Debt crisis moment

JVRMac

Don't know where to start, I have been watching this thread all year and have known this point was coming but still managed to ignore it.


OK a bit of background....so the past couple of months I have finally started facing my debts. I started following the advice I had been reading on here and trying to do a SOA I say trying as I manage my money by paying a Standing Order to another account where all my DD's and debts come out of and the rest I have to try and live off.


I have used Step Change's website and found that they recommended a DMP, I have also spoken to Step Change and they sent me a plan, however I had decided to manage myself as I naively thought that I might protect some of my credit rating that way????


So I have been sleeping a little better at night knowing I am finally managing this, or so I thought..... Last week a letter came from my bank (the one that pays the DD's) advising me my £1000 OD was ending on the 14th Oct, I rang my bank and re-applied for the OD advising that I had some credit issues which I was managing, they told me they would apply and let me know if successful or not. So on Tues I rang having not heard anything and was told I had been declined and all would be explained to me in writing.


I received a letter today saying I had been accepted for the OD?? I decided to ring the bank as wanted to complain about the unnecessary stress that they have put on me, only to be on the phone for 1hr 10mins being passed from pillow to post to eventually being told that it has been declined and that the letter they sent was to agree a temporary extension for 1 week. They agree the letter they have sent was misleading and is the same letter they would send had I been accepted for the OD and it shouldn't have been sent and that no letter has been sent to notify me that the OD was declined.


They have said that what I need to do is to open another bank account and to move my DD's over and they can arrange a payment plan to pay the OD off and I have until tomorrow to arrange that as from tomorrow the OD will be removed leaving all my DD's being returned unpaid???


I have asked them for help with this as surely this cannot be legal, but have been met with "we are not prepared to extend any further and that they have the right to remove an OD without notification"


Surely this cannot be right, especially as they call themselves an "ethical bank"


Also as part of the benefits of the bank I have a reduced rate tracker mortgage, which has never had so much as a late payment.


The bank are putting me in a position that is going to severely impact my debts. They will cause me to fall behind with my essential bills, they will potentially increase my mortgage to standard rate and because of my current credit status, I doubt that I'll be able to move the mortgage to a better rate.


I also have an old savings account with them where the child benefit gets paid directly into, will they be able to access this, as I try to save this up for Christmas although there's not much in there?


I hope this all makes sense as my head is all over the place, I really don't know what to do???

~Beanie~

Unfortunately overdrafts usually are repayable on demand so in that respect, yes, they can do it. You probably shouldn't have mentioned that you were having credit issues although I appreciate that it's done now and you can't turn back time.

I would do as they have suggested and open an account elsewhere (with an institution that you don't have any debts with) and get your DD's swapped over ASAP. I would also get the child benefit paid into a different account as the bank can take this money to pay off or reduce your overdraft. Then you can set up a payment plan and pay it off that way.

dancingfairy

I believe technically yes an overdraft is repayable on demand, however it is curteous to give some notice. It also sounds like they have completely mismanaged the situation.
You can, of course put a complain in to them and then take it to the ombudsman when you have exhausted their complaints procedure if you are not happy but that is not going to help in the short term. If they're going to withdraw your overdraft then you need to try and limit the damage (by moving money into a new account, cancelling dd's before they get declined, explaining the situation to your creditors and then setting up manual payments). Otherwise it is going to be a lot more stressful, more expensive and could leave you with a damaged credit rating.
Focus on getting out of this mess and then set about complaining, and yes about the only thing they did appear to get right was the advice about opening a new bank account
df

Happytravelling

Normally, your mortgage rate isn't linked to your credit rating. As its a tracker rate, it should be linked to Bank Base Rate. But, if you got the rate because you were one of their current account customers, it may be a condition of keeping that mortgage rate that you hold a certain current account with them.

Check this and if you need to keep a current account to keep your mortgage rate, you might have to open a separate current account with them, but presumably it wouldn't have an overdraft. If you don't need to keep your current account with them, open one elsewhere.

Keep a note of names and dates from phone calls, and who told you what (from now on if you haven't already), in case anyone tells you anything that later turns out to be wrong.

