Seeking advice for my disastrous debt

DebtFreeWannabe27

Does anyone know whether a lender can take money from a current account with another provider that sits under their broader company umbrella? For example, if I had a debt with HSBC, could they take money from a First Direct current account. @sourcrates

Grumpelstiltskin

Technically yes if the 2 entities belong to the same group. That is why we always advise you move your current account to a bank that is not associated with any of your creditors.

sourcrates

DebtFreeWannabe27 said:

Does anyone know whether a lender can take money from a current account with another provider that sits under their broader company umbrella? For example, if I had a debt with HSBC, could they take money from a First Direct current account. @sourcrates

It`s called the "right of set off"  and whilst its theoretically possible, debts cannot be called in (A) before they default, and (B) If it happens, it would be much, much later in the collection process.

But its always best to avoid the possibility in the first place.

And remember, the calls are all automated, its the auto dialler calling you, not a person.

DebtFreeWannabe27

It's been over a week since I last posted, and i've some updates to share. Things I've done since my last post:

1. Explained the full situation to my OH. This is was one of the hardest things I've had to do but all in all, he's been supportive. It wasn't the absolute catastrophe I played out in my head a million times. I've so much to do to prove that I'm tackling the situation and taking responsibility though, so I'm mindful to keep going with small actions that count towards this (including posting on here).
2. Opened a separate bank account.
3. Created a SOA for my own spending and saving.

Actions for the coming week:

1. Set up a regular savings account with high interest.
2. Contact payroll to have my salary paid into my new bank account.

RAS

Well done on telling OH and glad he's supportive. You couldn't go on without him knowing why you are less keen on expensive spends. Much better that he knows the true reason rather than also playing out all sorts of scenarios in his head.

You might want to schedule a session each month with OH to share your finances? To make you accountable. You might also want to discuss how you can alert him if you feel the urge and what you'd like him to do then to help you?

DebtFreeWannabe27

Almost a month on since my last post. Life feels so much more positive on a daily basis. But! I received 6 letters yesterday all about missed payments, and although I know they'll come, it still feels like a lunch when they do. And all those feelings of shame and guilt come flooding back. 

On a positive note, I'm now at £500 in my emergency fund and I'm happy that I'm sticking to the budget I've created. 

enthusiasticsaver

Well done and you sound positive. 

RAS

That's really great. 

Getting a sustainable budget is a huge issue in ensuring you can deal with your debt long term. You'll need an annual cycle to be sure you've captured the occasional demands but your got a solid foundation.

And the fact that you've started well on your emergency fund will turn the occasional crisis manageable. 

The letters are a bit of bummer, but you'll eventually get the default ones you need to move forward.

DebtFreeWannabe27

I've just received a text from a borrow to say my loan has been defaulted and I should set up a payment plan. Only missed payments are coming through on my credit report at the moment. Is this another ignore and carry on moment? I probably want the loan debt to be sold on before I consider making token payments. Always appreciate your advice @sourcrates

RAS

Defaults have to be notified by letter, by law. Have you checked the recent mail?