.

Any and all advise on what to do next would be much appreciated.

[labman]

Re: Lowell chasing HSBC overdraft

Was the overdraft agreed with the bank or not?

[WaylonJ]

Re: Lowell chasing HSBC overdraft

Was the overdraft agreed with the bank or not?

Thank you for replying. The overdraft was agreed at £5,000 but went up to £6,000 plus with their charges and interest. Does that make a difference?

[Celestine]

Re: Lowell chasing HSBC overdraft

Because an overdraft does not have a 'credit agreement' at the start of it, s.78 CCA 1974 does not apply. So you can not use their inability to produce any original documentation as a means to challenge this debt.

Also, the debt is quite recent so is not time barred under Limitation Act.

Do you own your own home? If so, be very cautious as Lowell have a habit of issuing statutory demands to enforce debts.

Because the charges were bank charges, they too will be enforceable.

[PlanB]

Re: Lowell chasing HSBC overdraft

I also had an overdraft and loan from HSBC. I couldn't keep up the loan repayments and received numerous default notices from HSBC which ended up in June 2010 with HSBC closing my loan and overdraft.

The combined debt was £16,522.42. HSBC combined the two acounts and closed them. Ii have attached a copy of the closing statement that Lowells have just sent me.
.

You might be in luck here

The debt Lowells are chasing includes the original HSBC loan which would have been covered by the CCA at inception. I believe that they would still need to provide the original credit agreement under s.78 in this instance.

Also HSBC have no right to combine two debts into one account without your express permission. So unless this was a consolidation loan (which it doesn't sound like) then Lowell may be in some difficulty if they pursue you to court.

Can you post up separate information for each of the HSBC products. The date the loan account was opened is the most important.

[labman]

Re: Lowell chasing HSBC overdraft

Thank you for replying. The overdraft was agreed at £5,000 but went up to £6,000 plus with their charges and interest. Does that make a difference?

Yes! See below

Because an overdraft does not have a 'credit agreement' at the start of it, s.78 CCA 1974 does not apply.

"(1)Where an authorised business overdraft agreement or an authorised non-business overdraft agreement has been made, a document containing the terms of the agreement must be given to the debtor."

http://www.legislation.gov.uk/ukpga/1974/39/section/61B

There is also case law to back up any agreed amount being exceeded - see p5 and 6 of attached

[PlanB]

Re: Lowell chasing HSBC overdraft

Then on 6th September Lowells wrote saying that they had requested copies of my statements from HSBC and the amount they were now claiming was just £6,395.70, i.e. the amount relating to the overdraft and excluding the loan.

Finally yesterday I received a letter enclosing the statements, saying that as it was a running account it was not covered by the CCA 1974 and asking me to contact them.
.

I'm not sure how Lowell can take you to court for only a portion of the current debt. I am aware of cases like this where the debt purchaser has had to sell the whole account back to the original creditor, who then has to separate out the two products (loan and OD) and then resell them to the debt purchaser. Even this wouldn't get them round the problem that the accounts may have been terminated incorrectly in the first instance which could make them unenforceable.

It's complicated which is to your advantage. I'll have to look up the bit in the CCA which says HSBC cannot combine those debts without your permission. I'll be back when I've sourced it

[PlanB]

Re: Lowell chasing HSBC overdraft

It's complicated which is to your advantage. I'll have to look up the bit in the CCA which says HSBC cannot combine those debts without your permission. I'll be back when I've sourced it

I'm back It's section.82(2)(3) according to this and it's all about *modifying* agreements:

The OC in question had amalgamated a credit card balance and a flexi-loan balance with the small overdraft balance on my current account.... and then sold the whole lot to an external DCA under that current account reference number. As I had not signed any documentation authorising them to do this, the whole thing was challenged under CCA 1974; s82(2)/(3) as follows:

82 (2) Where an agreement (a "modifying agreement") varies or supplements an earlier agreement, the modifying agreement shall for the purposes of this At be treated as:-

a) revoking the earlier agreement and

b) containing provisions reproducing the combined effect of the two agreements, and obligations outstanding in relation to the earlier agreement shall accordingly be treated as outstanding instead in relation to the modifying agreement.

(3) If the earlier agreement is a regulated agreement but (apart from this subsection) the modifying agreement is for running account credit, it shall be treated as a regulated agreement.

[labman]

Re: Lowell chasing HSBC overdraft

I'm posting to this to say what the bank may well claim, as combining accounts is not an uncommon occurence. It comes down to the right of set off.

