Overdrafts

[roosi]

Asking for a friend - if somone has a bank overdraft that's always in the red although your plans are to pay it back once some free'd up cash becomes available, are the bank quite within their rights to reposess, and send bailiffs out for this amount?

It is sitting at around 2500 on 2 accounts and is always absorbed into wages each month, therefore they can't afford to pay it back in a lump sum although as I said, they want to pay it back eventually, just cannot afford to just now. Tey have no other outstanding debts apart from this.

Sensible answers only please. And no scare mongering, as my friend is extremely nervous and quite depressed about this.

Thanks
R
x

[roosi]

Also, mortgage payments with the same bank have never ever been missed same with utility bills etc, everything else is up to date and in the clear.

[roosi]

And, also, would the bank warn them first to pay it back or would the chasing be spontaneous without any warning?
There are charges on the accounts too which makes paying them back even harder - sorry forgot to mention this.

[redcrx]

I think that a bank would give notice that they want the overdraft closed.

has your friend thought of approaching the bank first and perhaps clearing the overdraft with a loan or something, that way they are paying it off and not just paying interest on it.

[Ethel]

Is the overdraft limit exceeded? If so, by how much?

Would it be possible for him/her to get a cheaper loan and pay the overdrafts back that way?

By repossess, do you mean seize assets, or repossess the house?

Are there any CCJs?

[roosi]

Maybe doc, but I didn't want it to be ignored, my friend needs some advice asap.......

[luxury]

Hi Roosi,
Can your friend get a loan? that way the money will be paid back and probably at a cheaper rate than the overdreaft fees and % rates the bank is charging for the overdraft.

We have an overdraft and it's 2 grand, but we pay 16 % for that and a loan would be 15%. We don't pay fees for the overdraft because it's an offfset mortgage and that's just how our bank works it seems.

Has your friend had warning letters from the bank?

[roosi]

Is has been exceeded by charges a couple of times, and they just bung more money in each month to TRY and cover these charges, they already reconsolidated some loans into one mothly payment a few times, and don't want to again as they did so not that long ago, then ran up the O/D again. Kept going online and increasing it by a hundres etc etc until it;s back up there again. Vicious circle, but they make it so easy to increase these bloody things, I feel for her I really do. CCJ's not to sure whqat that is - if it's threats of reposession etc, then no.

Everything else gets paid ticketyboo, just the O/D doesn't, but will - they are trying to buy time I guess...

[roosi]

No warning letters been sent that's why they asked, will the bank give notice if they'd had enough of it not being paid, then issue a deadline? Or would they just receive a red letter one day without warning?

They reckon they will get a bonus at Xmas, and plan on paying most of it back at the end of the year. This should bring it down considerably.

Other than that - it is just hanging over her head, and she wants it to go away without having to tie ehrself to YET another loan over a longer period when the loan she is currrently paying finishes in 2010. Fresh new start for her..

[annie0000]

Is this an agreed overdraft? Is it a standard overdraft that comes with the account? Overdrafts can be arranged on different basis and that is what makes the difference in how the bank handle it. Unless the overdraft was set up for a fixed period, or on a gruadually reducing basis, then I wouldn't think that there is likely to be a problem. tbh as long as here salary is being paid in, the bank are making interest on the overdraft and that is what they like - they make not a lot of money on an account if it is kept in credit by not very much. If you have any more details about the overdraft, let me know and I will see if that changes things. Also have the bank said anything about it to your friend?

[luxury]

CCJ = Count Court Judgement.

http://www.direct.gov.uk/en/MoneyTaxAndBenefit s/ManagingDebt/CourtClaimsAndBankruptcy/index. htm?cids=Google_PPC&cre=Money

[annie0000]

Sorry, you posted a lot more details while I was typing - I should think that there woudl be a problem. If she wants to be motivated into clearing it, she could ask the bank to support her by reducing the allowed overdraft gradually in order to ensure that she chips away at it. The danger being that she will obviously be liable to higher charges if she exceeds the reduced amount.

[roosi]

They have called her a couple of times out of "courtesy" and to revire her accounts, but never mentioned it outright. Also, the overdrafts were agreed as in it was applied for in the beginning as �100 then she went online and continually increased it till it is at 2500 approx, the bank have "agreed" it I guess with each letter that she has received through the post saying it has been added to her account and is now ready for use.

She is just really scared about her house and income, and everything else that as I say has been paid wtih no problems. No CCJ's have been issued either so this is not an issue.

Thanks luxury.

[annie0000]

As long as you keep the lines of communication open with the bank, then there are no surprises - we tend to get more frightened by what we dont know rather than what we do.

[annie0000]

It is really more about her managing her finances than anything else. As I said, Banks make money by people being in debt. However, they also want to know that eventually they will get their money back. If I was your friend, i would ask the Bank to put a money reduction on the overdraft facility of something that she could afford - e.g. 20 pound a month and then see it as a loan that she is repaying. They will also be less likely to grant further advances and this might help her reduce it in the long term.

[annie0000]

sorry - meant "monthly" reduction.

[luxury]

Can your friend take a lodger in for a while Roosi? extra income from a spare room is useful.

I'm glad there's no CCJ out :) xx

[roosi]

Thanks annie and lux, no lodger, not possible-house too small, although she has just called her bank and said she doesn't want to take loans past 2010 and explained that she wants to get onto the straight and narrow again.

Bank are reluctant to offer a pay back option (at per say �20 per week), and are pushing consolidation loans again, they are calling her back to discuss this afternoon. O/D seem to be really easy to get hold of, and such a struggle to get out of. Shame like, as she is planning (or trying to) a family but doesn't want all this hanging over her at such a crucial time in her life.

Thanks again for all your good advice, I will post the outsome so it may help others in a similar situation

R
x

[annie0000]

The reason the bank are pushing the loan is that they know that she is a good payer and that she will run up the overdraft again anyway - don't let them pressure her into anything she doesn't want to do. If they are reluctant to reduce her overdraft gradually, then that is really dissapointing and not very supportive. Presumably they subscribe to the banking code:

http://www.bankingcode.org.uk/pdfdocs/PERSONAL _CODE_2008.PDF

This syas that they will commit to lending responsibiy and work with you to resolve any financial difficulties. If they don't, you are withing your rights to complain to the ombudsman.

[luxury]

can bank of mum and dad help btw? I have borrowed in the past off mine and paid them back with 5% interest.... and also learnt that living within my means is the way to go lol as it saves on the lectures....