Overdraft £1800 help please...

foolsgold01

Good afternoon....My husband and I have spent what feels like all day and all weekend talking about money and budgets and costs etc etc with phoning and of course using this website to help us battle the debt demon!!

With support and help from places like this forum we have decided to try and go at this debt problem of appox £37k alone. This has gone down from £48k from me with my fine tooth comb out!!


The thing I would like to ask is regarding overdrafts....my husband and I have opened up to a basic cash card account but we are just waiting for the paperwork to sign and so it can be opened. I am very worried though about his current overdraft which sits at about £1800 overdrawn every month.


When we put our wages into this new account (to protect our assets) what happens with this? Obviously it will need to be a part of the plan to pay this off but I am worried if the bank can withdraw this at any time and demand this money?


This leads me onto my golden nugget of approx £1800 I have in savings. I know I have been previously advised to pay off two of the credit cards with this as they have the highest interest. However, it worries me about the overdraft especially when no money is then going to be going in to this account. Coupled with this costing my husband as it stands £17 + £5 + £6 for fees and interest on the overdraft!!


Thank you for your help x

FireWyrm

Lets take this one step at a time.

foolsgold01 wrote: »

With support and help from places like this forum we have decided to try and go at this debt problem of appox £37k alone. This has gone down from £48k from me with my fine tooth comb out!!

Woah...where did the other £9K disappear to?

foolsgold01 wrote: »

The thing I would like to ask is regarding overdrafts....my husband and I have opened up to a basic cash card account but we are just waiting for the paperwork to sign and so it can be opened. I am very worried though about his current overdraft which sits at about £1800 overdrawn every month.

This is with an entirely unrelated bank? They must not be in the same banking group or you could fall foul of something called 'offset' which means that the bank is allowed to appropriate funds in one account to cover debts in another.

foolsgold01 wrote: »

When we put our wages into this new account (to protect our assets) what happens with this?

As long as the new bank is entirely unrelated to the old one, nothing. Your funds stay exactly where you put them. The OD becomes a 'debt' which you need to address like any other.

foolsgold01 wrote: »

Obviously it will need to be a part of the plan to pay this off but I am worried if the bank can withdraw this at any time and demand this money?

It is always a risk with ODs. They are transient lending subject to arbitrary withdrawal at a moment's notice.

foolsgold01 wrote: »

This leads me onto my golden nugget of approx £1800 I have in savings. I know I have been previously advised to pay off two of the credit cards with this as they have the highest interest. However, it worries me about the overdraft especially when no money is then going to be going in to this account. Coupled with this costing my husband as it stands £17 + £5 + £6 for fees and interest on the overdraft!!

Right, so the OD is costing you £28 a month (£336 a year) just sitting there...and how much interest are you getting off the £1800 in the savings account? Next to zero I bet.
How much interest would £1800 to another credit card save you in interest on that?

I bet it is a no-brainer. Get rid of the OD free and clear and build the plan around snowballing the other debts. Ensure you dont go back into OD (ever) or use a CC (ever) and you'll be able to work your way out, plenty do.

seanavfc92

FireWyrm wrote: »

This is with an entirely unrelated bank? They must not be in the same banking group or you could fall foul of something called 'offset' which means that the bank is allowed to appropriate funds in one account to cover debts in another.

Banking groups are irrelevant when it comes to the Right of Offset. Using Lloyds Banking Group as an example, Halifax can't offset a Lloyds account, or any other within that group. Because they're under different trading names, it is classed as unfair practise to dip into accounts not under the same high street bank name.

It would only apply to the banks now owned by Santander. If you had a debt with Abbey (for instance) and you were banking with Santander, they COULD use the right of offset.

CoffeeBean_2

Maybe you could bite the bullet and pay off the OD with your savings? That way you wont have the additional worry and stress of worrying about the OD.
Then you can concentrate on the other debt but make sure you start a small emergency fund for anything unexpected.
Stress is not good for the body and mind (speaking from far too much experience) and you clearly are worrying about it.
ultimately that OD needs paying off and I bet you feel better once you make that payment.
Good luck with whatever you decide:)

double_mummy

seanavfc92 wrote: »

Banking groups are irrelevant when it comes to the Right of Offset. Using Lloyds Banking Group as an example, Halifax can't offset a Lloyds account, or any other within that group. Because they're under different trading names, it is classed as unfair practise to dip into accounts not under the same high street bank name.

THIS IS INCORRECT

if you wish to use lloyds as an example then money in a halifax account can be used to off set against a sainsburys finance product or bank of scotland or intelligent finance or lloyds tsb

moohound

I had an overdraft on my DMP and is was a major pain in the rear-end, given the choice of which debt to bin off at the start I would have picked that one.

foolsgold01

CoffeeBean wrote: »

Maybe you could bite the bullet and pay off the OD with your savings? That way you wont have the additional worry and stress of worrying about the OD.
Then you can concentrate on the other debt but make sure you start a small emergency fund for anything unexpected.
Stress is not good for the body and mind (speaking from far too much experience) and you clearly are worrying about it.
ultimately that OD needs paying off and I bet you feel better once you make that payment.
Good luck with whatever you decide:)

Thank you CoffeeBean you are right I am worried and have been worried overall about the situation of my husbands recent disclosure of his debts!


