Redundancy & overdrafts

islandboy_2

I have been trying to whittle down my credit card debt since the 'credit crunch' started. Previously I had fallen into the minimum payment trap, thought my job is safe. When I used the additional payment tool on MSE main site I saw that I could clear my card debt in 3 yrs. So I stopped spending on cards paid more than minimum each month and increased my o/draft debt as this was cheaper borrowing. Now there is a distinct possibilty I may be made redundant and I am concerned that if my redundancy money goes straight into our bank account the bank will say 'thank you' and take their o/draft out of it leaving us less to live on while I try to find another job. I am thinking now that I should have been paying off the overdraft first?

SuzieSue

Is there any reason why you can't open an account with another bank and pay your redundancy cheque into that?

YorkshireBoy

SuzieSue wrote: »

Is there any reason why you can't open an account with another bank and pay your redundancy cheque into that?

When I was made redundant earlier this year, my final payment included salary, holiday pay, and severance pay and came by BACS Direct Credit...straight into my account as it always had done.

Don't assume you'll be paid by cheque.

OP, is your bank account run well? ie no unauthorised overdraft, no charges, returned to credit each month when your salary lands? If so, then the chances of them immediately, ie without 30/60/90 days notice, removing the facility are slim aren't they?

SuzieSue

YorkshireBoy wrote: »

When I was made redundant earlier this year, my final payment included salary, holiday pay, and severance pay and came by BACS Direct Credit...straight into my account as it always had done.

Don't assume you'll be paid by cheque.

OP, is your bank account run well? ie no unauthorised overdraft, no charges, returned to credit each month when your salary lands? If so, the the chances of them immediately, ie without 30/60/90 days notice, removing the facility are slim aren't they?

Good point, however if OP is concerned, he could change the bank account that his salary is paid in to now.

YorkshireBoy

SuzieSue wrote: »

Good point, however if OP is concerned, he could change the bank account that his salary is paid in to now.

That might provoke his existing bank into reviewing his facility...unless he sends his entire salary from the new account to the existing one each month AND the existing bank can't tell the difference between a BACS Direct Credit and a BACS Transfer/FP payment.

islandboy_2

Perhaps I should explain further. We took out our mortgage with the Woolwich which has now been taken over by Barclays (our bank). We have an Offset Mortgage so the o/draft facility is tied into how much we have paid off the original loan. We started out ok not borrowing anything but as the house needed some improving we borrowed off the o/draft for windows,rewiring, etc. If we try to change banks it means remortgaging. I had become complacent because my job looked really solid but now our main customer is in trouble it is having a knock on effect. And yes I am assuming any payment will be paid by BACs. Thanks everyone for your comments, much appreciated!!

islandboy_2

Yes everything has been paid ok and we've had no trouble with paying anyone. As I mentioned in previous post I was paying minimum credit card payments as I thought to myself I'll just stop using them and pay it all off 'one day'.

SuzieSue

[QUOTE=._If_we_try_to_change_banks_it_means_remortgaging._[/QUOTE]

I don't know why you have to change banks. Can't you open up another bank account and have your salary paid in to that and then transfer it each month to your Barclays account? Or do the terms of your overdraft say that your salary has to be paid into the Barclays account?

islandboy_2

SuzieSue wrote: »

I don't know why you have to change banks. Can't you open up another bank account and have your salary paid in to that and then transfer it each month to your Barclays account? Or do the terms of your overdraft say that your salary has to be paid into the Barclays account?

Hi SuzieSue, don't know but will get all the papers out and check. It would certainly be a way out of the problem. Glad I've sat down today and put my thoughts on the forum, you guys are a real help!!!

getmore4less

If you have a Woolwich/Barclays offset there should be no problem.

There should be no requirement to be paid into the account I don't have that.

This is one of the reasons for having offset mortgages to cover cash flow issue you stick loads of money in to reduce interest and use that to cover costs.

Leave the payment in one of the offset savings account and use it to cover the minimum payment and reduce the debt/interest.

Definately worth looking at paying of any other high cost debt.

Do not put it in the savings reserve account you have used to extend the loan, allthough this should stay Barclays have tried to reduce these for some tracker loans.

The OD mortgage reserve is really a mortgage account extension at the mortgage rate if you have an offset so cheap.

If you mve any money out to another bank you lose the offset benifit which may be worth the risk if you think barclays will close some of the facility.

islandboy_2

Thanks GM4L (like the name) I guess whats worrying us is that I have been following the advice of 'pay off all high interest card debt' first and have been paying more than minimum payments. This has reduced our credit cards to the point where I can actually consider doing 'Martins Shuffle'. But suddenly with the threat of redundancy and the o/draft tied into the roof over our heads its made me reconsider whether this is always the correct course to take with this type of mortgage. I really don't want to contact the bank just yet in case it starts ringing bells and they put notes onto our account. Anyhow some good news yesterday at work we will be busy next week and orders have picked up so it looks like we are ok for another month at least!!