Need help with overdraft debts

smimon

Hi everyone, i've run into some financial problems recently and my friend pointed me in the direction of these forums, telling me I might be able to get some good advice. I hope someone can offer some help!

I recently graduated from university, where I managed to rack up a sizeable amount of overdraft debt. After uni, I owed £3,100 to Barclays and £1,600 to NatWest.

I was short of cash at the time, and Natwest would not increase the overdraft further, so I opened a third account at Lloyds with a £2,000 limit, with a view to paying off my NatWest account and having £400 spare.

I actually ended up not doing this, and have been using the Lloyds account as my main account, and the balance of which is now back at 0 again.

After leaving uni, I foolishly didn't inform Barclays of my new address, and the account fell into disuse. When I went into a branch a couple of weeks ago for some back statements, I updated my address. The first letter that arrived through a few days later was a final notice of account closure, citing account inactivity at the reason. Due to interest and other charges, I now owe Barclays £3,150. They are completely unwilling to reinstate the account.

I've phoned them up and arranged a repayment scheme whereby they are loaning me the money. They reinstated the overdraft (which had been removed) and have set it to be reduced by £100 a month, which I have to put into the account. Unfortunately, the loan they have given me at the moment has an interest rate of 17.9%APR(!).

I apparently have a period of 2 months to shop around for any other loan if I wish. However, my credit rating has been savaged by this affair and I now have a negative rating, which is going to make it hard to get a loan.

I need to clear these overdrafts as I am fed up of having the debt hanging over my head. I could close down my NatWest by transferring the balance over to my Lloyds account, but I would still be left with about £4,800 total overdraft debt.

If anyone could offer me any advice on the best way to tackle this situation, i'd be extremely grateful.

Thanks in advance for any replies and for taking the time to read this anyways.

Cheers

Rafter

Unfortunately by ignoring your Barclays overdraft and not telling them about your change of address you have defaulted on your debt.

It seems really unlikely in this event that your credit history isn't going to be bad for a few years.

The best you would seem to be able to do is to negotiate with them to relieve some of the charges and interest to what it would have been had you been straight with them.

You are then going to have to 'trade' yourself out of debt. Work out who you are paying the most interest too and prioritise paying this debt off first.

Look at all your outgoings and cut back where possible -loads of ideas on here about how to save money on bills, food etc.

Good luck.

R.

Jonni2bad

Free advice available from Consumer Credit Counselling Service (CCCS) on 0800 138 1111 or your local CAB office.

One free call to CCCS could give you all the advice you need and put your mind at rest, although I'm sure there are many regulars here who can also offer quite specific advice.

louise1234_2

Basically you have a few options

1. Iif you negotiate with banks directly, you should be able to come to some arrangements to pay off, it is likely this will still incur you interest. However, you should be able to stop defaults this way.

2. You could ask CCCS/CAB to assist you & negotiate on your behaly with banks. They can try to get interest frozen, but if this happens it is likely your account will default, as after default is when banks are more leniant about charges/interest...

This is not set in stone, but a general guide..

It depends what is more important to you. Are you likely to be needing credit - ie mortgage in next six years?? If so, a default would seriously affect you.

If you want to pay less off asap, allowing accounts to default & getting interest stopped may be the way forward. If you do not see need for credit in 6 years this may be best.

Just some thoughts for you to try & help...