Overdraft & Self Managed DMP

gorskiii

I’m already on a self managed DMP and have been since last November. It’s all going well bar a few bumps in the road. One thing I have never tackled is my overdraft. Hence the post.

Can you ask a bank to freeze the interest charges on your overdraft and then agree to pay £x per month to gradually reduce it?  Would they then freeze the account and put it into collections?

Bank in question is NatWest and the overdraft is 5K. I’m currently at the limit and paying approx £150 interest per month and I’m struggling to pay it off as just about covering the interest.

I’ve worked out I could (if interest is frozen) afford £100 per month. Think it’d be cleared in a reasonable time as that’d be 4 years.

RAS

Are you still banking with Nat West? Do you have any other debts with any bank in the same group?

gorskiii

RAS said:

Are you still banking with Nat West? Do you have any other debts with any bank in the same group?

I don’t currently bank with them. Advice I got before going on to my self managed DMP was to set up a new bank account. Which I did. Also moved over all direct debits to that account and my wage is paid into it. I had a loan with them and came to an arrangement to pay it back after it defaulted. No other loans or overdrafts with them.

ManyWays

How many days of the month are you in this overdraft?

gorskiii

ManyWays said:

How many days of the month are you in this overdraft?

Around 90 days.

13thlegion

So as I understand it from your posts.

• You have an overdraft with Natwest
• This debt you have not included in your DMP
• You currently do not use this bank account
• You are making payments towards it each month

You definitely can treat overdrafts like your other debts. Stop paying it, wait for it to default, then start making payments. 

Did you wait for defaults on your other unsecured debts before starting to pay them?

ManyWays

Around 90 days
Is that a joke or a typo? 

sourcrates

Stop paying the overdraft and allow it to default, write to the bank and ask them to stop charging interest and let them know your intention is to default, be pro-active here.

exponential

sourcrates said:

Stop paying the overdraft and allow it to default, write to the bank and ask them to stop charging interest and let them know your intention is to default, be pro-active here.

Interesting. Should I be doing that too?? My overdraft is £3.5k and is now over the overdraft limit.

RAS

Yes, but please do make sure that you are actively banking with someone to whom you owe nothing before you stop paying the OD. 

sourcrates

exponential said:

sourcrates said:

Stop paying the overdraft and allow it to default, write to the bank and ask them to stop charging interest and let them know your intention is to default, be pro-active here.

Interesting. Should I be doing that too?? My overdraft is £3.5k and is now over the overdraft limit.

Yes, banks can take forever to default and close accounts, let them know what you are planning, and they may hasten the process, you must move your banking to a safe account elsewhere.