Trouble with Lloyds Overdraft

johnA_2

Hi

The IT Company I was working for went bust 3 months ago and I have yet to find a job.

My graduate overdraft limit with Lloyds TSB was £1500 but I had increased this by £500 for a year brining my total OD to £2000. The only income I'm getting at the moment is JSA and when my account went over the limit and they started charging me £10 a day. Also £10 for every bounced Direct Debit (the companies I owe this money too also charge me (A LOT) for paying late). I had a credit card with £1000 on it which was also incurring charges.

I made an appointment with the Senior Personal Banking Manager at Lloyds. They could not help me with the charges and basically told me to borrow from my family to pay off the credit card and to put your graduate account back in check. This was yesterday and fortunately I was able to borrow £1500 in cash from family (which was horrible) to pay off my card and put £400 in my bank account.

Today I checked my balance and found that my overdraft has reduced by £500 as the temporary increase has expired so my OD is now £1500. I am now £300 over this limit with £290 (and counting) in charges to be taken. I phoned the bank and went in for another meeting but they said my credit rating has changed since I took out the first extended OD and they cannot increase it anymore.

I am stuck. I can’t borrow any more money and each day the situation is getting worse. My JSA does not cover the charges and these bounced direct debits are costing me a fortune.

I have an interview next week but even afford to dry-clean my suite or get to the location. Does anyone have any advice? I don’t want to declare myself bankrupt over a relatively small debt but don’t know what else to do.

Thanks for your time.

-John

Tixy

Hi john and welcome

First of all I would suggest you cancel the DDs, no point in being charged from both sides for each time an item bounces, better to at least save that money.

Then you need to set up a new bank account with another bank - one you owe no money to - and get your JSA changed so its paid in there.

What DDs are you paying on a monthly basis? what other outgoings do you have?

Are there any other benefits you should be entitled to -housing benefit etc? Have you spoken to the job centre to see if they can help with transport costs for getting to the interview?

Once you have the new bank account set up then you will need to write to your existing bank, explain that you are unemployed and only receiving benefits and tell them you can only afford a token payment of say £10 a month towards you overdraft. There are templates you can send that also ask them to freeze interest &charges on the account (they don't have to but often banks will agree to this).

barbiedoll

You should also think about raising a complaint with Lloyds, firstly through their own complaints department and possibly with the FOS if you get no joy with them.

See their contact details here...
http://www.lloydstsb.com/contact_us/complaints_procedure.asp
(Write, don't call!)

A senior personal banking manager definitely should not be encouraging you to get into more debt by borrowing money from family and friends. And even though you did as he asked, Lloyds have behaved badly by reducing your overdraft limit at at time when they know that you have very limited funds. The fact that you came in to them to ask for help shows that you aren't running away from this debt, I think that they have treated you very badly indeed. (Which is not uncommon for Lloyds if this board is anything to go by)

Do as Tixy says and cancel all of your direct debits and open a basic bank account with another bank, but do make sure that they aren't linked to Lloyds. Write to all of your creditors and let them know that you are currently unemployed and that you aren't able to pay your minimum payments at present but you are willing to offer a token payment for the time being, until your circumstances improve. Send all letters with a cheque or postal order for £1.00 (for each token payment) and use recorded delivery, keeping a copy of the letters for yourself.

Watch out too, for your credit card providers trying to raise your interest rate. They tend to do this as soon as they realise that you are struggling. You are within your rights to "reject" any rate rise, they will close the account but you will be allowed to pay it off at your current interest rate. Or even a lower one if you ask! (Not guaranteed but worth a try if you are unemployed for much longer)

Good luck with the interview, I'm sure that your very kind family will take pity on you and lend you £20 to get your suit cleaned and pay your fares there. Let us know how it goes!

johnA_2

Thanks for your replies, really appreciate it.

I have cancelled all the direct debits that I can. I have some left that have contracts (Clode funding (for a PC monitor), Hitachi (for a SSD), Three (mobile), LogMeIn Rescue (used for work) as well as a £2300 Lloyds TSB Graduate loan). If I stopped these (I can do it online) wouldn’t I be breaking the contract and occur further charges/legal action?

I do not have a credit card as it was paid off yesterday. My monthly outgoings are aprox £400. I’ve moved back in with my parents to save on rent. I’m going to speak to the Job Centre about a crisis loan but have been informed that you have to be on JSA for 6 months to be entitled.

What bank would you recommend to create the new account with? Will banks look at my now poor credit and turn me down?

Thanks again.

Tixy

Your poor credit will probably affect your chances of getting a 'full' account somewhere else - you need to apply for a basic bank account which has no credit facilities and is not credit scored - barclays and the co-op cashminder are popular on here.

If you stop your DDs on other debts then yes you will be breaking the contracts with them, but having DDs bounce means you are still not paying them and so the effect is the same but you save the charges.
The graduate loan you will also need to offer token payments on as with the overdraft.

Regarding the other DDs - are you in a contract with logmein? you are presumably not using it for work now you are not working - see if you can cancel or suspend membership until you are working again.
For the others it depends on your agreements, whether they are loans or HP and whether they can reclaim the goods if you stop paying.