Beanie is right about the savings, so move that too.

Considering what a significant thing it is to take away a £1000 overdraft, they've handled it pretty shockingly so if it were me I'd be complaining- the financial regulator takes a dim review of banks who don't deal properly with customers in financial difficulty, so for them to be making your situation worse and be going about it so shoddily is not right! i.e. The stress of the overdraft being removed, the fact that you were told you'd be written to and weren't, then you got the wrong letter, then you had to wait an hour to sort it out only to find you'd got 1 day in which to sort it, etc. If you have to apply for a current account elsewhere, or anything goes wrong with your direct debits causing fees, etc, make a note of that too, because you'd have a strong case to say their errors and incorrect information left you with such unrealistic timescales that they caused you to be charged, hence they should compensate you.

You don't have to complain if you don't want, obviously, I just get so wound up by banks having our money and then behaving like this. Grrr!

Best of luck

JVRMac

Many thanks for the replies, I've stopped running round like a headless chicken and have started to do something. I've completed an application for a basic bank account online and been accepted, although will have to wait for everything to come through the post. I've also cancelled my DD that goes into this bank account, luckily my pay goes into a different account and will just need to contact my DD's to swap them over. Luckily the majority of the DD's have already come out for this month.


I've also decided to give the reigns over to Step Change to manage my DMP as I'm beginning to realise that I'm probably not doing a very good job.


Will get this sorted first as advised and then definitely follow up the complaint.

Happytravelling

Sorry, I didn't mean to sound as bossy as I did then :eek:

JVRMac

Happytravelling wrote: »

Normally, your mortgage rate isn't linked to your credit rating. As its a tracker rate, it should be linked to Bank Base Rate. But, if you got the rate because you were one of their current account customers, it may be a condition of keeping that mortgage rate that you hold a certain current account with them.

Check this and if you need to keep a current account to keep your mortgage rate, you might have to open a separate current account with them, but presumably it wouldn't have an overdraft. If you don't need to keep your current account with them, open one elsewhere.

Keep a note of names and dates from phone calls, and who told you what (from now on if you haven't already), in case anyone tells you anything that later turns out to be wrong.

Beanie is right about the savings, so move that too.

Considering what a significant thing it is to take away a £1000 overdraft, they've handled it pretty shockingly so if it were me I'd be complaining- the financial regulator takes a dim review of banks who don't deal properly with customers in financial difficulty, so for them to be making your situation worse and be going about it so shoddily is not right! i.e. The stress of the overdraft being removed, the fact that you were told you'd be written to and weren't, then you got the wrong letter, then you had to wait an hour to sort it out only to find you'd got 1 day in which to sort it, etc. If you have to apply for a current account elsewhere, or anything goes wrong with your direct debits causing fees, etc, make a note of that too, because you'd have a strong case to say their errors and incorrect information left you with such unrealistic timescales that they caused you to be charged, hence they should compensate you.

You don't have to complain if you don't want, obviously, I just get so wound up by banks having our money and then behaving like this. Grrr!

Best of luck

Thanks for this advice, I've got the names and the dates I rang them, they have even backdated the acceptance letter to the date the OD request was submitted? They keep telling me they have extended it for 7 days already but if it runs out tomorrow then they must have extended it on application? I demanded to escalate to a manager but just got it'll have to be a callback and within 24hrs. Hopefully they will ring me tomorrow and I will start the complaints process.

judi24

Just wanted to say hello and well done you for making a start to sort things out! Sounds like you have a good plan and all is not lost - Its hard when you can't see the wood for the trees

DawnW

Going back to Step Change will certainly reduce the stress. I doubt whether a DMP managed by them vs a self managed one makes any difference whatever to your credit rating tbh.

Good luck x

Happytravelling

When you speak to them, explain you've only effectively had a 2 day extension from the day you've received the letter, and that the wrong information given on the phone when you chased them caused you to lose 2 days of your extension by waiting. Also make the point how proactive you've had to be and what could have happened if you'd not called to complain, considering it confirmed your application had been successful.