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Flibbitygibbit

Thanks for that advice, very useful. I was thinking of changing banks as First Direct seem to offer a better service, but can I change banks while I've got an overdraft? Am not sure how that works.

sourcrates

Flibbitygibbit wrote: »

Thanks for that advice, very useful. I was thinking of changing banks as First Direct seem to offer a better service, but can I change banks while I've got an overdraft? Am not sure how that works.

You would need to open a new basic account, with a bank you have no debts with.
Transfer all your banking to the new account.
Do this yourself, do not use the switching service, if you did, you would need to repay the OD first.
You then treat your OD with your old bank, as just another debt to service.

Flibbitygibbit

Thanks for your help.

StepChange_Jen

Flibbitygibbit wrote: »

Thanks for that advice, very useful. I was thinking of changing banks as First Direct seem to offer a better service, but can I change banks while I've got an overdraft? Am not sure how that works.

[FONT=&quot]Hello,[/FONT]

[FONT=&quot]As sourcrates posted, your basic bank account will need to be with a bank you have no debts with. [/FONT]

[FONT=&quot]Thanks for clearing that one up sourcrates [/FONT]:)

[FONT=&quot]If you’ve got any more questions please let us know.[/FONT]

[FONT=&quot]Jen [/FONT]

marcosdjcm

Decision time

Hi,

I am in a strong position to get a DRO, but have also been offered help from a family member to shift/consolidate my debt to a loan that they can get.

It's totally realistic that I can pay this loan in 5 years, but some friends advise me to take the DRO anyway as these things shouldn't involve a 3rd party etc.

It's a nice gesture from the family member and it won't cause any dramas. But not sure which I prefer, having a solid credit rating and having the option to think about mortgage and other things in the next 6 years, or just writing off £10k in debt and dealing with a ruined credit score for 6 years.

any thoughts?

sourcrates

marcosdjcm wrote: »

Decision time

Hi,

I am in a strong position to get a DRO, but have also been offered help from a family member to shift/consolidate my debt to a loan that they can get.

It's totally realistic that I can pay this loan in 5 years, but some friends advise me to take the DRO anyway as these things shouldn't involve a 3rd party etc.

It's a nice gesture from the family member and it won't cause any dramas. But not sure which I prefer, having a solid credit rating and having the option to think about mortgage and other things in the next 6 years, or just writing off £10k in debt and dealing with a ruined credit score for 6 years.

any thoughts?

At least with the DRO your debts are gone, you make no payments, and you won't have to worry about repaying the family member.

Yes your credit will be trashed, but you will be debt free, bear in mind anything could happen in the future, you may find it hard to pay the loan back, it's rarley a good idea to consolidate existing debt, I would think very carefully about the implications !!

HarmonyDragon

Hi, I am seeking advice on how to deal with a bank loan.

I was made redundant a year ago and have only had a couple of months work in November and December. Until now I have been living on redundancy money and keeping up repayments on my bank loan which is 120 a month.

I started signing on in February and I receive £312 a month JSA and £238 HB (,for a room in a shared house)

We have an arrangement for rent and bills where I pay £445 a month into a shared bill account, this includes £297 for rent, the rest is utilities, TV\phone\internet and food.

I have been stretching my last earnings and the last of my redundancy pay to cover all this plus £52.50 for a bus pass, £10 for a phone, 20 towards a credit card bill which is interest-free, and £15 for my overdraft.

So my income is £550 a month and outgoings about £545, not including clothes, toiletries or anything else, and then there is the loan.

Because I had some earnings left I didn't use my benefits in February, so I can cover the shortfall for one, maybe two more months and I am due a tax rebate in April or May which should be several hundred pounds. Meanwhile I am looking for work. But I can see that this is not sustainable in the long term.

It's been suggested to me that I could renegotiate my loan payments with the bank and they should be agreeable as I have a long relationship with them and a clear reason why it is necessary. But I've also heard that once you let them know you are in trouble, they are likely to wait for you to default and then start collections procedures. I'm worried because this is the same bank where I have my current account, which is overdrawn, and my credit card with £1000 borrowed on an interest a free deal. I don't want them to start taking amounts from my current account or demanding payment for my credit card balance. I also don't want to leave this to get worse!

mum2one

HarmonyDragon wrote: »

Hi, I am seeking advice on how to deal with a bank loan.

I was made redundant a year ago and have only had a couple of months work in November and December. Until now I have been living on redundancy money and keeping up repayments on my bank loan which is 120 a month.

I started signing on in February and I receive £312 a month JSA and £238 HB (,for a room in a shared house)

We have an arrangement for rent and bills where I pay £445 a month into a shared bill account, this includes £297 for rent, the rest is utilities, TV\phone\internet and food.

I have been stretching my last earnings and the last of my redundancy pay to cover all this plus £52.50 for a bus pass, £10 for a phone, 20 towards a credit card bill which is interest-free, and £15 for my overdraft.

So my income is £550 a month and outgoings about £545, not including clothes, toiletries or anything else, and then there is the loan.

Because I had some earnings left I didn't use my benefits in February, so I can cover the shortfall for one, maybe two more months and I am due a tax rebate in April or May which should be several hundred pounds. Meanwhile I am looking for work. But I can see that this is not sustainable in the long term.

It's been suggested to me that I could renegotiate my loan payments with the bank and they should be agreeable as I have a long relationship with them and a clear reason why it is necessary. But I've also heard that once you let them know you are in trouble, they are likely to wait for you to default and then start collections procedures. I'm worried because this is the same bank where I have my current account, which is overdrawn, and my credit card with £1000 borrowed on an interest a free deal. I don't want them to start taking amounts from my current account or demanding payment for my credit card balance. I also don't want to leave this to get worse!

the first thing to do is change bank account, do check that your "new bank" is not tied in with the existing one, eg, Halifax in under same umberalla as LLoyds....

Then open a basic account, and have your benefits paid it to this, dont do it as a switching service, as it will mean your od would need to be paid.

Then contact your creditors

basic letter saying your in financial difficulty as such you will pay £1 / £5 per debt, until further notice, enclose a statement of affairs - they may ask for copy of you dhss letter.

They may rant, rave, etc - but they can't get blood out of a stone, and if your income matche your outgoings then they cant have it xx

HarmonyDragon

Thanks for your reply. I was sort of hoping I wouldn't have to do anything that drastic, as I've been with Lloyds for 20 years and that has helped me in the past with favorable loan rates and such, and I don't want to mess up my credit rating which is OK at the moment.

Do you not think I could get them to just renegotiate the loan payments then? Or is it too risky without having a basic account set up elsewhere? I don't want to cut all my ties and trash my credit rating and then get a job next week.

Would the new bank want to question the reasons for needing a basic account?

Thanks for your advice.

Meatloaf1981

Banks never question the need for a basic account. I opened one with NatWest and they never said a word, just agreed to it as it had no OD facility so nothing to discuss really. You can always try to negotiate reduced payments with Lloyds but this can still affect your credit rating if they put late payment markers on there etc. If you can't afford the repayments and can get no assistance from elsewhere with your last couple of payments, I would suggest contacting Lloyds and asking for a payment break which many lenders will offer for a period of several months until you find your feet again.