Loans and Debt Management: Everything You Need to Know

Taking out loans and not repaying them can seriously affect your credit ratings and make managing debt really difficult. This article explains everything you need to know about loans and debt management.

Who is liable for joint loan debt?

Debts that have been taken out in joint names means that both parties to the debt are jointly liable for the full amount of the debt and severely (i.e. individually) liable for the full amount of the debt.

If the loan is in your sole name, then you are responsible for the repayments. If you feel that someone else owes you money, you could potentially put a claim into the ‘Small Claims Court’ for the money they owe you.

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What will happen if I don’t pay back loans?

If you continue to take out loans and not repay them then your credit rating is likely to become more and more damaged and this will make it harder for you to take further borrowing. If you are married or have a partner their credit ratings should not be affected and they should be able to get a loan. We suggest you talk to a debt adviser, as they may be able to suggest some practical steps that can be taken.

Please note, your property will not be blacklisted if you can not pay back your loans. Any debt relating to loans is linked to the person and not the property. Unless the property is an asset of the person taking out the loan and the loan is secured against it, then your property should not be affected. Please read our article in debt against a property for more information on secured loans against a property.

How long will I be asked to repay for an outstanding loan?

Debts become statute-barred after 6 years which means that although you are still liable for the debt it cannot be enforced through the courts so essentially the creditor can’t take action against you. For more information, please read our article on how to deal with debt.

How can I get a copy of my old loan agreement?

If you are aware of the original lender with whom you had the loan agreement they may be able to provide this, or the details of the agreement. It is going to be the place to start for a copy of your loan agreement.

If the original loan was regulated by the Consumer Credit Act 1974, under sections 77(1) and 78(1) you are entitled to a copy of the agreement. You would need to make this request in writing along with postal order for £1 to cover the administration costs.

You can find some more information, and template letters, for requesting copies of credit agreements on the National Debtline Website.

Can I get out a loan to pay off my debts?

It would not be advisable to take out a further loan to clear your debts because you will be taking out further debt to clear an existing debt. If you are using a debt solution, such as an IVA there may be terms and conditions that prohibit you from taking out further loans.

What can I do if someone is taking out loans in my name?

If someone is using your name on loan applications without your knowledge, then this is fraud. You can visit CIFAS, which has been set up by lenders to avoid fraud. For £20 you can add a Protective Registration on your credit report. This won’t prevent you from borrowing in the future but will act as an alert to lenders that you are vulnerable to identity fraud and will require them to take additional steps to protect you.

You may also want to check with the original terms and conditions of the loan to see if anything has happened that is outside of the contractual agreement. If you feel that the terms were breached then you can make a complaint, and escalate this to the Financial Ombudsman Service if you are unhappy with the lender’s response to your complaint. In the case, there was no breach and that person was using the account in the way it was set up to be used then you may also find that you have joint liability for the debt and the lender will be able to ask either of you to repay the debt. If you feel that an offence has been committed then you should report this to Action Fraud and take guidance on how to resolve this.

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Can I stop loan companies lending to my son?

There are many organisations that lend money and there is very little that you personally can do to stop anyone else lending to him. However, lots of lenders choose to report information, about the status of payments to an account, to the credit reference agencies. Lenders share this information so that they are better equipped to make decisions about whether to accept or reject an application. If he misses payments to the debts then it will start to have an impact on his credit rating and other lenders will become less likely to lend.

If he is left with an unmanageable level of debt there may be various debt solutions that could be useful, if he contacts a debt adviser they will be able to help him understand the choices available.

Can I lower my loan payments?

It may be possible to lower your loan payments. But you will need to show the creditor that you are struggling to maintain the current payments and can no longer afford them. Alternatively, you may be able to refinance to repay the loan over a longer period or at interest rates lower than what you are currently paying. If you are still struggling to maintain the monthly payments and want to see if you can reduce these, please contact a free debt advisor.

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