Small bank loan & debt collectors

L

Lizard

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My daughter who is unemployed and paying off a very small bank loan (but obviously not paying it off fast enough) received a letter from her bank stating that if she does not pay off the outstanding amount of 197 euros in 28 days, they intend to take action, file a default, legal proceedings etc etc. She has been trying very hard in the last 12 months to pay it off on a regular basis, and has reduced the loan from 600 euros to 197 in less than a year, and she continues to pay it off. There is no way she can pay off the outstanding amount in 28 days, it might take her a year to pay back this amount, as the interest and charges are so high that they swallow up most of the money she puts in in the first place.
However, it is clear to the bank that she is putting money in her overdrawn account regularly. What should she do next? She cant afford a solicitor, and I think court proceedings would be a waste of everyone's time, as she is paying the loan at the best of her ability.
 
Family loan? It's a tiny amount (although I don't know your family's circumstances, but I guess things are very very tight if you can't give her the 197 to just clear it). Could you ask someone else in the family or have a whip round?
 
Has she missed any repayments?

It is a very small balance, but if she has no money to pay it all off then she can't.

Can you lend her the €197, she pays it off, and pays you €8 per week for 25 weeks or €4 x 50 weeks with no interest or charges?
 
Lizard, a couple of questions
1) Had she come to any arrangement with the bank regarding the arrears or has she simply been trying to clear them as best she can?
2) Has she contacted the bank on the basis of their latest communication?
3) You mention her overdrawn account, is this a term loan or an overdraft you are talking about?

It sounds like a very strong-arm approach from the bank however as you surmise it would likely be a waste of everyone's day to start with legal proceedings at this point for such a small sum. Family paying it off now would save interest and would remove the threat but it also basically validates the banks approach. If she presents an achievable plan of regular payments to them clearing the loan within a definite period they may agree to it and then she has demonstrated good will and a clear intention to pay which would be viewed favourably if it came to a judge.

If it is a case of trying to clear her overdraft that might be a different kettle of fish, because essentially she is constantly extracting money in overdraft and never clearing it.
 
Thanks, it was a 2 or 3 year interest-free student loan that she should have paid off a couple of years ago, but she only started paying it off last year. By then it had passed the interest-free time scale. She has paid most of it off, and the bank has gained from her lapse through interest and charges, and she continues to put cash into this account - she is not taking any money out of it. I think I will advise her to ring the bank. As you said, a strong-arm, and entirely unnecessary approach from the bank. Thanks again for your advice.
 
Hope it works out well and they accept her payment plan. If not at least she can then say she tried.
 
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