Overdraft Question

NowInspired · 21 May 2018 at 1:33PM

Hi
I'm hoping someone can advise me about whether a bank would offset against money left in their own overdraft if your actually in the red.

The situation is we have set up a new bank account with the Nationwide as we are currently with Lloyds and our debts are mainly with them. Hubby's pay has gone to the new account but mine, despite the finance department being informed of the new details, has gone in to Lloyds! I moved it out straightaway. In the meantime I have spoken to SC but not instructed them as yet. I was waiting to make sure my money hit the right account before I proceeded further.. which it hasn't..

We have a joint account with Lloyds, each of us has a credit card, hubby has a loan and we are deep in the overdraft, we don't come out of it anymore. There is just a small amount left in there.

I would like to start off the dmp process this month i.e. sending the initial letters to Lloyds asking for them to freeze interest etc just for the cards (but at this stage not include the overdraft and loan) and then if my pay goes into Lloyds again next month, but we are still in the overdraft, could any of that money be taken from the overdraft to be offset against the cards? I'm hoping if I've not talked to them about the overdraft they wouldn't be alerted to there being a problem with that at this stage.

I'm sure I read somewhere that they wouldn't take money from an overdraft to offset against one of their other accounts because it's pointless if you're actually in the red.

I'm not sure as yet whether I'm going with SC or going self managed but I need a few month's grace anyway. I've managed to juggle up to now but there's nothing left to juggle with. I don't think I can cancel the direct debit for the loan but there will be enough in the overdraft for that to come out of that this next month. So really at this stage it's just the cards I need to be communicating about.

Can anyone advise about this please? do I need to worry about an offset being taken from money that has been paid into the overdraft, when we are still overdrawn?

I hope this makes sense.

Thanks,
Now Inspired

enthusiasticsaver · 21 May 2018 at 1:53PM

I don't think they would take it from your joint account if overdrawn but if you were in credit they might. That is why stepchange advise opening new bank account with a bank not connected with your debts so I would double check with your employer that in future your pay will go straight into nationwide.

sourcrates · 21 May 2018 at 1:57PM

Hi,

The right of set off, as it is called, can only be used where there is another account in the debtors name, held with the same institution or member of the same institution, where there is a credit balance.

They cannot take anything from an overdraught currently in the red, as it is their money, not yours.

Also there are certain rules the bank must follow before using this right, although a lot of the terms and conditions are a bit of a gray area to be honest.

NowInspired · 21 May 2018 at 2:12PM

Thank you so much for your replies, very, very much appreciated. At least if my work mess up next month, I know my pay will not bring us out of the overdraft, so it wont be offset.

National_Debtline · 21 May 2018 at 4:30PM

Hi NowInspired

Have you confirmed with your employer that they now have the correct bank details and will send your wages to the correct account next month?

I can understand why you are concerned that they may make a mistake again, but it is important to deal with all of your unsecured credit debts in the same way, whether that is self managed or in a DMP. On that basis I would advise you to send letters to the loan and overdraft as well.

There's no point continuing to pay the loan if your debts are not affordable and there is a chance the bank will call in the overdraft once they become aware of your financial difficulties. It's much better to deal with them altogether. Good luck with it all.

Susie
@natdebtline

NowInspired · 21 May 2018 at 6:12PM

Hi Susie,

Yes I'll be speaking with work tomorrow.

Everything will go on the DMP but from what I gather from SC I can't stop the direct debit for the loan and it's due out in about ten days. So that will go out anyway from what l've got left in the overdraft. So whether I tell them or not, it makes no odds, it seems they will most likely take it anyway,

I've just spent the last couple of weeks worrying about whether my wages would go to the wrong account, as I've never had to tell work to change banks before. I was stunned when they hadn't done it right and now I've still got the same concern, so at the moment I don't want to put the spotlight on to the overdraft, until I know my wages are safe. That has to be my priority over everything else. Then I can make sure everything goes into the dmp. I wont be starting it for a few months anyway, so it's just a matter of timing and knowing my wages are safe.

I realise they could still pull the overdraft when we tell them about the cards, but at least for now I'd rather wait to inform them about the overdraft until after pay day

NowInspired

Fireflyaway · 21 May 2018 at 8:00PM

One thing I do know is lloyds will take money from other lloyds accounts with money in, to pay overdrawn accounts. They have done this to me twice now. They took from my savings account and put it in my overdrawn current account. I'd not say anything until you get your pay paid into a non lloyds account just in case. I'm guessing like me the daily interest fees are messing things up?! I'm going to leave lloyds so on as I've paid them back.

NowInspired · 22 May 2018 at 9:25AM

Yes the overdraft daily fees are totally messing me up. I too will leave them as soon as I can although I know that may be a long way off.

Overdraft Question

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