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Paragon and chaser in clash over 187k debt

Paragon Mortgages is set to receive a claim from Loancheck over a 4,000 loan to a former soldier that it claims spiralled into a 187,000 debt.

The loan was taken out by Dundee-based John Brookes in 1990 at 37.8 per cent APR from Universal Credit, which was later bought by Paragon in 1998, although further advances saw the loan value rise to 10,000. Documents show that interest was frozen in 1993 after Brookes ran into financial difficulties but he claims that Paragon then backdated 34,488 of interest in 1999 after taking control of the loan.

The latest statements available show the balance outstanding at 186,976 in March 2006 although Paragon insists that figure is not the debt owed and is an internal calculation although Brookes insists he is still being pursued for almost 187,000.

Paragon says it offered the customer a settlement in 2003 of 17.91 a month which was payable over 12 years but Loancheck says it was not given any documents to prove that this was a settlement.

Loancheck argues that the loan is not enforceable because the total cost of credit was not disclosed in the original credit agreement in 1990. Operations director Keith Kellend says: “Why did they put him under so much pressure for 16 years and mess up his quality of life?”

A Paragon spokesman says: “Mr and Mrs Brooks have experienced a sustained per-iod of financial difficulties and since 1993 significantly reduced payments were accepted. These were reduced to 17.91 a month and we also agreed in 2005 that any balance above 2,149 will be written off in full.”

Other Loancheck cases in the pipeline will largely be based on undisclosed commissions, failure to state the total cost of credit, incorr-ectly calculating redemption charges and lenders’ assurances that loans and further advances are regulated by the Consumer Credit Act when they are above the monetary threshold.

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