In May 2022 the Amigo second Scheme was approved by the court. In November the deadline for making a claim to the Scheme passed. See Amigo’s Scheme for details.
With a current loan, you have three options once you have made a claim:
- you can carry on paying it if it is affordable.
- if you have paid more to this last loan than you borrowed, you can ask Amigo to let you pause paying until your claim is decided, see Equitable Set Off which describes how this works and the pros and cons.
- if you haven’t paid that much, you can talk to your guarantor and just stop paying Amigo, This article looks the pros and cons of doing this.
This article applies to people who have made a claim to the new Scheme.
Amigo says you still legally have to pay
Amigo says you have to continue your loan repayments.
The only exception is where they are offering to let some borrowers pause payments if they have paid more than they borrowed on the current loan, see Amigo’s Equitable set off for details about how this works.
It is correct that your loan still legally exists. But as you have made a claim, Amigo may owe you some money…
If your complaint is upheld, the interest would be removed from the current loan and any refunds from previous loans would reduce your balance. And a guarantor will be released from any liability if the borrower’s complaint or their complaint is upheld.
So in that case you may owe Amigo nothing.
Your duty to pay the loan is NOT more important than your right to have your claim assessed. Amigo is just trying to bluff you into paying.
Many people can’t afford the payments
This isn’t a temporary situation that will be sorted out in a few weeks. It is very unlikely your complaint will be decided in less than six months and it could nearly a year.
So you have to decide if it is even possible for you to struggle on that long.
Borrowing more from family or getting behind with important bills is a disaster.
It is also a big problem if you can only pay Amigo by not paying some other debt. If you stop paying Amigo and win your complaint, all negative marks on your Amigo credit record will be removed. But if you stop paying other loans and credit cards in order to pay Amigo, when you win your Amigo case you will still be left with a wrecked credit record.
And there is no reason why you should pay Amigo, or why your guarantor should be asked to pay, when they are refusing to look at your complaint.
What happens if you stop paying Amigo?
How to stop paying Amigo
A borrower needs to cancel their direct debit to Amigo. And you also need to explain to your guarantor why you are doing this and why they too should not pay Amigo.
A guarantor needs to cancel the direct debit and also phone up their bank to cancel the Continuous Payment Authority (CPA) Amigo has over their debit card. They should do this even if their debit card has been replaced with one with a different number.
Some banks are saying Amigo may reinstate the CPA. Point out to the bank that the FCA says Continuous payment authorities: it is your right to cancel and that if a payment is taken, the bank will have to refund it.
Both borrower and guarantor should tell Amigo (email email@example.com ) that they are stopping paying and will not restart until their claim is decided in the Scheme.
What happens to your credit record?
If a borrower stops paying, they will get missed payments and later a default showing on their credit record.
When you have had other recent credit record problems, one more may make little difference. And if the complaint is later won, these negative marks will be deleted.
A guarantor’s credit record is not harmed if they refuse to pay because the Amigo loan does not show on there.
Amigo won’t take anyone to court during the Scheme before their claim is decided
If you stop paying you may get emails and texts from Amigo saying you have to pay and making threatening noises about taking you to court.
Here is a typical one that was sent in 2021:
As there is no resolution in place, soon you may be issued with an LBA (Letter Before Action), this is a legal notice which will allow you to come to a resolution prior to a court claim being considered. In Court, an order for the full balance will be sought. A CCJ may be issued against you and your guarantor.
Amigo worded that very carefully so most people will think it sounds very threatening. But look at the words they used:
- They MAY issue you an LBA. They aren’t saying they WILL. I may win the lottery next week, but I probably won’t!
- A court claim will be CONSIDERED. Again they aren’t saying this WILL happen. I will consider running a marathon next month, but my decision is going to be that I won’t.
- In 2021, I don’t remember Amigo taking any customer to court where they have an open complaint. The threats then appeared to be empty.
And Amigo has said it will not be going to court during the Scheme where someone has a claim that hasn’t been decided.
Summary – the pros and cons of stopping paying Amigo
- not paying Amigo may let you pay your bills, other debts, feed the family and not get deeper into debt elsewhere.
- your guarantor will be asked to pay and will also have to refuse to do this;
- a borrower’s credit record will be harmed, but this will be repaired if you win your complaint. A guarantor’s credit record is not harmed;
- you will get emails and texts from Amigo saying you have to pay and making threatening noises about taking you to court. These are empty threats but unpleasant to get.
- if you lose your claim, then you will have to then restart paying. But you will be in a better position to do that if you haven’t got rent, energy bill or council tax arrears.
Some people simply have no practical alternative – they can’t pay.
But if you aren’t sure what to do, talk to National Debtline on 0808 808 4000 about this Amigo loan, your claim and the rest of your financial situation.