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Bank Overdraft
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andyscott
Posts: 167 Forumite
Im looking for a bit of advice for a friend.
He was up until 6 months ago working for the same employer for just under 10 years. He managed to run up an overdraft of £2000 but 6 months ago the company he worked for went bust.
He has not been able to find a job since and is currently on JSA of £71 per week.
Due to the interest on the overdraft every month, he is paying £30 per month and overdraft still sits at £2000. He has said a couple of the months he has been so short of money that the interest takes him back over the overdraft limit and then he is charged £30 interest and extra charge for going over the limit. Its like a never ending cycle unless he gets a job or can anyone tell me if there is a way round this??
He was up until 6 months ago working for the same employer for just under 10 years. He managed to run up an overdraft of £2000 but 6 months ago the company he worked for went bust.
He has not been able to find a job since and is currently on JSA of £71 per week.
Due to the interest on the overdraft every month, he is paying £30 per month and overdraft still sits at £2000. He has said a couple of the months he has been so short of money that the interest takes him back over the overdraft limit and then he is charged £30 interest and extra charge for going over the limit. Its like a never ending cycle unless he gets a job or can anyone tell me if there is a way round this??
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Comments
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The only way is to stop paying and then to negotiate with the bank freezing interest an a payment plan. This will result in a trashed credit history, but this will be a natural outcome for a person who after being employed for 10 years has £2K debt and no savings.0
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The only way is to stop paying and then to negotiate with the bank freezing interest an a payment plan. This will result in a trashed credit history, but this will be a natural outcome for a person who after being employed for 10 years has £2K debt and no savings.
How bad an effect would this have on him getting a mortgage once he clears the overdraft?
Does freezing the interest have much worse affect on his credit rating than all the interest he is paying?0 -
I think he can forget about it for the next 6 years. As he has no money even to pay overdraft off, he can devote these years to saving for the deposit.How bad an effect would this have on him getting a mortgage once he clears the overdraft?
The interest by itself doesn't have any effect. The fact that he is close to the limit has a minimal effect. If he remains over the limit this is bad, but I think still better than a payment plan.Does freezing the interest have much worse affect on his credit rating than all the interest he is paying?0 -
Did he get redundancy - there is a government scheme if a company has gone bust and has no money to pay this?0
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