Need advice on overdraft I can't pay off please

A.W.O.L

The gist of the story is that I was a student and had a £2500 overdraft with the Bank of Scotland, I have now finished uni and they have changed my student account to a graduate account and are charging me £1 per day for the privilege of having the overdraft. The problem is that I can only afford to pay in £31 a month to cover the charges and don't have any spare money to pay it off, therefore I am in a situation where I am basically giving the bank £365 a year but not managing to repay the overdraft at all. I have spoken to the bank manager who said there is nothing they can do as I would have been made aware of the t&c's when I took out the overdraft 5 years ago.

However, since leaving uni I have become disabled and unable to work, my benefits are just enough to live on, I could pay a maximum of £50 a month into the account but then it would take me 10 years and cost me £3650 in charges to pay off the £2500 that I owe!

The bank simply refuse to freeze the charges so that I can pay it off, and I am desperate for any advice you can give me on any other options I have to deal with this. A loan is out of the question as I do not meet the criteria for getting one, and I think it would be a bad idea anyway as I'd just be swapping one debt for another.

Any help would be greatly appreciated,

Cheers, from a newbie.

chanz4

you may want to look at companys that help disabled in the work place, loads of people do it and as you can use a computer...

Consumerist

Hi A.W.O.L and welcome to the MSE forum. Sorry to hear about your circumstances.

Firstly, the £1 per day charge amounts to about 15% APR on your £2,500 overdraft so it could be far worse. The main thing for the moment is to keep up the monthly payments until you can devise a long-term plan.

You don't mention whether you are likely to be able to get back to work in the future. Are we talking about a long-term solution or just a stop-gap until you are able work ?

A.W.O.L

Hi,

Its unlikely I'm going to be able to work in the near future anyway, I am virtually housebound at the moment. If I could find a way to earn some extra money and pay off this loan I would, but at the moment I can't see any way out of this situation.

opinions4u

Might be worth having a look at the Up Your Income forum. I know in a very hard up period a decade or so ago I was able to earn around £50 a month answering surveys. Dull as anything, but if you're already funding the charges this sort of additional sum could clear the debt in 4 years.

You could also change the account to a Reward current account. Then if you can pay £1,000 a month in to it (even if it's a case of moving £50 backwards and forwards with a Web Saver account 20 times a month) you earn the £5 Reward for yourself.

There might be value to visiting the Bankruptcy part of the forum. Ask about the advantages (and more importantly the disadvantages) of declaring yourself bankrupt. Perhaps talking to CAB or other debt charities is also a route to consider.

While it's all being thought through, keep paying and make sure the debt remains lower than £2,500. Best of luck.

Consumerist

As a recent student, you will be used to doing research so you could now put your talents to good use. There is much you can learn from the Debt-free wannabe forum and you can get more from a google for "debts and disability" or similar.

Without wanting to alarm you, I think you should be reminded that your overdraft could be withdrawn by the bank at any time. Your authorised overdraft (£1/day) could become an unauthorised overdraft (£2/day) at fairly short notice. If your overdraft exceeds £2,500 it will rise to £5/day so it is important to keep it under £2,500 for that reason alone.

As suggested earlier, it is also important that you seek advice from an advice charity (e.g. CAB) as soon as possible. There may be benefits / grants / loans available to you. Avoid debt-management companies who charge for their services which you get free elsewhere.

The going may get rough so post on the Debt-free wannabe forum for loads of support and encouragement.

Good luck.

A.W.O.L

chanz4 wrote: »

you may want to look at companys that help disabled in the work place, loads of people do it and as you can use a computer...

I would if I could, but unfortunately my circumstances do not allow this at the moment. I have looked into work I could do from home from my pc but there are so many scams or companies looking for an outlay payment which I am not able or willing to do at the moment.

A.W.O.L

I think I will contact CAB, as I have spoken at length with the bank manager and not had any luck that way. Thanks for all your advice.

Consumerist

As a precaution, I would advise that you open a basic current account with another banking group (i.e. not Lloyds or Halifax) so that if it becomes necessary to negotiate a formal agreement with the bank, you can divert your income to an account which BoS will not be able to plunder. At this stage, just open an account and await developments.

Banks are required to treat their customers sympathetically and if they don't then you can ultimately refer a complaint to the Financial Ombudsman Service. You could start the ball rolling by sending your bank a statement of Income and Expenditure and, based on that statement, make a "fair and reasonable" offer to repay the overdraft over time. The CAB should help you determine what would be fair and reasonable in your circumstances and may be able to help you to persuade the bank to waive charges.

lawrie28

Would they convert it to a loan at all? If they would then you would have a structured repayment plan which might help?

the_insider

Give them another call, explain that you're in financial difficulty and whilst you appreciate that you are aware of the terms and conditions of the account you are not in a position to repay the overdraft balance. Be polite but make it clear that you don't feel that they are treating you fairly. If they refuse to accept your complaint and do something to help you then ask them for their final response and take the complaint to the Ombudsman.

On the back of Consumerist's post, complete the Self help pack on https://www.nationaldebtline.co.uk and send them that as well. It saves waiting for a CAB appointment.