Can the bank force me to transfer overdraft to a loan?

sarah2201

Hi

I have run up a debt of £1400 on an account (which will be less charges - just in the process of claiming them back!). An offer of £200 per month was made to the bank to reduce and finally settle the account however, the bank have written to me advising that it is in my best interest to transfer the overdraft to a personal loan and have processed the application and sent all paperwork for me to sign! I havent even asked for the loan yet they have processed an application - not knowing my personal circumstances, income etc. I believe that my original offer is fine however the debt recovery team will not accept this as being reasonable. Can they force me to transfer this debt to a loan and should they have processed it in the first place without my consent?

oldwiring

Overdrafts can be called in at anytime; that is what repayable on demand means. Although IMO to propose a loan to a customer without all the facts is not good practice, the offer is a better alternative than making a formal demand for repayment upon you when you fail to cough up the money to repay, in the meantime bouncing all your debits on the account. Even worse still for you would be being taken to court or having the bailffs sent in.

The bank may have debited charges that are unlawful because of their penal nature, but truly there would have been charges at some lesser level. Those charges would have arisen because from the p.o.v. of the bank they incurred costs to control your account. It is that failure to properly control your account and finances that led you in to the overdraft position. You will not like it but if the bank feels its money is in danger, probably because part of it has become hard core, it has the right to ensure it does not increase that danger. It has done this by withdrawing your ovedraft. Placing that debt on a loan is a privilege for you. It gives you a chance to sort yourself out.

Edinburghlass_2

As this is a banking question rather than a reclaim question I'll shift this thread across to the Budgeting and Current Account board.

sarah2201

Thank you for your reply

dexters_mum_2

I think they can implement what they woudl call a consolidation loan or a debt recovery loan for you to repay any borrowing you owe them, sometimes they have a higher APR than normal personal loans so if your credit record isn't in any other way blemished, you may get a better deal elsewhere.

I don't think you can be forced to have a loan, after all, you would have to sign a consumer credit agreement to agree to it but they could make life very difficult for you, ie, sending your account to recovery agents who may not be sympathetic and more charges may be accrued on your debt.

Worth exploring and exhausting all options with your bank first before taking on any other borrowing.

oldwiring

OP certainly cannot be forced; that is true, but sometimes matters have to be dealt with quivkly.

sarah2201

Hi

Thanks

I just cannot believe that they processed the application without my consent or without even knowing my personal circumstances! I have agreed to repay the debt over a two month period now - killing myself in the process but at least it will be finished with. Surely they cannot process applications like that without even consulting with me first!??? Especially when they had already agreed with me that monthly installments of £200 where ok???

RayWolfe

All they have done is to draw up an application, they have not imposed it. If you want consultation, go and consult with them. An overdraft is not a right but a facility to give temporary help.