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Guarantored my brother for a payday loan

(28 Posts)
GossipWitch Mon 03-Oct-11 21:51:21

my brother got a payday loan last year when he was working and asked me to be the guarantor with the promise of paying it back, however he lost his job shortly after and struggled to pay it, he told them his situation and said they'll take the minimum payment from him a month, of course being on jsa and the payments being £40 a month he found this difficult so I was at that time paying some of the payments for him. After a while of this we decided to check his balance and found that he was only paying the interest off the loan and nothing else even though the add clearly states that they expect you to pay the interest and at least 1% of the loan amount. So we went to citizens advise about this and explained what was going on, I also spoke to a financial advisor, who said they found it dodgy, and also said that this particular loan company is currently being investigated by watchdog.

The loan company is basically hounding me constantly, after following the CAB by not paying them until they can make some arrangement with them, they have even managed to find my home number although it is in a different name, I get around 2 letters a week at least 7 phone calls and texts a week and emails too. They even kept my other brothers number from brother 1 calling them to explain that he lost his job and have been hounding brother 2 asking for brother 1 ever since. Last month they somehow managed to take £100 of my brothers money out of his account even though he had changed his card. They are also on my brothers case too. He's paid twice the amount of the loan to them but he's not paid a penny of the loan amount, surely this isn't right?

My brother also has mental health problems, and at the minute would sign his life away, he's also dyslexic and didn't quite realise what he was getting into. Me on the other hand I was phoned by them whilst looking after my kids and they did all the details and things over the phone. So I was very distracted and also had my brothers failed promise of paying it back. However I have learned from my mistake and will never guarantor any one ever again, or take out a payday loan.

Any advise would be greatly appreciated.

twotesttickles Tue 04-Oct-11 18:31:53

He/You need to ask for a statement of account from them with details of the payment plan in writing and then contact these guys www.cccs.co.uk/ - they will help work out a plan to get rid of them.

GossipWitch Tue 04-Oct-11 18:44:33

two I'm more or less wondering whether I have a leg to stand on if I was to go to another debt management group tbh as I am his guarantor, they seem pretty sure that they can recover from me if needs be, I was hoping that citizens advise could cap the interest to help him pay it and reduce the payments somehow (they've managed this for me before years ago). I'd more or less like to know my legal rights in regards to this situation, if i have any, and whether this company is in fact a bit dodgy?

twotesttickles Tue 04-Oct-11 19:06:58

If he's mentally ill and they knew that or ought to have, then I think you may be able to get it wiped.

Why on earth did you agree to it in the first place? confused

GossipWitch Tue 04-Oct-11 19:10:13

Because I'm stupid and thought he'd have it paid off in a couple of months. they didn't know he was mentally ill, they didn't ask him so he thought he didn't need to disclose it.

catsareevil Tue 04-Oct-11 19:16:05

To have a contract cancelled on the grounds of being mentally incapable isnt easy, and would need his psychiatrist to agree that he met certain criteria.

The fact that you have guaranteed the loan might make that irrelevent anyway, as they have an agreement with you, with no suggestion of mental difficulties.

deeplydepressed Tue 04-Oct-11 21:44:00

If the amount is relatively manageable and your credit history is good, could you take out a credit card with a long interest only period and then at least the payments would not be paying off the interest but only capital? I think you a liable for this debt. You could of course take your brother to a small claims court to recover the money but it doesn't seem like a thing you want to do.

deeplydepressed Tue 04-Oct-11 21:45:33

PS payday loans are up there with consolidation loans - a totally shit deal for the customer and not touched with a barge pole.

Lougle Tue 04-Oct-11 21:47:24

The whole point of a guarantor, is that they are guaranteeing to pay the amount should the primary borrower default.

You don't have a leg to stand on, sorry.

The only option would be, as you say, to try and get the loan wiped on the basis of your brother's mental illness.

I don't think you would get far by saying that you agreed to be his guarantor because you thought he would pay it.

GossipWitch Wed 05-Oct-11 20:58:50

So I'm effectively screwed then, great!.

Next question, how do I get divorce proceedings to divorce my brother?

Lougle Wed 05-Oct-11 22:52:21

MMMM....tricky.

To do that, you'd have to prove that you were married. I take it there isn't another piece of paper kicking about that you signed? grin

Sorry, it truly is horrible. I wish there was a solution for you, but I think this falls under the 'only sign if you mean what you are agreeing to' category. sad

GossipWitch Thu 06-Oct-11 08:12:15

That's the thing, we didn't sign any thing, neither of us did! the only letters we've ever received from them is when they've put extra charges on and that's only been in the last few months. which the cab liked because they now have an address for them, I also recieved an email from them saying that they are making changes to the amount that they'll be taking off and have included the 1% they advertised about last year. They say that they have a verbal agreement on the phone from me and that's enough, I was so distracted I vaguely remember giving them my card number.

