Advice needed re: DMP & Overdraft withdrawal

Dancingthroughlife

I am in the process of setting up a DMP with Stepchange. One debt I have which cannot be included in this is a small business loan, I have missed several payments so last week the bank withdrew my
Overdraft from my personal account. Unfortunately the letter regarding this reached me several days after this happened and I was left wondering why I had two payments from jobs go in (I work freelance) and couldn't take any money out!

I now owe £344 which was my overdraft. I'm due to receive a payment of around £300 into this account on Friday which I need for bills etc. I have some cash at home as the lady I spoke to at the bank arranged for me to withdraw some cash as I wasn't aware my overdraft had been withdrawn, but I still need the money that's coming in.

I don't know whether to ring the bank to discuss transferring my overdraft debt to my DMP or speak to Stepchange first? Are the bank just going to take all my earnings straight away on Friday? Sorry if I sound a bit clueless but haven't experienced this before so don't know the best course of action. Have just been on hold to Stepchange but I have to go out now, can try again later.

Any advice appreciated.

Meatloaf1981

Have you opened a new basic bank account with another bank, one that is not affiliated to the bank you owe the overdraft on? If not, do so TODAY and inform whomever is due to make the payment on Friday that you need the banking details for the payment amended BEFORE the payment is made. Make sure the payment is made into the new account, otherwise yes, the bank you currently have can and will offset the cash coming in against the amount owed. If you have priority debts to pay or other matters the money is needed for, they will not consider this when offsetting.

Once you have the new account and the payment details amended for Fridays payment, THEN contact Stepchange and ask them to add your old bank account with overdraft to your DMP if that is what you need. No need to contact your bank to inform them of that as Stepchange will handle all contact with them.

EDIT: I should add that if the account you are currently using has any direct debits setup for it, then these should be cancelled and moved to the new bank account. That way the unauthorised overdraft won't get any larger except for fees and interest etc.

sourcrates

Most definitely get a new basic account as soon as you can, make sure your new bank is not affiliated to any of your debts, your existing account has now been compromised, and there's no guarentee they will let you have any more money.

You need to find a new bank, sorry !!!!

National_Debtline

Just to add to the advice from the others, if you can’t arrange for incoming money to be paid into a safe bank account by Friday you can use your ‘first right of appropriation’. This is where you can instruct the bank to pay specific bills before they’re allowed to take what they want to service your debt with them.

We have a sample letter to make the request here:

www.nationaldebtline.org/EW/sampleletters/sole-letters/Pages/Ask%20your%20bank%20to%20pay%20particular%20bills%20out%20of%20your%20account%20(sole%20name).aspx

James
@natdebtline

Dancingthroughlife

Thanks everyone for the advice. I managed to get my wages paid into my partner's account so I could at least access that.

I have just tried to open a new current account with HSBC and was declined, probably because it asked for other accounts so I stated my business account which has outstanding debt. How/where can I open a new account without this affecting it? I dont want to lie?

sourcrates

Dancingthroughlife wrote: »

Thanks everyone for the advice. I managed to get my wages paid into my partner's account so I could at least access that.

I have just tried to open a new current account with HSBC and was declined, probably because it asked for other accounts so I stated my business account which has outstanding debt. How/where can I open a new account without this affecting it? I dont want to lie?

It's not a current account you want, it's a basic account, with no OD facility.
These accounts are available to everyone, as there is no credit check, but they are not widely advertised, you gave to search for them, coop do a good one called "cashminder", it includes a debtcard, not a cash card.
Other banks offer similar accounts.

Dancingthroughlife

Thank you, sourcrates. I have just opened a new basic account. It says online I must close my current account in branch, do I need to speak to step change about transferring my outstanding overdraft before I do this, so the bank know it is being managed?

Thanks again.

dancingfairy

I doubt the bank will let you close your account whilst there is an overdraft. You certainly don't want to transfer the overdraft anywhere else. Just let stepchange know the balance and the details and they can add it to your payment plan.
It should be quite straightforward, I think (I'm not 100% sure as it was a business account, but assuming you are a sole trader and not a limited partnership or company or anything like that I believe it will just be treated like any other personal debt). Just have a word with Stepchange and I'm sure they'll sort it
df

sourcrates

Dancingthroughlife wrote: »

Thank you, sourcrates. I have just opened a new basic account. It says online I must close my current account in branch, do I need to speak to step change about transferring my outstanding overdraft before I do this, so the bank know it is being managed?

Thanks again.

What DF said ^^^^^^^ !!!!!