UKC

In a bit of a pickle to say the least. My parents transferred a sum of money into my account, which they are going to take out in a months time. The problem is that this money went into my overdraft which has now been removed, so I've effectively lost my parents money. I was sent a letter about my overdraft being significantly reduced due to my credit score but I didn't read it as I presumed it was a statement and I see my statements online.

Apparently I can call collections tomorrow and they may be able to reinstate the overdraft as long as it is reduced by £50 per month. I was given a 50/50 chance of this however. I'm really worried now.

I just needed to get this off my chest. I know I've mismanaged my money and been stupid but it just feels harsh and sudden. I was just starting to resolve my financial difficulties and now this happens.

If the overdraft can't be reinstated i haven't a clue what to do, maybe open a new account with an overdraft but I don't know whether I'd be accepted due to a low credit score.

I'm really worried, any advice is welcome, thanks.

In reply to outtathaway:

Good luck.

In reply to outtathaway:

Not really got advice but hope you get it sorted.

In reply to outtathaway:

I reckon the first thing to do is to talk to your parents. Obviously I don't know what amounts you are talking about here but I doubt they would want you to take out another overdraft (and more debt) to sort this out.

Hard to give any solid advice without more details but my guess would be that it sounds like not having an overdraft is a good thing for you so perhaps work out a way to pay your parents back (with them) and resist the temptation to get another overdraft.

If there are other debts involved then you need to make a solid plan to get out of the hole. The Money Saving Expert site has some good advice if you're disciplined enough to do it yourself. If not then one of the many debt advice services is probably your best bet.

In reply to outtathaway:

I'd also be very surprised if the bank gave you the (actually their) money back. From their side you've paid off some/all of your debt, and you obviously don't have a sterling record of doing so - the parents story will sound like just another sob story from someone who can't manage their money.

Sorry, sounds harsh.

In reply to outtathaway:

I'm sorry I don't have any advice but I'm sure you'll get it sorted.

Banks truly are parasitic scum.

In reply to Greasy Prusiks:


In this particular case, why?

In reply to Greasy Prusiks:



Why do you say that? They are open and up front about their terms - you don't have to use them. If you get yourself into unsustainable debt that's not their fault. They are businesses, not charities.

In reply to Trangia:

OK mostly it's because I haven't forgiven them for the banking crisis. It seems that if they get into financial trouble we have to pay money we don't have to get them back to making money out of us. If a member of the public gets into debt then the bank can just take their house away, no second chances. That doesn't seem very fair to me.

(I'm happy for someone on here to convince me otherwise!)

In reply to Greasy Prusiks:


I agree that it sounds harsh, but Mortgages come with huge up front warnings that your house may be at risk if you cannot repay a loan.

In reply to Greasy Prusiks:


In what way is that necessarily the fault of the banks? A lot of people, especially nowadays, live beyond their means. As Trangia pointed out banks are not charities; they exist to a) look after people's money and b) in doing so, make money for their shareholders.

In reply to Trangia:

Yeah I agree it's a business so at the end of the day they'll always be after making money out of you. I just don't like the buggers!

In reply to Greasy Prusiks:

Sorry to say this but you are being naive! If you don't like it don't use them and live within your means.

In reply to Greasy Prusiks:

What is the alternative? Living with cash only within your means would seem to me to be it.

In reply to outtathaway:

Basically you need to:
- Identify what how much you owe and to who (Bank, your parents, anything else?)
- Work out which is the highest priority to pay off (Interest rate, penalties, is it secured against house etc)
- Work out how much (if any) money you have available per month to pay off debts
- Pay off the highest priority debts first
- Try to avoid getting into further debt in the mean time
- Keep in touch with the bank etc and try to convince them you have a serious plan to pay them back

I would strongly advise that you speak to Citizens Advice or someone like that - but have a go at putting the plan together first so you have something to talk about.

Good luck!

In reply to Trangia:

I'm not really sure that's possible in a modern world, besides it's possible to use something but think it could be done fairer.

I think we're at risk of derailing the OPs thread now so I'm not going to reply to any more posts, sorry. As I said best of luck to him getting it sorted.

In reply to outtathaway:

In the long run it might be the best thing that has happened. Speak to your parents, tell them everything, leave nothing out. You'll feel better. Unless your folks need that money back very soon, don't get your overdraft back. Rather than reinstate your credit and reduce your overdraft over time, just pay your folks back directly. It stops your borrowing more, it will keep your account looking better and the onus to pay your parent back is probably greater than other creditors. Easier said than done, but adding more debt won't help you long term.

As others have said, look at your other debts and seek advice.

In reply to Greasy Prusiks:



You are confusing retail banking with investment banking.

In reply to outtathaway:

Well if you can't get your overdraft reinstated then take out a loan to cover what you owe your parents. You were X pounds in dept before, you'll be X pounds in debt afterwards so it doesn't make a lot of difference.

Paying back your loan may even help to improve your credit score as well.

In reply to outtathaway:

Do everything you can to get it sorted without borrowing, or with as little borrowing as absolutely possible. Eliminate any expense you can and consider what you have that you can sell and won't miss.

