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Closing a bank account when overdrawn? Advice please
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# 1
monkeyintrouble
Old 21-09-2008, 2:02 PM
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Default Closing a bank account when overdrawn? Advice please

I am desperately trying to stop my creditors loading on late payment fees, extra interest etc etc while sorting out a DMP, I stopped my direct debits on a personal loan and credit card, both of which were with the same bank as my current account. I sent them, and all my other creditors my own version of a DMP as advised by CAB with pro rata offers. Heard nothing at first but made my first pro rata payments anyway on the first of September. Without my permission the loan and card companies took the balance of the regular payment out of my current account. I am now 1500 overdrawn! After taking advice from some of you good selves, I have successfully opened a new bank account with a different bank. Im due to get paid, before I get the details of my new account so whats the best plan of action now?
Do I transfer my wages as soon as I get my new account and then write to my old bank and request to close my old account? I will then have to include them on my DMP as my overdraft will instantly turn into a live debt so to speak.
Any advice or comments welcome :confused:
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# 2
continualdiamond
Old 21-09-2008, 2:13 PM
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As soon as you get paid if you can transfer all the wage to your new account, we had to do this and had no problem doing it.

In terms of closing your old bank account, im not sure if you can due to having the overdraft, just make sure its a basic account and none of these fees for having it.

We cannot close our old bank account (TSB) because we have an overdraft with them, its not been used in 2 yrs and we changed it to be a basic account. We log into in now and again to make sure they're not charging interest and that the payment every mth comes off the balance.

Oh by the way i was also successful claiming back around £700 off the TSB for taking the regular payments from my old bank account for my loan, which pushed me over my ovedraft limit and then they charged £200 for being over it. I sent them a letter of complaint and they refunded me all of it.
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Last edited by continualdiamond; 21-09-2008 at 2:15 PM.
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# 3
monkeyintrouble
Old 21-09-2008, 2:18 PM
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Im fairly confident about getting my wages out but Im really concerned about the loan and card companies drawing again and putting my overdraft balance up even more. I reckon once they take it, its pretty hard getting it back! I cant do anything to block payments as apparently they have the right to draw monies owing out of my account without my permission. Thats why I need to close it down.
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# 4
Jvic28
Old 21-09-2008, 2:21 PM
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Yes. Take your pay out straight away and then deposit it into your new bank account (once you have your details). Then include them in your DMP. That is what I have done. I know pay off my old overdraft monthly along with my credit cards and loans etc. You won't be able to close the account as such although the bank may pass the debt to a DCA eventually. Just ensure that you cancel all your direct debits for the old account.
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# 5
skylight
Old 21-09-2008, 2:21 PM
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If you owe money on an account you cannot close it down at all, until the balance is paid off and is zero. The bank account will not continue to pay out the loan etc indefinitely. It will stop - keep logging on and cancelling the direct debits, but you are going to have charges and stuff against it. At least the charges/fees you can claim back.
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# 6
skylight
Old 21-09-2008, 2:24 PM
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Is it best to perhaps get your wages paid elsewhere? Parents/friends for the time being or paid by cheque? Because if you have a £1500 overdraft now but your limit is actually a lot less than that or even zero, you will find that your wages will be swallowed up with the overdraft and you will not be able to get it back.
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# 7
continualdiamond
Old 21-09-2008, 2:24 PM
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Quote:
Originally Posted by monkeyintrouble View Post
I cant do anything to block payments as apparently they have the right to draw monies owing out of my account without my permission.
Correct.

I must say though i didn't find it that difficult to claim money back off the TSB, i sent 1 letter and a person got back to me basically saying they could see the account hadn't been used for every day banking and thats why the refunded. My letter included stuff like we were trying our best to repay the debt (loan/cc with them) and them taking money out of a bank account that wasn't used, was thus increasing the overdraft debt with them and it would take them longer to receive all the money back.
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# 8
Jvic28
Old 21-09-2008, 2:26 PM
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Quote:
Originally Posted by monkeyintrouble View Post
Im fairly confident about getting my wages out but Im really concerned about the loan and card companies drawing again and putting my overdraft balance up even more. I reckon once they take it, its pretty hard getting it back! I cant do anything to block payments as apparently they have the right to draw monies owing out of my account without my permission. Thats why I need to close it down.
Unfortunately they do that's why you need to get any available funds you have out. You could reduce your overdraft limit to stop them taking anymore money.
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# 9
Jvic28
Old 21-09-2008, 2:30 PM
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Quote:
Originally Posted by skylight View Post
If you owe money on an account you cannot close it down at all, until the balance is paid off and is zero. The bank account will not continue to pay out the loan etc indefinitely. It will stop - keep logging on and cancelling the direct debits, but you are going to have charges and stuff against it. At least the charges/fees you can claim back.
Thats not correct. I cancelled my direct debit but the bank took it out anyway. They checked that I had the money available (even though it was only available as I hadn't quite reached my overdraft limit) and just took it out to cover the loan repayment I owed them. They continued to do this for as long as I owed them money, whenever money got paid in they took it straight back out to cover the loan repayments. When I checked the small print of the loan agreement, they were entitled to do this.
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# 10
skylight
Old 21-09-2008, 2:42 PM
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But the OP is not intending to use that account again. If its already at £1500, then the loan etc may be taken out next month -nothing else should be going in or out of that account - the bank account itself will have a cut off point where it will not permit the loan to come out anymore. It will not allow this to happen indefinitely as there is nothing go in.

In your case, you were still using the account, money going in and out and therefore they continued to take it as they are entitled to.

