Bank Account ruined by PayDay loan, default threat, HELP!

noreen88

Hi there,

I'm looking for some advice, on a pretty serious situation.

I'm a student, and at the start of summer I was pretty skint from last year of uni, so rather than doing something sensible like borrowing from parents, I decided to take out a £400 pay day loan. I'd done a couple of these before and always had the money to repay them. I was getting a job in summer and didn't think this would be a problem.

So I got my job and was earning about £1000 a month (for 3 months). The day my payday loan was due to be taken from my account I didn't have enough money in it, so I went along to the bank on the day (I have a couple of student accounts) and took cash from the other account and deposited to cover this.

There was a teller error however (I think something along the lines of he didn't assign the money to pay off the cheques) so they bounced. I was refunded these charges, but since then the cheques have been banked about 5 times, at which points I've never had money to cover them (I get no prior warning as to when they will be cashed).

Anyway, to cut a long story short, this, and a few other charges have led to my account being £1500 over my overdraft limit. I've stopped using this account and my last credit was 3rd September, and moved to using my other student account. Trouble is I am pretty much broke at the moment and only just covering rent plus living expenses. I guess I didn't really realise the severity of this until today, when I phoned the bank collections line and spoke with them.

Basically I am going to be issued a default notice unless I can pay the money back within a week. I went to the bank and asked if I could get a loan to cover it which I woudl pay back with my student loan (£89 a month) but they said this was impossible.

My credit rating has already been severly affected by this whole catastraphe (£1000's worth of charges) and I really don't know what to do. Also if i get a default it means I have to pay back the full amount on the overdraft which is nearly £3000! I also am advised that a default will stay on my credit rating for 6 years and I will have no chance of obtaining any credit, and this will affect my opportunities to get a job and housing etc.

I know this is all my fault, but I hadn't realised the severity of it all until now. Do I have any options? I really don't know what to do! As far as getting a job goes I can get some work at Christmas and will be working again next summer, but do I have any leeway with the bank (RBS)?

sammy115

Can you not now go cap in hand and explain to your parents what has happened and borrow the money from them now....

Nothing I can say will help with the emergency of the situation. The only thing I can suggest is putting in a claim for a refund of charges. I know the cases are on hold at the moment but due to you being a student and having very little money they may class you as a case for immediate review.

Have the cheques to the payday people now been cashed or do you still have that to repay also.

You could also approach a credit union in your area. Some of these help people in your situation with payday/provident loans. You might also get some help from student welfare.

RAS

I am not going to pretend that this is not going to impact on your future but someone is delibarately frightening you more than necessary here. It would be a lot better for you not to speak to the bank again but to comminicate in writing. The reason is that when people want to frighten you into paying they refer to lots of things that may or could or might happen, even when these are remote possibilities and they over-egg the danger.

noreen88 wrote: »

Basically I am going to be issued a default notice unless I can pay the money back within a week. I went to the bank and asked if I could get a loan to cover it which I woudl pay back with my student loan (£89 a month) but they said this was impossible.)?

Banks do not have money to lend to each other or to clients with immaculate debt records at the moment.

noreen88 wrote: »

My credit rating has already been severly affected by this whole catastraphe (£1000's worth of charges) and I really don't know what to do. )?

I would start by reclaiming those bank charges. You would be a hardship case.

noreen88 wrote: »

Also if i get a default it means I have to pay back the full amount on the overdraft which is nearly £3000!

It means that you are going to be asked to pay back the whole amount. Not that you have to pay the whole amount back. Since it is defaulted they should not add any further charges or interest to the debt.

noreen88 wrote: »

I also am advised that a default will stay on my credit rating for 6 years and I will have no chance of obtaining any credit)?

it will stay on you record for 6 years. You will only be able to access sub-prime credit. If you behave more responsibly with that, you will be able to get better deals in a couple of years (depending on the ecomony picking up).

noreen88 wrote: »

this will affect my opportunities to get a job and housing etc.

There are very very few jobs that would be affected and it will only afffect some housing. You need to avoid a CCJ if at all possible.

