THOUSANDS of Amigo Loan customers are one step closer to getting their money back.
Amigo was accused of giving out unaffordable loans, that customers couldn't repay – but they are now inching towards the compensation they're owed.
Court hearings took place on May 23 to approve the New Business Scheme Amigo set out to pay its customers back.
Speaking on the result of the hearing, Gary Jennison, chief executive officer of Amigo, said: "We are pleased that the Court has decided to allow creditors the chance to maximise their redress payments from Amigo.
"The Court's ruling is good news for creditors, customers and employees, and it takes us a step closer to delivering compensation as well as drawing a line under the mistakes of the past."
We asked debt expert Sara Williams, who runs consumer advice blog Debt Camel, what it means next though.
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She said: “Now the court has approved the Amigo scheme the next stage is for Amigo to announce when the Scheme starts and put up a page where customers, both borrowers and guarantors, can enter a Claim."
If a borrower wins their claim when that time comes, they will be given back a proportion of any interest they had paid which could be up to 41%.
But most claims will be about affordability Sara explained.
She said: "An Amigo loan is only affordable for the borrower if at the time the loan was given, the borrower was likely to be able to make all the repayments necessary still be able to pay their other debts, bills and living expenses, without having to borrow my more.
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"Many people will have been desperate to protect their guarantor so they may have got payday loans, increase their credit cards or got behind with bills in order to pay Amigo.
"So even though the Amigo loan was repaid on time, it may still have been unaffordable."
Amigo warned last year that it could collapse under the weight of customer refund requests.
The loans company was founded in 2005, offering loans of up to £10,000 over 12 to 60 months at an interest rate of 49.9% to borrowers typically turned away from traditional lenders.
It would also supply loans to those with poor credit histories as long as a friend or family member agrees to make repayments if they can't.
But in March 2020, the firm's founder claimed customers had been given "irresponsible" loans.
That is what has triggered the bout of compensation on its way to thousands of customers after this latest update.
But even though the scheme has been approved, customers will still have to wait for Amigo to put up a claims page.
Once it does go live, they could have just six months to take action according to Debt Camel.
You can still claim, even if you've paid off the loan, if you struggled to make the payment at the time.
If you're still paying of your debts, you can still complain if you're finding it hard to pay the money pack.
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To make a complaint to Amigo, you should get in touch as soon as possible.
Send a short email to [email protected] with COMPLAINT as the subject.
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