Overdraft problem

lution

Wondered if someone could give me a little advice on a situation I've found myself in.

Basically I've opened a new account using a switching service which has ended in the account with Halifax being closed with an outstanding balance of £3000. I've switched before and the original account remained open.

Anyway they have asked for the balance within 30 days or it will go over to their collections department. I cannot make the payment in 30 days. The best I could possibly do is probably 3 months.

Will they arrange a payment plan and will this put a default on my credit file? What would you suggest is the best thing to do?

Regards

jimjames

Switching several years ago didn't close the account. The new switching service does and all documentation I've seen has made that pretty clear.

Can you take out a personal loan for the money or get an equivalent overdraft on the new account?

Mr_Goodkat

Before using the switching service (that always now closes the old account) and opening a new account you really need to ensure that the new bank will offer at least the level of overdraft you have elsewhere or have an alternative way of repaying the money owed.


You really need to avoid it going to their collections department as it will be reported to Credit Reference Agencies and cause you problems in the future.


It is worth remembering that overdrafts are repayable on demand, are a very expensive way of borrowing money and only meant as a short term borrowing solution!


Do you have an overdraft on the new account you have opened if so what is the amount?


It would be worth speaking to the new bank to see if they will extend your overdraft or give you an overdraft to that level to move it across.


If your credit file is strong enough a MBNA or Virgin credit card that lets you do money transfers on a 0% rate for a period with a handling fee of typically 3-4% is a good option but ensure you repay in the period.


If your new account is not with Nationwide then you could look at a Flex Direct account as this comes with 12 months interest free overdraft although they are not guaranteed to give you an overdraft or at that level.


A personal loan would also be worth investigating if the other options will not work.


Do not wildly apply for product after product as you will appear desperate and further reduce the chance of finding a solution - use the eligibility checkers on here and elsewhere to find possible solutions and check that your credit files are all correct with no errors or potential problems e.g. defaults.


Good luck

Dandytf

Try and agree a payment plan with you previous bank.

don't except it to be less than expensive,

I switched with a 1700 o/d -my sig includes SC DMP and my old overdraft.estimated balance since 2012 659.00

Mr_Goodkat

Dandytf wrote: »

Try and agree a payment plan with you previous bank.

don't except it to be less than expensive,

I switched with a 1700 o/d -my sig includes SC DMP and my old overdraft.estimated balance since 2012 659.00

Entering a payment plan with the previous bank should only be a last resort after investigating all the other options, a number of which I have pointed out in my above post.

lution

I've spoken to Halifax collections and they say it's possible that I may be able to make a payment plan without a default appearing on my credit file. I've written to Halifax today to have this in writing as I would assume it would affect my credit file as soon as it hit the 30 days they gave me to pay.

YorkshireBoy

lution wrote: »

I've spoken to Halifax collections and they say it's possible that I may be able to make a payment plan without a default appearing on my credit file. I've written to Halifax today to have this in writing as I would assume it would affect my credit file as soon as it hit the 30 days they gave me to pay.

If you enter a payment plan it's extremely likely they'll mark your CRA files with an 'AP' (arrangement to pay) marker. Whilst this is not as bad as a formal default, it's bad enough to prevent you from obtaining mainstream credit for a very long time.

Which is why you were advised above to explore all other avenues first.

Mr_Goodkat

lution wrote: »

I've spoken to Halifax collections and they say it's possible that I may be able to make a payment plan without a default appearing on my credit file. I've written to Halifax today to have this in writing as I would assume it would affect my credit file as soon as it hit the 30 days they gave me to pay.

As per the comments by Yorkshire Boy it is very unlikely that this course of action will not result in adverse information getting reported to the credit reference agencies.


Whilst the Halifax have told you they may not pursue a formal default they are likely to report an on-going arrangement to pay until the debt is settled in full as you have failed to repay the debt in line with the terms and conditions of the agreement i.e. on demand. This will damage your prospects of credit going forward.


Please investigate all other options before coming to an arrangement with the Halifax and make sure you fully understand all financial agreements you enter into going forward.


There may be a way out of this as advised above but you need to look into these and identify the most likely chance of success.