Accounts beyond their overdraft limit in my debt management plan - what happens guys?

mcajshaw

Hi everyone,

I have recently set up a DMP with Payplan and make my first payment tomorrow morning by standing order. Two of the debts in my DMP are my a Lloyds overdraft of £2500 and a Natwest one of £2000. Both balances stand slightly in excess of their overdraft limits. Lloyds at -£2543.00 and Natwest -£2027.35 with charges and interest to be added over the next few days.

Once the DMP gets up and running (if they agree) they will both be receiving around £40 per month. However becuase they are over the overdraft limit now they will be picking up monthly fees and daily charges in Lloyds case. These charges and interest will amount to more a month than the £40 payment. As a result I don't see how it is ever posisble for the balance to ever come back within the permitted overdraft limit so I can start chipping away at the deficit.

Am I missing something as I am now really worried about it all again.

Thanks in advance, Jonathan.

boredofbeingathome

Not really sure on this one, i think once they accept the DMP then the charges will stop, however i have read in the past that they pass it over to DCA's and that takes a while, so interest and charges accrue until then.But not always the case, sometimes they accept straight away.

The important thing to remember is that you should keep making the payments and keep referring any nasty phone calls and letters to Payplan.
Good luck.

fatbelly

Banks tend to be really slow but they will eventually default you, with charges and interest frozen.

When I set these things up at the CAB, I don't advise people to commence payments until this happens, as I suspect making payments at an early stage just delays the process and causes more interest and charges to be added.

But I know others work differently in this regard.

RAS

Hi

Have you considered getting over to the reclaim forum and re-claiming the charges. If you are on a DMP, then you would count as someone in financial hardship, I suspect, so the reclaim should not be halted by the court case.

That would bring you inside the OD limit.

sam89

Hi Jonathan,

Our overdraft was with First Direct and well over it's limit . They accepted the DMP really quickly and raised our overdraft limit to cover the amount of excess. Each month, after payment from Payplan has cleared, the O/D limit drops to a few pounds more than the balance.

Hopefully Lloyds and Natwest will have a similar system.

Sam,
x.

mcajshaw

Its confusing..because they are beyond the O/D limit and the monthly payplan installement wont bring it back (unless they freeze interest and charges) I dont know what to do or how it will work. Any other ideas please people - would appreciate any help.