Drowning in Overdraft Fees

Reiko89

I opened a student account several years ago with Halifax Bank of Scotland, and in my naivety I recked up a £1000 overdraft. I've been unable to pay this off thus far, but it wasn't a major issue as there were no fees for a planned overdraft.

The problem now is that they have switched my account to a regular current account, and I am now being hit with a charge of £1 per day for my overdraft, costing me about £30 a month. I am currently back in full time education, but my bank refuses to give me back my student account as I'm not studying an HND or higher level course (studying HNC Engineering).

I am using the money I get each month from my Student Loan to pay my bills, rent, travel and tuition fees. Paying these overdraft fees too is really hurting at the moment, not to mention the trouble I'll have once my payments stop in June as I have no job set up.

My credit score is already in some pretty bad shape, I need a way to deal with these fees before I lose grip and the whole situation gets away from me, please help.

eskbanker

Best bet is to head over to the debt-free wannabe board at http://forums.moneysavingexpert.com/forumdisplay.php?f=76 for ideas as to how to reduce outgoings or otherwise manage your debt.

theheretic

Ok, this is my first post here as I will be also asking advice elsewhere about a similar issue.

The first thing I would say is don't panic. You might think you're doomed, but you're not. You have options. Then think, 'It could be worse...' because it always can be, but doesn't need to be. Then... you have to realise you have rights and there ways and means of dealing with these difficulties.
The main thing to consider is "Am I really unable to pay this back?"

By your post title, and the fact you're here, I'd say you've already answered it.
If your answer to this is no, then you have to take action. Letting it just happen makes things orders of magnitudes worse.
The first thing I'd do (and have) is get a new bank account. Try a different bank and they'll likely give you the student one too. I'd recommend Smile.co.uk or the cooperative, avoid HSBC like the plague, they'll only make things worse. Make this your main account, i.e make all your payments, direct debits etc out of this account. This way you can still move your money around freely without incurring additional charges or risk having your account frozen.

Then, at pretty much the same time, you need to let your current bank know that you can't keep the current payments up with the interest and charges you're accumulating.

Let them know your circumstances. They're required by law to treat your case, and you, sympathetically. This doesn't mean an awful lot, but it stops them generally making you feel worse or threatening you.

Specifically request that charges and interest on your account are frozen, as not to increase the amount owed. They don't need to honor this request, but it shows that you're showing initiative by doing so. (more on why this is relevant later)

Take a note of the balance of your account from the date you do this. Let's call this 'Your Balance'

Then, and most importantly, make an offer of repayment, one that you can afford. If they decline, pay it anyway, taking note of Your Balance, and the impact your repayment made of it. It is important to have a record of how much you paid and when.

This shows that you are making a effort to repay your debt, something that means the bank will be pretty much powerless to take action against you in most circumstances.

Keep them updated about your situation. Do you need to pay less, or can you pay more this month?

£1000.00 isn't a big amount in the grand scheme of things, but it is to you, and I get that, but a regular payment of £50 would have it gone in 20 months. Adjust your calculations accordingly. This will give you some peace of mind. The Citizens Advice Bureau said I could offer as little as £1.00, but I decided on £50 to speed up the process. It's tight, but the end is so much nearer.

After this, should it not work, things get a little more complex. But you have more options.

I can't possibly produce an exhaustive list of what your next options are, as that depends on how your bank reacts. But the above actions should buy you time to reassess and research more options.

Keep records of EVERYTHING. Every phone call, email, letter. Time, date, names, amounts.

DON'T LIE.

Research your rights.

DON'T CAVE IN to their every demand.

And you WILL be just fine.

I hope this helps, I know the feeling, but with far bigger numbers. The amount you owe is almost irrelevant, so just remember that.

Fly Safe.

HERETIC