Any Bank collection experts out there?

Stacey12345

Hi guys, I have an outstanding debt of £1800 in the form of an overdraft with Lloyds TSB that I used during my student years. Since then ive been paying off what I can every month but they wont drop the interest and im making no inroads at all. I cant afford to increase the payments but dont want to be tied to this debt forever.

They have taken away my debit card and replaced it with a cash card and cant open another bank account because of this. It really is affecting things and a big pain. Ive always been on time and very good with any debts but this one is just too big to service.

I have asked for a full and final settlement as my Dad said hed give them £800 and I can put my savings of £200 towards it but they still say no, probably because they are making a mint off me with the interest.

After 5 years ive had enough and am considering stopping paying them in the hope they pass on the debt to a credit agency that may offer a full and final settlement and can get rid of this debt and get on with my life once and for all.

Do you think they will do this as a result of me stopping the payments?

Tixy

Have they ever officially recalled the overdraft? or at the moment are they happy for you to keep it open but only with a cash card?

If they have recalled the overdraft - have they yet maked a default on your credit file.

If you stop paying altogether then they are likely to recall the overdraft if they haven't already, and then filea default notice on your credit file, if they haven't already - general advice would be to avoid this if possible.

If you do default then its fairly likely that they will at some point pass it to a debt collector. Although its possible that this wouldn't be for many months, and its also possible they might instead decide to take court action against you to try and obtain a CCJ for the debt (may well not happen but its always a possibility).

Surely if you have £200 savings then its worth paying that off the debt anyway - it will at least reduce your monthly interest a small amount, and mean that future payments will help you reduce the balance rather than only pay interest?

You might also want to consider posting up a statement of affairs, as its quite likely people will be able to suggest a few possible changes you could make so you could free up more money to pay to it each month, even just say an extra £10 a month would make a big difference to how long it will take to repay the debt.
How much are you currently paying a month? and what APR are they charging you?

Stacey12345

Hi thanks for your reply.

No dont think they have called the overdraft in just happy for me to pretty much pay off the interest each month. I have rang them and told them that I will be paying them forever if this keeps up so asked them to freeze the interest at least - which they refused.

I have thought about giving them my savings but my Dad said it wont make much difference, he said ill just go from being £1800 in debt for years to being in £1600 debt for years such is the lack of decrease in the debt. So not sure if its worth it considering my savings have come in handy over the last few years acting as my shortfall should I get something unexpected like problem with the car etc. Although I dont want to give the impression that I am holding a lot of savings back, it rarely goes over £200 ever at any one time.

In a bit of a hole with this really.

Tixy

Do you know what APR you are paying? or at least how much interest you are being charged a month?

Stacey12345

Im paying £25 off a month and think £7 comes off my balance.

Stacey12345

im just researchng over some forums and on google and some suggest that if you leave the country for 3 years it will be written off and cleared from your record in 6 years? is this true?

I was only last month offered to go and live in Australia for a few years with my Grandmother.

Tixy

So you think the interest is currently about £18? which would work out as about 12% APR.

If it is 12% APR then using the snowball calculator - if you continue to pay £25 then it will take you 126 months to pay off the debt - or 10.5 years.
If you could increase it to just 30 a month that would drop to 91months, so that would knoch near enough 3years off the debt.
Are you sure you can't afford another £5 a month from somewhere?

If you pay off your £200 savings and can increase your repayment to £30 then it would reduce to 76months.

Tixy

No its not true at all.

If you go abroad and stop paying anything towards your overdraft then at some point they will recall the overdraft. From that date they have 6years to take you to court to obtain a CCJ - if you are abroad and ignore court papers then they'll be given an automatic CCJ against you.

Even if they didn't take court action against you then it would still stay on your credit file for 6years and when you returned you would still owe the money (even when its statute barred you owe the money).

If they do obtain a CCJ and you return then you can expect them to try to enforce it, which might at first consist of asking you to pay, but could then lead to bailiffs being instructed, or if you were earning, in your employer being asked to deduct payments direct from your salary before you are paid.

I think it would cost far more to try to run away from the debt (not least the flights to Aus, than it would cost you to settle the debt).

Stacey12345

Thanks for working that out for me. Ive already increased my payments from £15 to £25 and any increase on that and I wont be able to guarantee its regular payment. Im very rarely left woth any money at the end of the month and dont go out and do little on my days off as a result.

I feel quite resentful paying another £3150 off an £1950 overdraft given to me as a student after already paying about £1000 to them already. And cant fathom not being able to open another bank account for the next 10-11 years.

thanks for all your help though

Tixy

There is no reason why you shouldn't be able to open a new bank account just because you have an overdraft with this account.

Have you tried applying for a basic bank account with another bank - these are not subject to a credit check as they don't have overdrafts, they only an identity check. You need to specify you only want a basic account.

Are you on the electoral roll at your current address? thats far more often the reason a person is unable to open a basic bank account.

Here is a list of basic accounts on the market - and the type of card they offer, most offer a visa debit - http://www.moneyadviceservice.org.uk/_assets/downloads/pdfs/your_money/bank_accounts_table.pdf

Don't be put off by those snowball calculations, if you cn increase it by £5 now even if its only some months you can afford to pay that much then it will all help, and hopefully at some point in the future, your income will increase or circumstances improve and you'll be able to pay much more to your debt and get it paid much quicker and for less interest.

Obviously your other option is to stop paying and accept that at some point they will recall it and add a default which will have a major impact on your credit file for the next 6years, and hope that this leads to them selling the debt on and you getting a reduced settlement, rather than them taking you to court.

DVardysShadow

Snowball calculator. http://makesenseofcards.com/snowcalc.html

A very good tool. Consider taking the £800 from your father and putting in your own £200. You then owe £800 and you would be paying off £17 month. It would be gone in under 4 years. Suggest you try it in the calculator