And you keep cancelling the DDs as it makes you feel a bit better an in control somewhat!
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# 11
monkeyintrouble
Old 21-09-2008, 5:11 PM
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Thanks guys for all your comments. I must tell you my overdraft limit is 2000 so theres still scope for them to take out further payments. I think the best thing I can do is wait for my wages to get paid in (Friday) then do an online transfer as I should have my new account details by then. Then I'll try and reduce my overdraft limit on my old account to a figure very close to the current balance on that date, that way, in theory they shouldn't be able to take any more payments out after that date.
All direct debits have already been cancelled except my mortgage, so I'll have to let that one through depending on how quick the new account can be up and running.

What do you think? Hopefully this should do the trick as long as I can reduce my current overdraft online!

All this thinking and working things out really keeps your brain active, but I'll be glad when I get a DMP up and running and can take a breather!
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# 12
sarriep
Old 21-09-2008, 5:26 PM
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Hi monkey, just ensure they don't stop your overdraft facility (as I think they are entitled to do???). In effect when your wages are paid in you may not be able to withdraw anything as they will use these to pay off the overdraft. I'm sure I read that happened to someone else on here. Can you not get your wages paid into somewhere else? I called my wages dept and they did it straight away over the phone had to confirm by fax then. You just need your sort code and bank account number.

I'd hate you to not be able to get your money!
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# 13
monkeyintrouble
Old 21-09-2008, 5:46 PM
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Quote:
Originally Posted by sarriep View Post
Hi monkey, just ensure they don't stop your overdraft facility (as I think they are entitled to do???). In effect when your wages are paid in you may not be able to withdraw anything as they will use these to pay off the overdraft. I'm sure I read that happened to someone else on here. Can you not get your wages paid into somewhere else? I called my wages dept and they did it straight away over the phone had to confirm by fax then. You just need your sort code and bank account number.

I'd hate you to not be able to get your money!
Sx
Thanks,
There shouldn't be a problem as far as I know my current bank account is not aware of the gravity of my financial position, unless the loan and credit card departments have warned them. I think its going to be all a matter of timing! Cant wait to get my new account details and get the hell out of my old bank. Feel bad but loyalty doesn't seem to pay!
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# 14
Jvic28
Old 04-10-2008, 3:08 PM
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Quote:
Originally Posted by skylight View Post
But the OP is not intending to use that account again.

In your case, you were still using the account, money going in and out and therefore they continued to take it as they are entitled to.
I was in exactly the same position. I was setting up a DMP and this was my last pay going into the account.

I think the OP has got the right idea now anyway and I hope it all worked out Ok.

x
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# 15
MikeDoherty
Old 26-12-2008, 4:34 PM
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I had a similar problem with the Halifax recentley. I had a 1000 overdraft and it was nearing its final months and knew it wasnt going to be renewed, I had not got the money to pay it all off, so I decided to let it go over its limit. I got a letter saying I had been charged, but after a month or so it was passed onto the collections Dept for formal demamd of payment. I basically said I didnt have the money and could not pay anything to the overdraft, they were in fact very understanding. I entered into a payment arrangement to pay 20 a month to it, on the understanding that I could not use my account (didnt bother me as I had a good account at HSBC) so I paid the 20 for last 3 months. I recieved a letter from them last week, in fact it was wescott Credit services so im assuming they have sold my debt on. I will offer them 300 to close the debt. Saving me 700, or I will continue to pay 20 and bank with HSBC.
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# 16
shabbychicfan
Old 26-12-2008, 9:54 PM
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Surely it can't be right that if you cancel a direct debit that a company can continue to collect it??

If that is the case what is the point of moving bank accounts as presumably they will just keep taking applying for the DD from the old bank?

is it really true that they can keep taking it until the bank bounces it for lack of funds?

I always thought that the only reason to get another account was in the case where you owed your own bank money, say on an overdraft, so that if your wages weren't paid in they couldn't be swalloed up by the overdraft.
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# 17
MrsTinks
Old 26-12-2008, 10:07 PM
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Quote:
Originally Posted by shabbychicfan View Post
Surely it can't be right that if you cancel a direct debit that a company can continue to collect it??

If that is the case what is the point of moving bank accounts as presumably they will just keep taking applying for the DD from the old bank?

is it really true that they can keep taking it until the bank bounces it for lack of funds?

I always thought that the only reason to get another account was in the case where you owed your own bank money, say on an overdraft, so that if your wages weren't paid in they couldn't be swalloed up by the overdraft.
Yes they can do this. They are legally allowed to do this too...

That is why you need to move the banking to a bank you do NOT owe any money to. Yes they can carry on taking payments until your OD limit is met (and in cases exceeded) but you can reclaim the charges (eventually) and in the mean time YOU have control of your money. Otherwise they would leave you nothing to live on or pay other creditors. That would make them a prefered creditor and void any DMP etc.
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peachyprice
Old 26-12-2008, 11:08 PM
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Hi Monkey,
One thing you can do to protect yourself from unscrupulous creditors in the future is, wherever possible, set up standing orders, rather than direct debits. That way you are in control of how much you are paying, rather than creditors being in charge of how much they take from your account. Your creditors won't like it, but at the end of the day you are paying them, so there's diddly squat they can do about it.
Accept your past without regret, handle your present with confidence and face your future without fear
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# 19
bunty1983
Old 03-02-2009, 8:37 PM
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im having to switch bank accounts as doing dmp and my overdraft is currently 950 with halifax,has anyone had dealings arranging monthly payments to pay an overdraft off and what are they likely to accpet from me as a lowest payments as i cant afford to offer much on my dmp about 15 a motnh i think it worked out?
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