New- confronting Debt - HSBC good idea or nay?

T_Wilson

Hi all,

I'm looking for some advice from someone who may have a better idea about tackling debt than i do.

Essentially since i had a wage cut 14 months ago i haven't made any headway tackling my debt. Only treading water on a £9k credit card and £1.25k overdraft.

I have been in contact with national debt line and other advice providers but found them not overly useful. My issue seems to be that I only have one creditor; my bank. When i speak to these organisations they seem really helpful until i tell them I have one creditor; where upon I'm told they can't help me. Not having a moan at them by the way. If that's the way it is so be it!

Anyhow I'm considering asking HSBC is they can put me on a debt management plan. Does anyone have any experience with this? Is this the right thing to do?

Any thoughts or suggestions welcome!

thechippy

Welcome to MSE....:beer:

Firstly, open another bank account with someone not related to hsbc.
It's always unwise to bank with whom you owe the money, as they can and do use the right of offset. Transfer wages dd's etc over to there. You will now be in full control of your funds.

Then, negotiate reduced payments, freezing of interest with hsbc.

You could try negotiating first and see if they behave, but as soon as you see them using the right of offset - leave them.

Bear in mind that if they accept reduced payments, they will still mark your credit file as such and your rating will be on a downhill spiral from then on.

T_Wilson

Hi 'thechippy'

I guess I'm less than concerned about my credit rating at the moment as actually having enough money to feed myself.

So you think move my account and then negotiate?

thechippy

T_Wilson wrote: »

Hi 'thechippy'

I guess I'm less than concerned about my credit rating at the moment as actually having enough money to feed myself.

So you think move my account and then negotiate?

Would be the safest bet I think...;)

smartiedriver_2

My personal opinion is that this would weaken your position.

If one of my clients came to me for help, having moved their banking elsewhere, I would be less open to negotiation. I would wonder what they were hiding, and what borrowing they had elsewhere.

Far better to be open and honest with the bank and work with them to find a solution. If your money is elsewhere you are more likely to incur larger charges as you might not be able to move money around quickly enough, and the bank has no obligation to freeze your interest meaning your debt will increase.

The right of set off is only applicable if you are over your overdraft limit or miss payments - otherwise there is nothing to set off. They won't just take money from your current account to clear a loan or credit card unless it is in default in the first place, and if they want to cancel your overdraft they will give you notice.

yorkshire-lad

have you tried giving cccs a call? they are a debt charity and im sure they will give you advice on where to go from here.

but i second chippys advice in moving banks, if you start to fall behind on payments they may very well start to take money out of your account.

smartiedriver may work for one of the nice banks but in my past experience HSBC provide terrible customer service.

BeautyandtheBeast_3

i would speak to HSBC as they have been brilliant with me and I will stick them because they have helped me through some tricky parts of my life financially. you could start by asking to reduce your overdraft limit just £10 a month, you will be surprised how quickly that can happen, Mine started of at £1k, now it stands at £250 (and i am in it some months, sometimes im not) as for the credit card, you could ask for a loan at the rate of £7.9% (advertised on website) for which will help alot (if your cc interest is high) Because you are moving money within HSBC they are more likely to help you out, rather than lose you. I had a loan at interest rate of 14.9 with hsbc and i was finding the repayments tight, so i went in and thy changed my loan into a new one with a rate of 8.7%. That really helped out!!!!!!!

thechippy

smartiedriver wrote: »

My personal opinion is that this would weaken your position.

If one of my clients came to me for help, having moved their banking elsewhere, I would be less open to negotiation. I would wonder what they were hiding, and what borrowing they had elsewhere.

Far better to be open and honest with the bank and work with them to find a solution. If your money is elsewhere you are more likely to incur larger charges as you might not be able to move money around quickly enough, and the bank has no obligation to freeze your interest meaning your debt will increase.

The right of set off is only applicable if you are over your overdraft limit or miss payments - otherwise there is nothing to set off. They won't just take money from your current account to clear a loan or credit card unless it is in default in the first place, and if they want to cancel your overdraft they will give you notice.

You may be one of the better managers, but sadly in my experience of helping others, lenders are simply too inconsistent with how they deal with clients who start to have issues. Most in fact, are extremely unhelpful, even to long standing customers.

Due to the inconsistent and largely unreasonable behaviour, I would reiterate changing banks.
If a payment IS missed, the right of offset would be used which could cause an essential payment such as rent / mortgage being bounced.

Nothing is being "hidden" and as you well know, you can see other borrowing from credit reports!

It's a matter of putting yourself in control of your funds and not being at the mercy of the bank's every whim.

The banks don't show any morals or compassion, - not even with clients who have banked with them for decades.

@beautyandthebeast

I'm pleased you had a good experience with them and best of luck moving forward...:beer:

T_Wilson

Thanks for all your contributions guys.

Apologies for the delay in getting back to you. Been very busy with work work and college work (another excuse for burying my head in the sand)

The thing is I've never missed a payment on anything for 6 years or so. Therefore i can't see why i would fall behind with any payments if I went onto a plan. I always settle my monthly outgoings on payday. I'm more likely to actually miss meals than i am bills.

I just can't get out of the debt cycle due to previously mentioned pay cut, large apr on credit card, inflation squeeze etc etc.

T_Wilson

@Beauty&theBeast

I've asked for loan in the past year and they won't even consider it.

I guess there is more money to be made by the current arrnagement

T_Wilson

..and yes, i do have a 1,250 overdraft in addition to my 9k credit card so i guess if they did 'offset' I'd be pretty buggared