LIZS Thu 06-Oct-11 08:30:02

A verbal contract is still a contract. Could the correspondence have gone to your dbro and he's hidden/ignored it ? It is very unlikely there won't have been something in writing before he defaulted or he may have accepted t and c's via a website if he applied that way. As guarantor it could reflect badly on your credit history as you effectively undertook to pay it back if he couldn't. Do you have the means to do so ? If so make an offer and stick to it. These loans are relatively easy to get and potentially lucrative because the interest rate is so high and often the person is fairly desperate for the money. You tend to pay interest off first rather than the balance and it escalates on default. I think you need to take CAB's advice again.

GossipWitch Thu 06-Oct-11 16:27:38

I have been to the CAB today and asked for the person dealing with it to give me a call back I have also thought about getting my brother to give me £100 to help me to pay it back, I'll also have to borrow money from a couple of members of my family too, then he can pay me the money back which means I have to talk to him first (not on good speaking terms due to this loan!). TBH I just want this off my back before they end up sending bayliffs round to me. The interest gets more and more with more money owed to them so I don't want to wait too long.

Collaborate Thu 06-Oct-11 16:37:52

They can't send baliffs until they have a court judgment against you. If they don't have judgment then they are just their representatives and have no legal standing.

I'd get it paid off pronto though as the interest will cripple you.

GossipWitch Thu 06-Oct-11 20:26:44

My brother came round and I explained what I wanted to do, he said no because the CAB are dealing with it and if he has to he'll get a DRO to wipe it, and his other loans etc off. He's going down there in the morning to sort it out, because he says he should have some money off the original balance, and therefore they are advertising wrong and entrapping people in to paying a constant amount with out touching the loan amount, and he's going to fight it all the way so no-one else gets trapped by this sort of thing! (I did say he has mental health issues earlier didn't I?) So I'm going to leave it with him for the time being and see if he can do the DRO thing.

sneezecakesmum Thu 06-Oct-11 20:56:59

Gossip, you can bet your bottom dollar the company has the legal wording sewn up tighter than a duck arse so your DBs protestations are pretty worthless. The contract is with you as the guarantor as well as your DB, if you could negotiate with them just to stop the interest payments until you sort finances out it may buy you time to get an interest free credit card, pay them off and keep moving the balance until its paid off. Or borrow from family??

I card tart all the time and havent paid interest in years. The payday loans work out at over £1000 APR so DO SOMETHING NOW!

GossipWitch Thu 06-Oct-11 21:04:53

Already been down the interest payments path, asked if he could have the payments reduced and the interest capped for an extra 1 off fee and they basically said eff off, my brother, when he lost his job in the first place asked for reduced payments, he again got the same answer, they just want to keep making money off him/me by making him just pay the interest!

belledechocchipcookie Thu 06-Oct-11 21:07:38

You need to seek legal advice over this, the CAB staff are (usually) not qualified in this. Is there a law centre near you? Under the Consumer Credit Act your brother should have been given paperwork regarding his loan, it's an offence if he wasn't given anything. As stated, they can't send the bailiffs into your house to sieze your goods, they need a court to authorise this and it's doubtful that this will happen. Don't negotiate with them, don't talk on the phone, tell them that they are harassing you and, because of this, they are in breach of the Consumer Credit Act. Tell them you will be reporting them to the FSA (Financial Services Authority), you can do this as well. You and your brother need legal advice, look for somewhere that does Legal Aid work (try your local Law Centre first as they are very hard to find). Best of luck, don't give in to the bastards. They intimidate people because all they are interested in is your money.

belledechocchipcookie Thu 06-Oct-11 21:10:57

You need to ask the CAB to negotiate the freezing of interest with the company. They have the power to do this, you can't do this yourself.

GossipWitch Thu 06-Oct-11 21:58:48

Thank you belle, that sounds actually quite positive I really didn't think we had any hope. I'm off to google, thanks again.

belledechocchipcookie Thu 06-Oct-11 22:08:49

There's all sorts of rules and regulations that they have to adhere to. It sounds like your brother is very vulnerable. You really do need professional legal advice though. I don't think the CAB have the knowledge and experience to deal with this.

GossipWitch Thu 06-Oct-11 23:21:30

ok thankyou i'll be giving the law centre in leicester a call tomorrow and will see if they can help

belledechocchipcookie Thu 06-Oct-11 23:28:24

smile Best of luck. These companies are a nightmare and should not be allowed to trade this way. Let me know how things go.

GossipWitch Thu 06-Oct-11 23:37:08

I will do and thanks again smile

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