HELP!! Overdraft suddenly been reduced

Thrugelmir

KT2802 wrote: »

That reassures me a bit. I could just about afford to give them £100 a month at a push. I think I will also open an account elsewhere and have wages paid into this. I understand that an overdraft is repayable on demand and that I shouldnt always be using it etc but I think it is unreasonable for them to expect people to be able to pay back £1000 within 3 weeks.

Can you not spend on your credit cards to reduce your reliance on your overdraft?

Alternatively see if they will convert part of the overdraft into a loan to clear it

The NW will have detected a pattern to your overdraft usage. An overdraft is not meant a permanent loan. Given the economic climate, banks are now tightening down on credit facilities across the board. So you haven't been singled out.

KT2802

Thanks all.

Unfortunately I am pretty much upto my limit on both credit cards so couldn't really spend on these.

My signature is perhaps unwittingly misleading - sadly I haven't paid £6000 worth of debt since the start of the year. My LBM was when I started to overpay on my debts and finally made the decision to stop getting in more debt. £6000 is the amount I have paid towards my debt over the past few years or so if that makes sense.

Newyorkdreams - my overdraft was also low down on my priorities to pay off due to snowballing etc. I feel silly that I did not think about what a huge problem it would be if the bank took the overdraft away.

I know it's my own fault, it's just very frustrating when I am trying to sort my finances out and that this could now set me back massively.

Valhaller - I was thinking about opening a new account and transferring all DDs etc as well as wages. I would be concerned that NW would completely remove any overdraft then though, like you say.

I feel at a loss about what to do really. I know that I need to speak to NW asap but I don't know whether to remove money from the account first just in case. I am extremely worried that if I speak to them and they then see that I am not going to be able to pay it back straight away that they may remove the facility earlier than planned.

ValHaller

KT2802 wrote: »

I am extremely worried that if I speak to them and they then see that I am not going to be able to pay it back straight away that they may remove the facility earlier than planned.

The cold crumb of comfort is that in 6 years time the resulting default would come of your record that number of days earlier ....

Generally, you would be better off speaking to them and offering a credible plan. Now straight answer to the question - how quickly could you clear £1000 by dropping all overpayment? By robbing Peter to pay Paul?

Trajal

Personally I would change to another bank account.

I had HSBC pull the rug out from under me in the same way as you are describing. While they did agree to let me pay in installments rather than all at once, they nonetheless reported this as an arrangement to pay - very damaging to my credit file.

Then I swapped accounts, had my pay put into a different bank and rang them up. Explained the situation and said that they had put me in an untenable position as they not only had ruined my credit file but they'd caused me genuine financial hardship. I managed to get the AP taken off my record and came to an agreement that I could afford with them (at the time £60 a month - which knowing what I know now I think was way too much).

Never have your current account and salary paid into someone that you owe money to - whether it be by way of overdraft, loan or credit card.

KT2802

ValHaller wrote: »

The cold crumb of comfort is that in 6 years time the resulting default would come of your record that number of days earlier ....

Generally, you would be better off speaking to them and offering a credible plan. Now straight answer to the question - how quickly could you clear £1000 by dropping all overpayment? By robbing Peter to pay Paul?

I think I could probably clear the £1000 within 10 months ie £100 a month. This would cause me quite a lot of difficulty but it would just about be do-able I think.

If I could borrow part of the £1000 from family/friends do you think the bank would look more favourably upon me? I won't be able to borrow the full amount but possibly up to half of it.

Trajal: Thanks for sharing your experience. I have certainly learnt my lesson about banking separately from all my debt. I am planning on opening another account tomorrow elsewhere. In your experience then, would you recommend switching everything over before speaking with the bank?

ValHaller

KT2802 wrote: »

I think I could probably clear the £1000 within 10 months ie £100 a month. This would cause me quite a lot of difficulty but it would just about be do-able I think.

If I could borrow part of the £1000 from family/friends do you think the bank would look more favourably upon me? I won't be able to borrow the full amount but possibly up to half of it.

Trajal: Thanks for sharing your experience. I have certainly learnt my lesson about banking separately from all my debt. I am planning on opening another account tomorrow elsewhere. In your experience then, would you recommend switching everything over before speaking with the bank?

