I opened an account with HSBC in 2004 for $1,600. I have been making my monthly payments even more than the minimum monthly payment required. However, due to my current financial hardship, I was not able to pay monthly. The interest rate is 23.80% and penalties kept adding to my account in the amount of $39.00. The late charges and interest every month totals to $60.38.
I have calculated the payments I made for almost 3 years and the total is much, much more than what I owe. The last statement I received dated September 10, 2008 still showed I owe $1,096.77 from the original $1,600. On October 7, 2008, I wrote a letter to HSBC and explained my predicament, and to request some consideration and offered an amount of $300, which is all I can afford to settle and close my account. I never received any response whether my offer for settlement is acceptable or not.
I finally received a letter on November 13, 2008 from a collection agency. My balance showing is in the amount of $1,220.49. I called the collection agency and explained my request to HSBC but they will not listen to my explanation because accordingly, I signed a contract with HSBC. They are now threatening to bring my case to a small claim court if I do not pay. I cannot afford to pay a lawyer as I am still going to school and working at the same time. Can I get help in my case from any government agency?
I think you just learned a valuable lesson about financial products.
When you opened the loan with HSBC you entered into a legal contract with them to repay the loan. That contract covered the terms and conditions of the deal, including what would happen if you defaulted.
Paying back a debt with interest will always result in payments being more than the original amount, and the more penalty and late fees that get added on top of a jacked up interest rate, the amount repaid will be huge.
I’m not surprised that HSBC would not take a $300 settlement. That’s not enough for them to waste their time with. You’re going to have to get your offer up around $800 probably.
It sounds like your only option is to let the case go to court. Unfortunately, you will probably lose because the lawyers will point to the contract you signed as your agreement to repay. There is no government program for this situation since this is what happens when everyone defaults on a financial contract.
The only legal intervention available is bankruptcy but that will cost more than you owe.
You might have to do what many others have done, get a second job or drop out for a semester to make enough to pay the debt.
It all sounds grossly unfair and sucks. Welcome to financial reality.