Overdraft recalled

Kerryx

Hi all,
I am new to this and am looking for some advice. I graduated last summer and had a £1500 overdraft on my student account. I struggled to find work, eventually taking a part time contract the end of November to make ends meet. We went into our bank in February to change my account to a graduate account and to see if we could sort out our finances. We are managing to pay everything every month but wanted a loan to pay off the overdraft on the graduate account and on a joint account and a loan we have. We were turned down for the loan and we thought it would be a case of just keeping finances tight for another year until some things are paid off and hopefully our income improved. Then last month I had a letter saying there wasn't anything being paid into my graduate account and they were going to withdraw my overdraft and I needed to pay the full amount straight away. Then the phonecalls started, demanding full payment. I explained that we had come to them and tried to sort it out but were told they couldn't help us. I said I could set up a standing order for £15 a month (not a lot I know but its all we can afford) as a goodwill gesture and they accepted this until we could go into our branch and do another budget sheet. I have just returned form the branch, our budget hasn't changed from February and the assistant at branch rang collections and told them £15 was all we could afford for now. They have basically said tough they want the full amount and my only option is to go to a debt management company and pay them instead and it will go on my credit file. I feel so let down. We tried to do the right thing and instead it has blown up and made things worse! I don't know what I should do next.

Tixy

Is this your only debt? If so then a debt management plan would not be appropriate for you.
If you cannot pay your overdraft in full when it is recalled the bank are entitled to enter a default against you on your credit file (though they must send a default notice out first).

I would continue to make the payment of £15 per month if that is all you can afford. There is little else the bank can do other than decide to take you to court to reclaim the balance, this is not a likely option as it would cost them money to take you to court and if you ask to pay in installments a judge it likely to only order payments similar to what you are already paying now.

Do you have any other bank accounts with the same bank? if you do you need to move these to a different bank so that the current bank cannot use any funds from these to offset money against your graudate account.

Kerryx

Thanks for the reply, we do have other debt which is all finishing within the next 6-12 months. Hence why we do not want to go down the route of debt management. We have worked hard to get ourselves to this point and it was just the overdrafts left to work on. My husband has an account with them and there is also a joint account. Can they touch the funds in these?

moneypenny2k

Just a thought as you've not mentioned it. Have you sent them a copy of your budget so they can see that that really is all you can afford?

I'd echo the advice of getting bank accounts elsewhere so they can't help themselves to any money in the accounts.

I'd suggest getting in touch with a debt counsellor via the CAB, they can help with letters etc.

I wish you well

Kerryx

The budget sheet we did was with the bank in february. They have it on file and I went in today to confirm with them that nothing has changed and that what I had offered was what we could afford for now. The assistant in the bank confirmed this to collections too. They have said they will keep ringing and hassling me until its paid! I am really worried about the money in the other accounts now. What goes in there goes out on our bills and rent. If they took it we would be in a right mess!

Tixy

Kerry
They can offset the money from your joint account - and its not unheard of them to do this right after your salary (or whatever) goes into that account leaving you unable to pay bills for the month.
You do need to move your joint account to a new bank elsewhere as soon as you can.

Kerryx

They have given me 90 days and an agreement to pay £50 a month for the next three months so we can sort our finances. Gonna be tight but doable. Still not sure how we are going to find the remaining balance but at least we have time to make some sort of arrangements now. Thank you everyone for all your help.