Cancelling loan DDs for the month - what will happen?

debtboredom

Hi all,

Started a thread a few days ago with my soa etc. I'm trying to keep away from going on to a DMP as I can make cuts to afford over minimum payments. I have a major cash flow shortfall this month though. I've already claimed back previous PPI but have now also written to the bank to ask for £1900 in charges back because of my financial hardship.

My bank have refused to give me a repayment holiday on my loans this month which would free up a well needed £350. (I've had 1 month off of each in the past and have always made payments on time every month.)

If I was to cancel my DDs and wait for them to call/write, what can/will they realistically do if I say I can't pay them until next month? I'm planning to get all of my wages into a different account as soon as they've been paid in.

Thanks for any help!

ellesbellesxxx

Correct me if I am wrong please anyone, but my understanding is that you would then default on your loan - this would impact on your credit file for 6 years making future credit/mortgage applications hard.

Time_to_face_the_music

debtboredom wrote: »

Hi all,

Started a thread a few days ago with my soa etc. I'm trying to keep away from going on to a DMP as I can make cuts to afford over minimum payments. I have a major cash flow shortfall this month though. I've already claimed back previous PPI but have now also written to the bank to ask for £1900 in charges back because of my financial hardship.

My bank have refused to give me a repayment holiday on my loans this month which would free up a well needed £350. (I've had 1 month off of each in the past and have always made payments on time every month.)

If I was to cancel my DDs and wait for them to call/write, what can/will they realistically do if I say I can't pay them until next month? I'm planning to get all of my wages into a different account as soon as they've been paid in.

Thanks for any help!

Hi debtboredom :hello:

This is a bit of a Catch 22 situation. Your bank won't consider you in financial difficulty unless you have defaulted and/or have a payment plan in place. This could be a DMP or your own arrangement to pay.

As you stand currently and are up to date with your payments, they are very likely to ignore your request for a refund of charges and even if you now entered a payment plan, they would probably only consider dropping charges/interest from the start date.

If you cancel your DDs, they are within their rights to default you and apply charges. They could also cancel your OD facility and demand full repayment.

If you are sure a DMP is not for you, have you attempted to set up a payment plan with the bank?

debtboredom

Thanks for the replies guys. Honestly love the helpfulness of people here . Been lurking for years!

I was thinking that they probably wouldn't default me for one missed payment? Am I completely off with that? It doesn't strike me that they're being particularly responsible by refusing a repayment holiday.

I went through my income and expenditure with their customer support unit who then just put me through to collections because my account is £700 over the overdraft at the moment. All of the details are in my original thread is at showthread.php?t=3994405 (can't post the link).

Started another one to try and get some specific help with the loan situ. I'm at a bit of a loss with the shortfall I'll have this month. Even if I started a DMP I'd still have to get through this month.

The charges were incurred through other charges. To be honest, even if they offer £100 it'll be better than nothing. I'm just taking a bit of a punt.

happy_bunny_2

ICO guidelines say 3 months have to usually be missed to issue a default. In my experience, if you cancel the DD it takes them a while to notice. Worst case 1 month late payment on credit file and in some cases a missed payment fee.

Who is the loan with?

I have experience with RBS and Cahoot, now Santander.

They can take from your current account or savings if with same bank.

happy_bunny_2

Forgot to add. RBS had a habit of reinstating the DD without permission. I complained that they were abusing their position to maximise overdraft charges. They did not do this again after this.

debtboredom

Thanks Happy!

It's with Lloyds. Will they expect me to pay two months worth next month or just write that payment off and add an extra month?

I'm planning to cancel them and pull the money into a different account. The only way they could take it from my current account would be to put me into an unplanned overdraft and I'm sure they wouldn't do that!

happy_bunny_2

Probably expect 2 months, however, once you miss the payment you can negotiate to pay it back over longer I guess.

Barbeduk

I'd be careful in case they call in the OD, but have no experience with lloyds, only santander.

tony_ack

I'm going to be honest here, so sorry if this is a little blunt, but I hope you take the advice on board as it will help you out in the long run.

First of all, you need to be realistic about your bank charges claim - even if they didn't throw it out straight away (which I think they will), this is income you cannot rely on to get yourself out of a hole. You must only work with what you know you've got or you know you will get.

In answer to your question about whether you will need to pay two loan payments, then the answer is yes, the loan company will expect you to pay the arrears as well as next month's payment. If you only make one payment and don't come to some other arrangement with the loan company then they will likely take next month's payment as payment of the arrears, which means you could effectively also miss next month's payment (two strikes, we know what happens after the third). On the plus side, your loan company may put a payment plan in place for the arrears if you speak to them.

I think you have a big decision to make. You need to work out how much cash you would need, today, to get all your accounts (including your overdraft) up to date and cover future charges. Can you realistically raise that sort of money? Perhaps selling things on eBay? If you can raise the cash you then need to seriously consider whether the cuts to your monthly outgoings are sustainable, and whether you'll be in the same situation again in a few months. If you can't make up the shortfall AND manage to pay reasonable monthly living costs, then I would seriously consider a DMP. I have been in a similar situation to you and ended up selling many cherished possessions to try to get on top of my debt, only to fall into a DMP anyway a couple of months later. I'm not saying give up, but be realistic about your position.

debtboredom

tony_ack wrote: »

I'm going to be honest here, so sorry if this is a little blunt, but I hope you take the advice on board as it will help you out in the long run.

First of all, you need to be realistic about your bank charges claim - even if they didn't throw it out straight away (which I think they will), this is income you cannot rely on to get yourself out of a hole. You must only work with what you know you've got or you know you will get.

In answer to your question about whether you will need to pay two loan payments, then the answer is yes, the loan company will expect you to pay the arrears as well as next month's payment. If you only make one payment and don't come to some other arrangement with the loan company then they will likely take next month's payment as payment of the arrears, which means you could effectively also miss next month's payment (two strikes, we know what happens after the third). On the plus side, your loan company may put a payment plan in place for the arrears if you speak to them.

I think you have a big decision to make. You need to work out how much cash you would need, today, to get all your accounts (including your overdraft) up to date and cover future charges. Can you realistically raise that sort of money? Perhaps selling things on eBay? If you can raise the cash you then need to seriously consider whether the cuts to your monthly outgoings are sustainable, and whether you'll be in the same situation again in a few months. If you can't make up the shortfall AND manage to pay reasonable monthly living costs, then I would seriously consider a DMP. I have been in a similar situation to you and ended up selling many cherished possessions to try to get on top of my debt, only to fall into a DMP anyway a couple of months later. I'm not saying give up, but be realistic about your position.

Thanks Tony. I'm not relying on the bank charges coming in to add extra income. I'm not expecting them to honour it at all but I figured I have nothing to lose!

I was around £25 short of monthly payments (over the minimum) after everything on my SOA. I've cancelled my Life Insurance (which I didn't actually need and was stupid to take in the first place) which was £43 monthly and have already started cutting back on groceries etc.

It might be that in July I have to use some credit on a CC that I make a payment on to help me through. That will at least get me out of the overdraft hole though and then at the end of July my wages will go into a new account.

Really appreciate the advice. I've decided not to cancel the loan DDs. I will see how July goes and make a decision from then. I want to start snowballing but that will need to wait until I've got out of this overdraft mess at the end of this month.

I will be earning around £1000 extra in August which will go towards my debt and I will hopefully negotiate some sort of pay rise in November which will help increase my payments. I'm committed to sorting this now.

I thought I've had my LBM in the past but I really hadn't. This is the one and being on here is helping lots!