Overdraft after account due to close

Ed-1

Does anyone know what would happen if a current account together with overdraft limit is due to be closed (e.g. as a result of a switch or if the bank has advised that they are to close the account) and on the date it is due to close there is still an overdrawn balance so the account can't close but the overdraft limit remains in place and the overdrawn balance remains following this date - are there any repercussions in terms of credit report status codes etc. for not settling an overdraft swiftly in these circumstances?

Thrugelmir

The lender could close the account and pursue the debt through other avenues.

Ed-1

Thrugelmir wrote: »

The lender could close the account and pursue the debt through other avenues.

Yes but would this adversely affect a credit report? e.g. is there any industry standard status code to register on a current account that is operating within an agreed overdraft but is not being repaid?

anna42hmr

Ed-1 wrote: »

Yes but would this adversely affect a credit report? e.g. is there any industry standard status code to register on a current account that is operating within an agreed overdraft but is not being repaid?

But the account would not be within an agreed overdraft as to have an overdraft an account has to be attached to it. Overdrafts are repayable on demand and the bank will need to see you clearing it. if no payments are being made into the account you may find they withdraw the agreed limit and you will therefore have an unauthorised overdraft.

The bank can then pursue the funds via other methods as advised by the previous poster (such as internal collections, passing to debt collectors etc, and could leave negative markers on the credit report).

Prior to the account closing (or if it already has done) i would suggest that you clear the debt off as soon as possible, either by making the payment yourself or seeing if the new bank can cover it during the switch process and provide an overdraft of the same amount to pay back the previous one.

matttye

Ed-1 wrote: »

Yes but would this adversely affect a credit report? e.g. is there any industry standard status code to register on a current account that is operating within an agreed overdraft but is not being repaid?

Yes it would show as up to date.

There's no requirement to pay an overdrawn balance each month unless you've agreed that with the lender - in which case it would show as an arrangement to pay.

academiet

I know someone who overdrew their account, couldn't repay it and of course, they shut it down. Collection agency's called, still couldn't pay. Sooooo, they have a bank that gives what they call "second chance checking accounts". You can open an account w/them, they watch it pretty closely at first, but if you keep it going, w/out overdrawing, you'll reestablish your banking reputation. That person never repaid the bank for the overdrafts, couldn't, money was too short. With the situation today, do what's best for you, you can't go on the old rules anymore. No one else was playing by them, anyway. Take care of you.

PaulW922

As long as you pay the balance back promptly I am sure that will be fine. It must happen quite often. In fact do they not ask this during the transfer process?