"Formal Agreement" - as good as a written contract?

Chris120A

I got into a bit of financial trouble a few months ago (even more than usual!), and as a result ended up about £250 over my overdraft limit of £1120. I spoke to my bank on the phone and arranged to have a temporary overdraft of £1300 one month, then £1210 the next, then to keep it at £1120 after that. I managed this until about 12 days before it was due to go back under 1120, a direct debit went out before a payment went in, plus charges = the agreement being cancelled, and another phone call from the bank. I explained the situation to them, and made a "formal agreement" to get back within my agreed limit by the 28th of last month, and to keep under it. On Saturday I received a phone call, a week before I get paid, telling me I have gone over it again. They asked me if I could get myself back under limit and keep it under by the 21st of this month (payday). With clever budgeting and scrimping even more, and once Xmas is over with, I told them yes. The guy on the phone warned me that this is a "formal agreement" which (his words) is "a legally binding contract", and that if I do not keep to it, my overdraft limit would be reduced straight away to £100, I may lose some banking facilities, and they may take further action against me to recover the amount. Getting an overdraft increase is out of the question, as this is the maximum they will give me for my type of account and income.

Am I right in thinking that a spoken agreement is definitely not a legal contract? Unless I have signed something, there is no contract involved?

I really am trying my hardest to keep under limit, I walk to work, wear extra jumpers instead of putting the heating on, recycle, stay in instead of going out (I have been inside a pub three times in the last 4 months, and each time someone else was paying!). The money that I am spending is going on food, bills, the odd bus fare, and paying off my other, more expensive debts. But what my bank is saying is, that even if I accidentally go over my limit, even a few days before next payday, I'm going to have to pay unauthorised overdraft interest levels on £1000+, and probably much worse?

Where exactly do I stand on this?

DesG

They can withdraw the overdraft at any time, so arguing over what is and isn't legal will not get you anywhere

If you go over _they will_ charge you, and you have been warned, so do whatever it takes to keep under til payday!

Good luck.

Cheers, Des.

Xbigman

Yes a verbal contract is legally binding, and if they recorded your call to them provable.

Of more concern is why you keep going into the red because of direct debits. These should known about in advance and if they are catching you out then you really need to budget much more closely.
Can you cancel some of your direct debits and pay in cash?
Regards



X

wigginsmum

If you're paying more than the minimum on other debts, see if you change that to minimum-only in an effort to get your OD down. The OD may have a lower APR but if they take away that facility, you're scuppered.

Jules

tattooed_lady

I have to agree with Xbigman, you should be aware of the dates and amounts of all dd's. If I were you I'd either cancel the ones that seem to come out at the worst time of the month and pay another way, or change the dates so they all come out after payday.

Chris120A

I am aware of the dates and amounts of all direct debits. However, I have been selling stuff on eBay to try and cover some of my debts, and delays in buyers paying me, cheque clearing times and delays in PayPal transfers mean I can only guesstimate when the money will be paid into my account. In some cases, the money has gone into my account the day after the DD has gone out :mad: Then I get charged, so I go even more overbudget.

skintchick

It's hard, but you need to budget for money that is actually in your account only - if it isn;t there, assume it will not be for that financial month, then you won;t get into trouble.

EG I am expecting three payments for extra shifts sometime this month/Jan but I am counting it as Jan. Although desperately hoping one of them hits this month as otherwise I have £12 to live on till Jan 6!!!

mazzza_2

do all your direct debits go out at different times of the month. when i got into SEROIUS money trouble i canged all of mine to go out the day after pay day. took some phone calls and letter writing. but apart from tv licence (who refused!!!) and powergen who were just incompertant until i got rude with them(they were more so with me) i found it a lot easier to keep track of all my money.