The OD is his as we have separate accounts and the savings are through my job and were for our children - was a 10 year plan of which I am currently in year 4. I have to make the right decision for us as otherwise we are going down the swanny river together so want to try and make it work!!


The catch is my car is an asset too and if I sold it now I would hopefully get the amount back to pay off my debt of £10.5k (£235 a month) but then I would need to use this £1800 to put down for an old banger! However I need something reliable as we live in a rural location and have to have a car for work.


I have also spoken with my dad this evening as he also paid into the savings to contribute. am relieved that he wants what's right for me/us and said its got to go (the car and the savings). He was not however impressed with my husbands debt problem but that's another conversation!


The whole thing makes me feel sick to be honest and I feel the walls are caving in....I have only felt like this for a week - my poor husband has felt like this (apparently) for about 3 years :eek:

foolsgold01

Thank you FireWyrm for your reply earlier today. I have replied in blue and being new to the forum and how I all works hope this does

FireWyrm wrote: »

Lets take this one step at a time.



Woah...where did the other £9K disappear to? Bad adding up! My husband didn't know how much he was in debt (I know I know) but I have managed to get to the bottom of this. He was originally counting the overall amount but not what he has left to pay as he didn't know (from £25k to £19k). My debt also the same in that I wasn't allowing how much I have left to pay (£12k loan which I now owe £10.5k on). The other was credit cards and their outstanding amounts. 1 of which I paid off for him!



This is with an entirely unrelated bank? They must not be in the same banking group or you could fall foul of something called 'offset' which means that the bank is allowed to appropriate funds in one account to cover debts in another. We have opened up an entirely new bank account not linked to any that we have (everything is currently separate).



As long as the new bank is entirely unrelated to the old one, nothing. Your funds stay exactly where you put them. The OD becomes a 'debt' which you need to address like any other. Ah ok...




It is always a risk with ODs. They are transient lending subject to arbitrary withdrawal at a moment's notice. This is what worries me lots!!



Right, so the OD is costing you £28 a month (£336 a year) just sitting there...and how much interest are you getting off the £1800 in the savings account? Next to zero I bet.
How much interest would £1800 to another credit card save you in interest on that? I put this in my reply to coffeebean in that I don't want to make the wrong decision with this money as what I do with it is pretty critical in my opinion. This is one option OR I sell my car, pay off my loan (£235 per month) and use the £1800 to fund me an old banger as I have to have a car re work and living in a rural area plus being mums taxi at times too!

I bet it is a no-brainer. Get rid of the OD free and clear and build the plan around snowballing the other debts. Ensure you dont go back into OD (ever) or use a CC (ever) and you'll be able to work your way out, plenty do. Totally totally agree with you. My husband though I do feel has put us into this situation by not saying earlier about his massive debts and I am trying to gain some control now before we are really pooped! I don't know though if its possible.

Thank you for your help with your suggestions it really does help with what to do... x

foolsgold01

double_mummy wrote: »

THIS IS INCORRECT

if you wish to use lloyds as an example then money in a halifax account can be used to off set against a sainsburys finance product or bank of scotland or intelligent finance or lloyds tsb

Can this happen even though we are married and living together but the accounts are in our sole names (not joint accounts)? Good example above as I have a Halifax account (although this isn't where my wages go) but my husband has Lloyds. Can the banks demand/take money from my Halifax (not that theres much in there) to service his Lloyds OD?

Thank you x

Thrugelmir

foolsgold01 wrote: »

The thing I would like to ask is regarding overdrafts....my husband and I have opened up to a basic cash card account but we are just waiting for the paperwork to sign and so it can be opened. I am very worried though about his current overdraft which sits at about £1800 overdrawn every month.

The bank will detect the lack of activity on the account ( i.e. regular credits). So will be highlighted for review. Overdrafts are repayable on demand. So the bank could escalate matters very quickly.

If you don't repay the OD. You would be better off running the account as your main one. As then you would only be charged interest on the actual OD balance. Not be left with a high balance continually that incurs maximum interest charges.

double_mummy

foolsgold01 wrote: »

Can this happen even though we are married and living together but the accounts are in our sole names (not joint accounts)? Good example above as I have a Halifax account (although this isn't where my wages go) but my husband has Lloyds. Can the banks demand/take money from my Halifax (not that theres much in there) to service his Lloyds OD?

Thank you x

depends on the terms and conditions but not many of them are stupid enough to try it as quite a lot of the time it gets overturned by the FOS