Tuesday 28th of July 2009
A man who took out a £16,000 loan from the Royal Bank of Scotland (RBS) soon found himself faced with a balance of £153,000, it has been reported.
While the bank claimed that John Green, from Woodsetton in Dudley, West Midlands, only met his repayments on an ad hoc basis, Mr Green told the Guardian he could not understand how his balance had reached such a high amount.
Before loan repayments reach such a level, borrowers may want to consider obtaining individual voluntary arrangement (IVA) support. IVAs can freeze the interest on loan repayments and make the monthly amount more manageable.
Time spent in hospital meant Mr Green missed some repayments and he admitted he was partly responsible.
"But to go from that level to where it is now is ridiculous," he told the newspaper.
A spokesperson for RBS said the bank remained "committed to discussing a mutually agreeable settlement with Mr Green", which could include an IVA.
Creditors may be willing to agree to an IVA because unlike bankruptcy, debtors are expected to pay back the full amount they owe on a loan, albeit at a smaller monthly amount.
By Ashley Littley
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