Overdraft-anything I can do?!

MsNBC

Good morning

I hope someone can advise, and I'll try my best to keep it as brief as possible.

Background- My financial situation changed when I moved back to the South Coast from London after separating from my child's father. My child was very ill, which left me in a position where I couldn't work at that time as was constant weekly hospital appointment/stays. So I was claiming benefits. Naturally, money was very tight, and I arranged a planned overdraft to cover a food shop etc etc. Things escalated to a total of £1,760...(all from £50 originally)! Much my fault, but was necessary as for example, to place my child in a nursery I had to pay a deposit of £365..not something I could afford without taking a hit.

Anyway, I digress.
I do not understand how or why Lloyds Bank allowed my overdraft to get to that amount. Firstly at the time, I had a very, very poor credit rating due to ID fraud (has now been deleted from my credit report, so that's fine). I couldn't even when I had a job get a phone contract, so unsure how I was even granted one, and even more so because on paper I was a single person/parent on benefits? Secondly, why my overdraft limit exceeded my income by quite some way?

It eventually became a vicious cycle, my overdraft would be maxed out (as never had more than £1,760 in my account at one time). I would be charged an overdraft usage fee each month as well as interest leaving me unable to pay some bills, taking me over my planned overdraft, therefore being hit with more charges. The cycle went on. I even had to cancel my standing order for rent and pay as and when I had it, as often had return charges too.

Things are a bit better now. I work for the NHS and currently setting up my own business. But I still have this sodding overdraft.

I know there's an article on here about claiming back bank charges, but as this was technically an arranged overdraft most of the time, I don't think I can do anything.

So thought I would ask the knowledgeable people of this forum to ask if I stand anywhere with this, based on my two main points of credit score and the overdraft limit being a lot higher than my incoming at the time? Makes me very cross that they didn't have my best interest here, but rather that they saw a person they could make a lot of money from. But that's banks for you, eh!?

[Deleted User]

If you haven't already done so, change to a completely different bank from Lloyds. Most banks offer a basic bank account, in that way you can deal with the overdraft with Lloyds without worrying about them taking your money in ridiculous charges. I would write to Lloyds and offer something you can realistically afford, and ask them to freeze charges. If they don't, I wouldn't bust a gut trying to clear it, you deserve some quality of life.

MsNBC

I have thought of doing that, but if I do so won't my interest charges be more as would have little/no money going through it?

MsNBC

Sorry, must add I've asked them to freeze charges before to allow me to repay it, but they won't do it.

ldhme

MsNBC wrote: »

Sorry, must add I've asked them to freeze charges before to allow me to repay it, but they won't do it.

Well why would they? They can take what they want when they want.

Switch banks and play hardball, give them what you can afford and inform them why with proof.
Worst case scenario is it'll get defaulted and passed on to a debt collection agency you can set up a repayment plan with (if Lloyds don't do this themselves).

Having a positive balance in my current account is the best feeling ever, despite how much of a mess I left my last current account in.

Tixy

You don't have any case in relation to the size of the overdraft they gave you, or how you chose to use it.

You have a few choices

1) continue as you are and hope to start making a dent in the overdraft and pay it off over time.

2) switch to a new bank account with a different bank and use that for your day to day banking (I would suggest not getting an overdraft). Then write to lloyds offering a monthly repayment you can afford and ask them to consider freezing interest & charges.

3) see if you can borrow from somewhere else at a cheaper rate and use that to pay off the overdraft (making sure you can afford the repayments on the new borrowing).

If you suffered from a lot of overlimit fees then it may be worth a stab at writing for a reclaim of the charges claiming you were in financial hardship at the time. It may come to nothing but it is probably worth trying, providing you are no longer reliant on the overdraft (so only after doing 2 or 3 above).

Don't put in the claim letter about you think they should not have given you an overdraft at all or not a limit of more than your salary or that you think they were just trying to make money from you - it is not relevant and will cloud the main issue of your claim.

Just keep it to the point that you were in financial hardship as evidenced by having items bounce regularly and being unable to get out of the cycle of fees taking you over your overdraft limit.

http://www.moneysavingexpert.com/reclaim/bank-charges

For more advice on reclaiming bank charges due to financial hardship have a look at the reclaiming charges section fo the forum.