HBOS - overdraft.

jaybob_2

I just wondered if anyone else has experienced a similar problem that I have encountered in the last two weeks with the Halifax (now Lloyds Banking Group). It may be that it's individual to me in which case I just have to accept it. It may not be as simple in my case as I have the added complication of being a staff member on long term sick.
I have an account with an overdraft limit of £1200. I have not worked in three years because of mental illness and at the moment my only source of income into the account is incapacity benefit and housing benefit. I would stress that I have never gone over this agreed overdraft limit though I do utilise it every month.
On the 12th of March I received a letter from the Halifax saying that my overdraft facility was going to be withdrawn in two weeks time. This came totally out the blue. Pretty upset I phoned up to explain my personal circumstances however this was met with an unsympathetic response. Eventually they said that the only way I could continue to use the account would be if I started to repay the overdraft at £50 per month. Now they know full well that there is absolutely no way that I can afford to do so.
I suggested in the meantime that I was prepared as a show of good faith to pay it back at a token payment of £1 per month but they found this unacceptable. They said I could do so if I wished with a view to the account being eventually closed but I would no longer be able to use the account even if I made the token payment. Pretty desperate I explained that if I didn't have access to my benefit then it was no exaggeration that I would have no money to eat or indeed pay my rent. It was at this point they suggested that perhaps they would delay the withdrawal of my overdraft facility for a further two weeks to allow me to open an account elsewhere to have my benefit paid in. I have since been told by a union representative that it is actually unlawful for benefit to be withheld.
As it stands I do have an account elsewhere that I opened just in case some situation arose where there was problems with my bank. However the inconvenience involved with transferring benefit payments and direct debits over to a new account is an added stress that I really could not have been doing with at the moment on top of my medical problems.
It seems crazy to me when at the moment the bank have a regular amount being paid into my account in the form of benefit and I pay debtor interest for the overdraft facility and now the bank is going to be left with an overdrawn account with no funds being paid in at all. This will probably result in the account being passed to a debt collection agency.
Reading between the lines, though it could be me overreacting, I would say that since the banks bail-out at the expense of the taxpayer they are now identifying any account that they see as a potential risk and offloading it onto other banks.
If anyone else has encountered similar problems then I would be interested to hear or at my voice to the concerns.

Milarky

jaybob wrote: »

As it stands I do have an account elsewhere that I opened just in case some situation arose where there was problems with my bank. However the inconvenience involved with transferring benefit payments and direct debits over to a new account is an added stress that I really could not have been doing with at the moment on top of my medical problems.

This is more a debt than a banking related question, but going ahead and diverting your benefits (and other payments) to a non Lloyds account is the only way you will recover control of that money now - so you must make sure that you do so...

As regards the 'withdrawal' of the overdraft, it's only a withdrawal to the extent that there is currently some unused. They can't force you to repay - simply take away the privilege of borrowing extra.

So I would certainly detach myself from Lloyds in your circumstances. As to the future of the overdraft - it still needs to be serviced and £1 a month isn't going to make any inroads from the bank's point of view hence their request for £50. It is often possible to convert such a debt to a personal loan - with fixed interest and set repayments and a set term of several years. Not sure what is currently available but with short term rates right down there may be an attractive alternative there.

opinions4u

jaybob wrote: »

On the 12th of March I received a letter from the Halifax saying that my overdraft facility was going to be withdrawn in two weeks time. This came totally out the blue.

To be fair, it was only a 12 month overdraft that would need renewing, so it can't be totally out of the blue.

Pretty upset I phoned up to explain my personal circumstances however this was met with an unsympathetic response. Eventually they said that the only way I could continue to use the account would be if I started to repay the overdraft at £50 per month. Now they know full well that there is absolutely no way that I can afford to do so.

How did they get to £50?

I suggested in the meantime that I was prepared as a show of good faith to pay it back at a token payment of £1 per month but they found this unacceptable.

How did you get to £1?

They said I could do so if I wished with a view to the account being eventually closed but I would no longer be able to use the account even if I made the token payment.

Not unreasonable if you're not making inroads in to your debt.

I have since been told by a union representative that it is actually unlawful for benefit to be withheld.

There's a grey area though. Is it being withheld or is it repaying debt?

As it stands I do have an account elsewhere that I opened just in case some situation arose where there was problems with my bank. However the inconvenience involved with transferring benefit payments and direct debits over to a new account is an added stress that I really could not have been doing with at the moment on top of my medical problems.

I have the added complication of being a staff member on long term sick.

Do you mean you work for HBOS? Why not request a meeting with your HRBP and union rep to see if they can help you achieve something that allows you to keep your account, direct debits and overdraft for now. It shouldn't be beyond them.

Reading between the lines, though it could be me overreacting, I would say that since the banks bail-out at the expense of the taxpayer they are now identifying any account that they see as a potential risk and offloading it onto other banks.
If anyone else has encountered similar problems then I would be interested to hear or at my voice to the concerns.

Removal or reduction of overdraft facilities is commonplace. The risks of overdraft lending are high and they have less money to lend. There's a credit crunch on don't ya know.