You need to get hold of your Student Union Welfare Officer or Student Finace Support Advisor ASAp. They may be able to loan you some hardship money.

If you need advice on getting your other accounts sorted, speak to a debt charity. Once the other account is stable, you need to arange a standing order to pay something toward ther RBS debt each monht. NOT a direct debit.

noreen88

Thanks a lot for the replies. My parents probably would pay it for me if it came down to that, but I reallly reallly don't want to ask them, since I had a debt problem a couple of years ago and borrowed a considerably larger amount from them then.

The cheques have still not been resolved, I keep getting phone calls most days from certegy about them, but am embarrased to answer since last time I spoke with them (weeks ago) I said I would pay back in the next few days, which I fully intended to but had to pay rent etc. so couldn't in the end.

As far as reclaiming the bank charges go, I gather that to do this I will need to go to court etc., which will probably take a few months?

I will try and contact a finance support advisor tommorrow and see if I can sort something out.

As it stands I've made a promise with RBS to pay £150 on Friday as a token of goodwill and then the guy said he could give me two weeks (from today) to pay the rest. Does this sound OK? I don't have £150 right now but if worst comes to worst I will ask my parents for it.

Thanks for the advice so far.

The sick thing is that the total amount of the cheques is in fact less than the amount charged for them - but banks have no sympathy for this.

RAS

Here is the bank charges info

http://www.moneysavingexpert.com/reclaim/oft-bank-charges

There is a court case outstanding but OFT Guidelines mean that they have to deal with hardship cases now rather then after the court case is settled. if they do not pay up, you should start by reporting them to the OFT, at which point money will probably be credited to your account quickly.

sammy115

RAS has put it far more eloquently than I ever could...Please consider doing an SOA before you come to ANY arrangement with the bank to repay them the money. You should be able to commit to paying them back what you CAN pay, not what you think they want you to pay.

You also need to try and arrange some kind of payback to the payday loans people. Again - I suggest you do try a credit union. I know many of them have helped people with provident loans.

noreen88

Ok this is the position I'm now in. I've gone to the advice place to speak with a financial advisor and have made an appointment, but this is for Monday. I've also gone to the University advice place and picked up a leaflet for the hardship fund, which I will look over over the weekend and hand in on Monday.

With regards to the RBS I had promised to pay £150 today, but I don't have it and unsure what to do. I could tell my parents about it but then this might entail telling them about the total which would worry them etc. or I could just ignore their phone calls till Monday.

Will I be defaulted if I choose the latter option? The RBS agent on the phone on Wednesday said I would, but is this just scare tactics?

sammy115

You won't be defaulted on this and this alone. They have to write to you first and tell you that they are going to default you if you don't pay the outstanding balance within usually 7 days. Until they have done this they can't just place a default on your file.

If once you get a default notice and you then ring and make a payment arrangement up and then you don't make the arranged payment THEN they may place a default on your account.

Until they have sent you that default notice then nothing will happen. You need to hold off until you have spoken to the people you have made appointments with on Monday. Do not do ANYTHING now in haste. You need to take a step back with someone on the outside who will assess your situation and come up with a solution to your problems that will allow you to go forward and live.

Try to forget about this until Monday.

sammy115

You also need to ask for your bank charges back pretty quickly - that might just solve your problem.

noreen88

Thanks for the advice sammy.

As far as asking for the bank charges back - do you mean through writing a letter etc. as mentioned how to do on this website?

When I went to the bank on Wednesday and spoke with an advisor I said I would be writing to ask for my bank charges back and he said because effectively what I did was account abuse (e.g. there were times where I had enough money in the account and had spent it before the cheques were debited (obviously if I'd known a date they would be in then I wouldn't have done this)) then I won't get my charges back. Is this true or just what they say to everyone?

Burlesque_Babe

hi noreen - the person in the bank is talking twaddle and is trying to dissuade you from claiming back the charges.

You need to follow the guidelines on the reclaiming board by sending the letters and then the guidelines for it being a hardship case.