In overdraft when bank closes my account, What rights do I have? where do I stand?

Russler84

Ive recently got a letter from my bank and they said they are closing my personal bank account.
I am in my overdraft and I can not simply pay it back right away.

Is the debt enforceable and would it effect my credit rating?
What rights do the bank have to make me repay some or all of it? or any of it? and can the interest continue to grow even though the account is closed?

I was considering setting up a small payment plan, but is this registered anywhere as its not a loan agreement (wont be logged on my credit report?)

I hope someone can help me :-(

Tixy

Any overdraft is repayable on demand. So yes they can write and request you pay off the full amount.

Its likely that your overdraft is currently on your credit file - although it may depend on how long ago you opened it up (years and years ago banks did not routinely get permission to report bank accounts - but if its opened in the last few years its very likely they already report to the credit reference agencies each month with the current balance etc).

Assuming they do report to the credit reference agencies - if you do not pay up in the 14(?) days they have requested they are entitled to register a default on your credit file. Which will have a big impact on your ability to get credit - and stays on file for 6years.

If you negotiate to repay in monthly installments they may agree to this and they may agree not to register a default (they may put an arrangement to pay marker instead on your file - most likely if you are able to pay in a relatively short period eg less than 6months).

Yes they can continue to charge interest & charges on the overdraft in accordance with the original agreement/ terms & conditions of the account.

Sometimes a bank will agree to freeze interest & charges if they believe you are paying back all you can afford, cannot afford to repay in full. But its unlikely they will agree to this without makring a default on your credit file.

Russler84

Thank you for your help

zxspeccy

Is the debt enforceable and would it effect my credit rating?
Yes and probably.

What rights does the bank have to make me repay some or all of it? or any of it?
The bank has every right as it is their money, as the previous poster has said overdrafts are “repayable on demand”.

Can the interest continue to grow even though the account is closed?
In is unlikely the account will be closed if it is still overdrawn. However if you do not pay it back then they may close the account and move you outstanding debt to their collections department, which is not good. Although if you arrange a payment plan which is agreeable to the bank they may waived any future interest and charges.

What the bank are doing is completely legal. However Banks do not just call in overdraft, they would usually have a reason for it. Have you been going over your overdraft limit? Is this hardcore borrowing (meaning is your account permanently overdrawn)? Have payments into the account (eg. wages) stopped?

The bank is also entitled to close your account, just as you are free to close your account with the bank at any time. The only difference is the Bank is obliged to give you 28 day notice so that you can make alternative banking arrangements.

Banks are nowadays very selective on the accounts they hold, which means they are not too bother by upsetting existing customer if they no longer want their accounts.

Work out how much you could afford to pay back each month on the overdraft, and providing it is reasonable offer the bank should be able to help you. The only problem is you may have problems opening accounts else where is you credit file has taken a hit.

Russler84

Ok, i will try and get a repayment plan and letter together for when they offically ask for it back. Ill also try and freeze the interest.

Yes there was a reason... My old company went into liquidation and apart from losing everything in my business, they decided to close mine and my wifes personal accounts, even though she was never in her overdraft or even connected with he business in anyway, i call it very spiteful ;-(

steve1809

Russler84 wrote: »

Ok, i will try and get a repayment plan and letter together for when they offically ask for it back. Ill also try and freeze the interest.

Yes there was a reason... My old company went into liquidation and apart from losing everything in my business, they decided to close mine and my wifes personal accounts, even though she was never in her overdraft or even connected with he business in anyway, i call it very spiteful ;-(

I am currently in the same boat mate with the Natwest who are wanting to close down my personal accounts too following the closure of my business......helpful bank my ar*e

[Deleted User]

Did you not expect for this to happen, could you have not cleared your personal debts with business debts???

I think you are 1 of very many in the same boat...

If I were a bank, I think I may do the same. If you were running the business and were for example a sole trader then I would agree that you could appear to be another risk to them