Borrowers who have severe debt problems are still being charged interest on their loans even after signing up to a debt management plan.
When consumers have county court judgements (CCJs) issued against them, or if they sign up to a debt management plan such as an individual voluntary arrangement (IVAs) in order to repay their debts, their debts are generally frozen and no more interest is charged on the loan.
However, customers who have taken out loans with GE Money Home lending and who have had their debts sold onto Link Financial have found themselves being charged interest on their loans, even after they had entered debt management agreements.
The terms and conditions of the GE Money loans are worded so that the lender is still entitled to charge interest on a consumer’s debt regardless of whether or not they are in financial difficulty.
A GE Money spokesperson said: "Our current terms and conditions allow us to charge interest on accounts which have had a county court judgment levied against them, as we are legally entitled to do. However, given the economic environment, and in line with our commitment to our customers, we are in the process of reviewing this policy."
However, this does not help customers who are currently being charged interest on their loans which have been sold on to Link Financial.
A spokesperson for Link Financial said that interest is often charged when the firm are unable to come to a payment agreement and the case is passed to their legal team.
The company are asking for customer’s cooperation in improving their situations; "We can often set up a payment plan ... This can also include stopping the clock on interest charges. But we do need your complete co-operation. Please be open with us, and be prepared to give us a full picture of your finances."
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