Almost £14,000 in debt and unsure what to do

RAS

@Nalf03

You've not listed the overdraft as a debt in your SOA. Which bank is it with and how much?

You need a new basic bank account, into which your salary goes.

You then cancel all the DDs and SOs that come out of it. Sounds like the bank are going to play silly burgers re the OD? We need a bit more info to advise on that.

And if you are teaching, please find a way to be kind to yourself. I know how stressful it can be.

Nalf03

I didn't list it because I am not currently in my overdraft, I have some other cards too that I don't have any debt on, do I need to list them too? (Not trying to sound rude, that's a genuine question).

I just thought the advice was not to cancel direct but let them try and fail to take the money out of my account, but if they did that, then I would end up going into my overdraft and I can't currently remove the overdraft.

Grumpelstiltskin

The only way to move forward is to stop paying all your unsecured debts and let them default.

You need to open a basic current account ( no overdraft ) with a banking group you don't owe money to, do not use the banking switch service to transfer payments you will still be paying as it can cause problems but transfer them manually.

Cancel all unused credit cards, you are not going to use credit any more, this is why we tell you to work out a live able budget and save an emergency fund.

As I have said to you previously are your sure you understand debt? You will need to accept a different lifestyle but you will be in charge not your creditors.

RAS

So, you are not utilising the overdraft at present.

But is it associated with any of the banks to whom you owe money, say for a credit card? If so, which?

There may also be a way to utilise your "open" cards if their rates are lower. It requires a lot amount of discipline, so maybe when you feel less stressed?

Nalf03

https://forums.moneysavingexpert.com/discussion/comment/82167096#Comment_82167096

This is the bit I'm confused about. Why do I need to move to a different bank?

I thought it was to keep my direct debits open for my unsecured debts and let them run out, which is why im concerned about the overdraft.

If I can just cancel the direct debit, and I dont have any debt with my current account bank, can I not just keep the same current account without moving things about?

Nalf03

Is the advice to move my account so that when the unsecured debts try to take the money out, they fail because all my money has been moved? That's where I'm concerned about the overdraft, I'm not in it at the moment, but if they try to take money out even if I'm not paying anything in they won't fail, it'll go into my overdraft.

Otherwise why can't I just keep my current account and cancel the direct debits?

RAS

What happens is that your creditors just re-instate the DDs, and you spend months with money being taken, perhaps reimbursed, DDs cancelled again, rinse and repeat. Very stressful.

That is also why we tell people not to use the switch system. You might get £200 for switching but you'll spends a few months trying to retrieve money taken for DDs that you thought you'd cancelled. Happened twice to people who posted here, recently. One at least for two months before they stopped posting.

You need to transfer the essential DDs "manually", aka give your suppliers your new account code.

You may think I'm a nosy *** but how much £xk do you have in open cards, not currently used?

Because that may well be adversely affecting your scope to get better deals. Creditors will often assume you'll use what you've got open as well as what you are trying to apply for.

Nalf03

https://forums.moneysavingexpert.com/discussion/comment/82167604#Comment_82167604

Okay, that brings me back to the overdraft problem then, because even if I move all of my other bills and salary to a different account, they'll just keep reinstating DDs that'd put me into my overdraft? Then I'd end up with that debt that I wouldnt be able to pay off because that'd mean they could take the DDs again if I'm understanding correctly.

Im not sure how much, maybe about £2000.

sourcrates

Its best practice to move all your banking to a "safe" bank account, with a bank with whom you have no debt.

Banks have the right of "set off", so if you owe money to your bank on a credit card that you`re not paying, they can quite legally, subject to certain controls, take that money from any other bank account held in your name within that banking group.

If you have no debt with your current bank, no loans/credit cards/overdrafts you currently use, then you do not need to move banks, its just a failsafe move for those who do.

Debt management requires there to be certain steps to take to obtain the best outcome for yourself, long term.

Legal action for non payment of debt cannot be taken until an account defaults, the agreement must be officially broken before this can happen, now many thousands of people have unaffordable debts, they can`t take everyone to court, the system would grind to a halt, this is why we have debt collectors.

Usually once defaulted a debt will be either sold or assigned to a debt collector, if you`re really unlucky one lender may choose to make a random example of you and get legal, but normally that is a last resort, rather than a first response.

Once defaulted all interest stops, and there will be a clear 6 year window till your credit file recovers, regardless of what you then choose to do, you start payments to whoever writes to you and all should run smoothly from then on, its just the initial wait for defaults that can be tedious for some folk.

You don`t have to wait for defaults of course, you can start in debt management tomorrow if you wish, but, it might be hard to convince a creditor you are actually in financial trouble, if you have a good payment history, usually there is a record of late, then missed payments, showing that you are indeed in money trouble, rushing into things is not really the best way forward, and you really do need to save an emergency fund, even if its just a few weeks worth of payments.

The advice you have been given to date is pretty much standard advice, ask those who have been through it, or are currently going through it, they will tell you how easy things were, and how all their fears never materialised, many people tend to overthink the consequences, the ball is very much in your court here, at least two of the posters who commented on your thread are debt advisors, so we do know what we are talking about.

Think it over, ask as many questions as you like, good luck.

QrizB

Okay, that brings me back to the overdraft problem then, because even if I move all of my other bills and salary to a different account, they'll just keep reinstating DDs that'd put me into my overdraft?

You could close the account?

But I'm still not clear why your bank won't remove the overdraft facility.