If you have spare capacity in your agreed overdraft to fund part of the arrears on your credit card, they will often use the right of set off to take the funds from the overdraft availability and pay it towards your credit card. It is often in the T&C's they can do this without notice, for the obvious reason if they gave you notice, you may move the funds so they are no longer available.

See here from MSE:

http://www.moneysavingexpert.com/banking/setting-off


If they took this approach, you'd need to ask where it is enshrined in law to allow them to do this, as it is unclear.

[PlanB]

Re: Lowell chasing HSBC overdraft

In the OP's case both his accounts were in deficit with no spare capacity so the ROSO wouldn't apply.

[labman]

Re: Lowell chasing HSBC overdraft

Indeed, it wouldn't. :beagle:

[WaylonJ]

Re: Lowell chasing HSBC overdraft

Thank you for everyone's advice on this but I am still unsure as to how to proceed.

As the loan and overdraft have been separated out again' Lowell are only chasing the overdraft element so CCA 1974 doesn't apply.

In answer to Celestine, yes I do own my own house with a huge mortgage and am self employed so a SD would be very bad for me.

Would you suggest that I make them an offer, but if so at what level would you make an initial offer.

Alternatively, I did pick up on another letter on here as follows and was thinking of sending them this. Would do you think. Thanks

"Under the provisions of The Consumer Credit (EUDirective) Regulations 2010 and also c.39 (s.74 (A&B) (VA)) CCA(1974) Iwish to formally request a copy of the original overdraft agreement andrelevant paperwork that should have been sent annually if this account weregenuine.

If the alleged account can only be regarded as an'Agreed Overdraft', which has now reverted to an 'Unauthorised Overdraft' thenthe lending becomes regulated in line with c.39 Part VA (s.74) (s.1(b)) CCA1974meaning the normal rules and CCA(1974) protection applies to this account.

HSBC should have been sending an annual reminderregarding the alleged overdraft, as well as copies of the original agreementmade and an annual renewal form that contains the relevant prescribed termsthat are clearly outlined in s.74(A)2(a,b,c,d,e). I highlight this provision for your perusal;

s.74A(2) The current account agreement must includethe following information at the time it is made:

(a) the rate of interest charged on the amount bywhich an account-holder overdraws on the current account or exceeds thepre-arranged overdraft limit,
(b) any conditions applicable to that rate,
(c) any reference rate on which that rate is based,
(d) information on any changes to the rate ofinterest (including the periods that the rate applies and any conditions orprocedure applicable to changing that rate), and
(e) any other charges payable by the debtor underthe agreement (and the conditions under which those charges may be varied).




You should also be paying attention to s.74(B)(2)which reads, I quote;

s.74B(2)  The matters referredto in subsection (1) are:
(a) the fact that the currentaccount is overdrawn or the overdraft limit has been exceeded,
(b) the amount of thatoverdraft or excess,
(c) the rate of interestcharged on it, and
(d) any other charges payableby the debtor in relation to it (including any penalties and any interest onthose charges).

Therefore in line with the above, could you pleasesend me the required documents. I trustthat I have set out the position clearly and I await your response.

Yours faithfully"

[FlamingParrot]

Re: Lowell chasing HSBC overdraft

I'm posting to this to say what the bank may well claim, as combining accounts is not an uncommon occurence. It comes down to the right of set off.

If you have spare capacity in your agreed overdraft to fund part of the arrears on your credit card, they will often use the right of set off to take the funds from the overdraft availability and pay it towards your credit card. It is often in the T&C's they can do this without notice, for the obvious reason if they gave you notice, you may move the funds so they are no longer available.

See here from MSE:

http://www.moneysavingexpert.com/banking/setting-off

The article in question clearly states they can set off against any account with a CREDIT balance, an overdrawn account wouldn't be in credit.

"The Bank may, without notice, set off a debit balance, or debit interest, on an Account against any Account with a credit balance or credit interest held by the same Account Holder."

[labman]

Re: Lowell chasing HSBC overdraft

It doesn't apply in this case anyway, but if there is credit available within an overdraft facility, they will/can use it towards the ROSO.

As I say, it's purely theoretical here anyway, so doesn't matter.

[Ruby123]

Re: Lowell chasing HSBC overdraft

In this case, (ie)when the HSBC terminated and amalgamated the accounts, would it be allowed for the dca to un-amalgamate the accounts and revert back to the original agreements if they could be found?