# Should the bank have reduced my arrears balance before deducting it from redress amount?



## Ballygriffen (5 Dec 2017)

Hi, I had an arrears balance of 18k. The bank reduced my overcharged interest figure by this amount to calculate my redress payment. But surely if an incorrect interest rate had been apllied historically,  the arrears balance needs to be recalculated and would be considerably less than 18k.


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## SaySomething (5 Dec 2017)

I think you need to explain it a little bit more?


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## Ballygriffen (5 Dec 2017)

When I missed my payments the bank was charging me 5% interest.  The missed payments totalled 18k. The interest rate should have have been 1.15%. So I feel this arrears balance is overstated. 
My redress payment was calculated approx 50k overcharged interest less 18k arrears and this doesnt seem correct to me.


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## peemac (5 Dec 2017)

I presume this now means that you don't have arrears?

Then its correct - 

Let's say the redress is 30k and you have arrears of 18k, then the arrears are cleared first leaving a balance of 12k to be refunded.

For any additional cost that the arrears cost you, then the compensation amount should cover that and assuming the redress was in excess of the arrears and that if the correct interest rate was aplied you would not have gone into arrears, then you also need them to correct the record with the ICB.  

So you need to work out ho much extra the arrears cost you and whether the compensation amount sufficiently covers that.


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## SaySomething (5 Dec 2017)

That's correct.

Your arrears are cleared first. They are missed payments. The bank is entitled to do this. If you had missed payments the argument that you should not have been in arrears if you were on the correct rate doesn't apply.


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## Ballygriffen (5 Dec 2017)

It is the interest rate applied to the missed payments that I am querying.  If the bank are restating my account based on what the correct rate should have been,   the arrears balance should be less, approx 13k.


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## SaySomething (5 Dec 2017)

Did they not give you a detailed calculation?


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## Ballygriffen (5 Dec 2017)

Yes arrears are cleared now. I completely agree the missed capital repayments need to be repaid .. it's the interest on the repayments I disagree with them on. The calculations provided were pretty detailed. I told the bank I thought they were wrong. They told me they were right.  Has anyone else had arrears deducted from their refund?


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## SaySomething (5 Dec 2017)

You need to get qualified financial advice on this.


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## peemac (5 Dec 2017)

Ballygriffen said:


> It is the interest rate applied to the missed payments that I am querying.  If the bank are restating my account based on what the correct rate should have been,   the arrears balance should be less, approx 13k.


That figure would suggest penal interest rates and the 18k arrears being from way back.

Take a 13k loan over 5 years at 5% - the interest on that would be €1700. At 7 years it would be €2400.

So unless a penal interest rate of 10%-12% was being charged on arrears, the interest on the arrears is probably less than €2k


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