I would suggest you borrow say £500 and negotiate for the reduction to apply after next pay day with £100/month reduction thereafter to £1000 - plus it being recorded as agreed overdraft rather than arrangement to pay. Get any agreement recorded in writing - write the letter yourself and keep a copy if necessary

I would suggest not transferring salary to another account before speaking to the bank. Otherwise you risk upsetting the applecart. Only do this if they will not offer you a plan you can keep to. The fact that they have not recalled the entire overdraft suggests that they wish to continue to do business with you as long as you wind in your overdraft. But if you stop your salary going into the bank, you may find the rest of the overdraft is recalled.

There are some fine judgement calls to be made here and you will be living on the edge for a while.

KT2802

ValHaller wrote: »

I would suggest you borrow say £500 and negotiate for the reduction to apply after next pay day with £100/month reduction thereafter to £1000 - plus it being recorded as agreed overdraft rather than arrangement to pay. Get any agreement recorded in writing - write the letter yourself and keep a copy if necessary

I would suggest not transferring salary to another account before speaking to the bank. Otherwise you risk upsetting the applecart. Only do this if they will not offer you a plan you can keep to. The fact that they have not recalled the entire overdraft suggests that they wish to continue to do business with you as long as you wind in your overdraft. But if you stop your salary going into the bank, you may find the rest of the overdraft is recalled.

There are some fine judgement calls to be made here and you will be living on the edge for a while.

Ok thanks. Yes I would also assume that they want to continue doing business with me because of this (they make a large amount of money from me in interest).

I find the system very frustrating in that I have been managing my debts, not amazingly I admit, to a certain degree. I understand that they want me to pay back the overdraft but I think it is a shame that banks do not write to you saying this first or offering a payment plan, as most people will be unable to pay back large amounts of money within 3 weeks.

I will be absolutely gutted if this whole thing ruins my credit rating, particularly because like I say I have been really pulling my finger out lately with paying back debt via snowballing.

worried48

I admit I hadnt' thought of the possibility of overdrafts being removed at such short notice either. In 2012 we had the bank reduce our business overdraft by 2k over the year (£166.67 a month) but they gave a full month's notice before they started to do it. This year they wanted us to put it onto a credit card instead and we agreed (largely because we misunderstood what they were proposing, I think they might have allowed us to keep reducing the overdraft instead). However my husband's personal account has had a £1200 overdraft on it for years and most of the time over the last couple of years he has been right up to it. My overdraft has gone up a couple of times and is at £1600 now, though I am not always up to it (but I am usually half to three-quarters of the way there). Thanks to a PPI claim I managed to pay off Vanquis which was nearly 60% APR, also Capital One and Barclaycard. I was hoping to pay off Aqua and Oxendales in the next couple of months but perhaps if banks are likely to call in overdrafts without warning I'd be better clearing the overdrafts first.

KT2802

worried48 wrote: »

I admit I hadnt' thought of the possibility of overdrafts being removed at such short notice either. In 2012 we had the bank reduce our business overdraft by 2k over the year (£166.67 a month) but they gave a full month's notice before they started to do it. This year they wanted us to put it onto a credit card instead and we agreed (largely because we misunderstood what they were proposing, I think they might have allowed us to keep reducing the overdraft instead). However my husband's personal account has had a £1200 overdraft on it for years and most of the time over the last couple of years he has been right up to it. My overdraft has gone up a couple of times and is at £1600 now, though I am not always up to it (but I am usually half to three-quarters of the way there). Thanks to a PPI claim I managed to pay off Vanquis which was nearly 60% APR, also Capital One and Barclaycard. I was hoping to pay off Aqua and Oxendales in the next couple of months but perhaps if banks are likely to call in overdrafts without warning I'd be better clearing the overdrafts first.

After this experience I would definitely recommend paying the overdraft back first or having any money paid into another account without an overdraft. I am hoping that my bank are reasonable and say that I can reduce the overdraft over the year without this having a negative impact on my credit rating.

Newyorkdreams

Hi KT - I just wanted to let you know that due to your post, I'm going to prioritise paying off my overdraft as a priority debt (£1500) and have started with £50 this month. I want you know your misery has not been in vain!!!

Thanks

NYD