Lloyds overdraft help please!!

MrsLake

Hi all, i'm very new to this so please excuse any silly questions or comments i make, very happy to be called up on it :j

So anyway, myself and my husband are in a situation and was hoping someone with knowlege/experience or any advice could please help.

We have a Lloyds joint bank account that we have held for approx 9 years. Both our wages go in, all bills come out. We have no other accounts, no credit cards, no store cards, no savings accounts. This is our sole account. We have a couple of small loans that have been paid without fail, no missed payments or issues for 4 years+ using this account. Our issue is that we are currently living in our overdraft, after maternity leave on my part we kind of ended up in a downward spiral and have found ourselves at £2,000 OD every month. Each pay day approx £3,000 is paid in from both of our wages, then approx £1850 goes out for direct debits, rent, council tax, water, electric, etc but obviously with being 2K over from the previous month, this then sets us at -£850 before the months worth of petrol food etc has even began and sets us off in a circle that we can not escape.

I have arranged an appointment to see a financial advisor for a week Friday but wanted to clue myself up on my options etc before i walk in there. In my head i am hoping to open another account via Lloyds and transfer all our DD and to have both of our wages paid into this new account and to have NO overdraft. I would then like to freeze the 'Overdraft' account and pay, say £100 a month into it until the overdraft balance has cleared and then close the account down. My concerns are though, that this will affect our credit rating as the account will be potentially under a Debt Management Plan if i am thinking correctly, or would it just be some form of 'agreement' as all our other finances are in check, its just this little bit we need help with. Our credit rating being damaged is something we would definitely like to avoid as we would like to buy a house in 1 year (Money for deposit is there but not available for us to use for other uses - story for another day lol)

so i guess in a nutshell my questions are -

- Will having an agreement to pay off an overdraft affect our credit rating

- Will the bank be likely to do the above and freeze our account then open another to help us pay our overdraft off

-Would the bank be likely to freeze all interest/charges on the overdraft if we freeze the account to pay it off

Sorry for the rambling, just trying to give everyone a clear picture so hopefully someone can shed some light on this. Thanks for reading

grumbler

You concerns are correct.
How much does this overdraft cost you? Do you really want both your credit histories trashed for this amount?

You don't need any new account. With £1.25K left every month after the major bills all you need is to cut your spending until you get back into black.
Post your SOA on Debt-Free Wannabe board to get help with cutting your expenses.

As you seem to have good credit histories, you can apply for a 0% credit card that offers money transfer to a current account. This will help with getting back into black faster.

Alternatively apply for a Spending 0% Card.
Use the 'saved' money to pay the overdraft off.

Don't relax and keep saving to pay the CC balance off when 0% expires.

MrsLake

Thanks for your reply, i appreciate your time :beer:

Generally if we hit the £2000 OD mark we are charged around £30 in overdraft fees. We have been in the overdraft by this amount for around 10 months now and although we have attempted to cut spending down, we still seem to be in the same boat so perhaps posting in that forum may help. Thanks.

As for the 0% cards, i have thought about a balance transfer card however again my concern was my credit rating, how will it look to have a credit card on my account when we apply for a mortgage in a years time along with 2 current loans ( That are all in check and paid up to date) Excuse my ignorance, i've never had a credit card in my life so not sure on how they work :rotfl:

grumbler

"In a years time" a CC will only improve your credit history if you manage it correctly. Just follow the link and read the MSE article. And don't ignore the DFW board. I can't believe that during 10 months you were unable to pay £2K overdraft off with £1.25K left every month after major bills.

colsten

MrsLake wrote: »

I have arranged an appointment to see a financial advisor for a week Friday

What sort of a financial advisor is that? A Lloyds person? If so, you should probably cancel this appointment. You will not get independent advice from your bank. All you will get is what they have on offer, and what they most like to sell.

Instead listen to what the folks on DFW tell you, and/or talk to Stepchange. You need independent and free-of-charge debt advice, not financial advice, or a sales spiel from a bank employee.

MrsLake

Neither can i to be honest but as above, we are not left with £1250 as our wages pay off the overdraft in full, putting us around £1000+ in our account, then when the direct debits go out we're straight back to £850 ish OD, by the time the month has passed with food, petrol, kids nursery etc, we're back to the full £2000 OD. Will Definitely read the article though and look at cutting down before we dent our credit history with a DMP

MrsLake

colsten wrote: »

What sort of a financial advisor is that? A Lloyds person?

I would imagine so, i just called and briefly explained, got an overdraft, want to reduce it etc etc and she said i should see their financial advisor to see what my options are so i booked an appointment

colsten

I believe you would do much better talking in some detail to Stepchange before you go anywhere near to "adviser" as you need to have a very clear understanding of all your realistic options before you talk to anyone in a bank.

CLAPTON

before you trash your credit files go over tot the debt free wannabe board and explain your situation
they will suggest you work out where your money goes and post up full details of your income and spending (called an SOA)


do that NOW and see what feedback you get.

MABLE

MrsLake wrote: »

colsten wrote: »

What sort of a financial advisor is that? A Lloyds person?

I would imagine so, i just called and briefly explained, got an overdraft, want to reduce it etc etc and she said i should see their financial advisor to see what my options are so i booked an appointment

No doubt they will just offer you a loan.

Thrugelmir

MABLE wrote: »

MrsLake wrote: »

No doubt they will just offer you a loan.

It's a way of exiting the situation in a controlled manner. So shouldn't be disregarded. Particularly if some other savings can be eeked out of the monthly budget. Not a huge enough sum to trash a credit record for. When a few months of austerity could enable the corner to be turned.