Debt Management: £520 bank overdraft

rajeshk4u

I am helping someone who has a £520 overdraft with Lloyds. I believe his basic overdraft is £500. He is getting charged 75pence per day. He does casual work. So his income is unstable. What ever money he gets, he spends on renting a room, food and transport.

He needs a bank account to pay his monthly phone bill.

He has n't been able to get out of paying off his £500 overdraft. Someone suggested he apply for one and he has been trapped in it for years. He is n't making any progress.

Is there any ways of getting Lloyds, to look at the amount of interest he has already paid, to clear what he owes, so he has a fresh start?

Karonher

I doubt if they would clear it but they may look at a way of stopping interest for a while to let him pay some of it off. It could affect his credit rating.

bertiewhite

He could try appealing to the bank explaining that further charges are making things worse - Natwest gave me a temporary "chargeless" month when I was in debt years ago.

Willing2Learn

@OP - Get your friend to have a read of the article linked below. According to regulations and the lending code, banks have to treat their customers fairly if there is evidence of severe hardship. In particular, your friend should consider whether they fall within one of the following categories:

• They are in financial hardship
• The charges are disproportionate
• They are stuck in a cycle of charges they can't break out of

https://www.moneysavingexpert.com/reclaim/bank-charges/?_ga=2.196817708.1253246478.1557241668-686301347.1557241668

Although the article is about reclaiming charges, it could also be interpreted as to how banks should deal with customers who are in hardship.

Edit: Just to add. Has your friend checked out their eligibility for 0% APR money transfer card?

rajeshk4u

@bertiewhite - I don't think a month reprieve will help him. He needs a freeze.

@Willing2Learn - Thx. I will look into this. I did write a note a for him about 3 years ago, to give to his bank. He read it and said it seemed he was "begging". He did not give it to his bank.

Perhaps, 3 years later, he might be open for me to write a letter for him, to help him out.

He does not have any credit cards. I am not sure if he would qualify, given his irregular income. Even, then I wonder, if this will not tempt him into more debt.

If Lloyds don't play ball, then can he walk away from this debt? What is the worst they will do?. I don't think he cares about credit rating.

WhenIam64

He should get another bank account and have his payments paid there. He should then stop using the Lloyds account and start negotiating with them about what is due - if anything.

Had a similar issue with one of my mine going £0.12 overdrawn so he should remove his cash from their control. There will be effects further down the line with credit rating but control the income first and argue with the bank second.

bertiewhite

rajeshk4u wrote: »

@bertiewhite - I don't think a month reprieve will help him.

I wasn't suggesting it would, it's what MY bank gave ME.

My point is that your friend should appeal to the bank.

sourcrates

rajeshk4u wrote: »

If Lloyds don't play ball, then can he walk away from this debt? What is the worst they will do?. I don't think he cares about credit rating.

Usually if the bank refuses to help, or the help that`s offered is insufficiant, the account holder has to take matters back into their own hands and just walk away from the account and let it default.

There will be consequencies for doing this, but right now thats the least of his worries.

A new basic account is essential, the old account will be passed to collections, then maybe a debt collector, legal action may be concidered further down the line, but at some point he will have to make plans to settle the debt, once defaulted no further interest or charges can be added.

Asking for help should be the first step though.