You'll thank yourself in the end. If you need a reduced overdraft, having a detailed plan to manage things would in the past have made a difference with the banks, now I am not so sure.

Good luck.

In reply to FesteringSore:


The UK tax payers are though when banks go tits up.

In reply to robhorton:

Good advice there.

The OP also needs to do a similar exercise and review of their overheads and expenditure. In particular examine any so called "luxuries" in their life style, it is "essentials" that matter. Some sacrifice may be required until they are on a more even keel. I don't know anything about their personal circumstances but broadly things like owning a car/motor bike, smoking, eating out, going out for drinks, meals etc etc are typical to be considered critically and abandoned or reduced.This can be tough*, but it should be considered as an emergency stop gap until the debt is more manageable.

To the OP Good luck.

* I know because I have been through it with a failing business, and growing family.

In reply to DancingOnRock:


That's easy to do since they're all but inseparable these days.

In reply to outtathaway:

I do sympathise with you (having been there) - although it doesn't feel like it, this is probably a really useful kick in the pants for you

I have no idea about your own finances but at one point in my life mine were absolutely shocking. Massively overspending on crap, beer, fags, (little bit of weed now and again...). No planning at all. Was getting paid weekly on a friday and was generally skint by monday Visits to the cash points consisted of asking for a tenner and then crossing my fingers, getting deeper into overdrafts and pretty much sustaining myself by increasing my overdraft and getting more and more credit cards

Crunch came when I moved from my weekly temp job to a monthly permanent job and had to work a month 'in hand', so three weeks without an income, Bank turned my down for an overdraft extension, and so I had to spend three weeks living on absolutely nothing, using the tube without paying, bumming fags, and surviving on plain pasta and salad cream (nice).

Whined about the bank being bastards for a while, but It was a bit of a lightbulb moment and the best thing that ever happened to me. Spent a LONG time living like a pauper and paying off all my debts, getting out of the overdraft, building up a bit of savings and keeping tabs on what I was spending and making sure that whatever I earned, I spent within those limits. Did I 'want' something' or did I 'need' it. Never wanted to be in that position again

I remember it being a VERY painful transition and being bloody grumpy for a lot of the time. But it made me a lot more financially 'sensible'

A site that helped my attitude to spending, saving and money in general is MoneySavingExpert.com on the DebtFreeWannabee forum.

In reply to outtathaway:

Speak to your bank, they are obliged to help you reduce your debt in a manageable way. Just cancelling your overdraft does not do this. If a reduction of £50 a month is too much, talk to them about what you can afford.

As Thundercat suggests, you need to tighten your belt and stick to a plan to get yourself straight, but banks are supposed to follow a code of practice and it is always useful to understand how they should behave.

In reply to DancingOnRock:


Not that I entirely share Greasy Prusiks' view, but wasn't part of the problem that the banks had the same 'confusion'...?

In reply to The New NickB:

But the issue is that he's repaid the overdraft and the bank does not wish to reinstate it.

Anyway it's not clear if the OP even stayed in the thread...

In reply to The New NickB:


As far as the bank knows, the money paid in by the parents appears to have cleared the overdraft. So they have decided to modify the overdraft agreement, basically saying they are not prepared to allow the overdraft to return to its previous level. This seems pretty sensible and responsible to me.

Hopefully, explaining the situation might persuade them to extend the overdraft terms again, but I can see why they want some agreement to reduce the overdraft in the long term. Without knowing the extent of the overdraft, it's hard to comment on whether £50 a month is a lot.

In reply to captain paranoia:


Quite possibly. However I wonder how many people believe the school leaver sitting behind the window at their bank is evil.

The crash of 2008 wasn't down to banks not allowing people huge overdrafts. There were a huge number of factors.

Another thread - there's hundreds of them already on here.

In reply to outtathaway:

If you've got a low credit score I doubt you'd get a loan or a new account with an automatic overdraft.

Most overdrafts are reviewed annually anyway so you may just have had a few months left of it anyway.

Seems odd that your parents need to have you 'store' their money for you. Was it supposed to be a short term loan because you'd hit your overdraft limit?

You probably need to have a good chat to someone about money management and think about how you are going to pay off all your debts.

In reply to DancingOnRock:


Not many, I suspect. Or maybe hope...


I wondered that, too...

In reply to outtathaway:

I would approach the bank, and state you are in financial hardship. They are obliged to help. In return you should suggest that they reduce your overdraft by £50 each month, as a sign of good will.

If you have no luck with the bank, you can escalate to the banking ombudsman. They will adjudicate if the bank has been fair or not. Though I don't think they can force the bank to pay back the money. Also the process wont be quick, three or four weeks or more.

Failing that there is the citizens advice who may be able to help you with this:
http://www.bbc.co.uk/news/business-19511542

In reply to outtathaway:



You haven't lost your parents money at all - its gone to a really useful purpose which is debt clearance. That's not lost.

Other's have talked about the need to tighten your belt and limit expenditure but I always look at the other side of the coin - how can I increase my income? Changing job or negotiating a rise is an obvious one but not always likely in the current climate.

Try selling stuff - clear out unwanted junk on Ebay etc. Even get rid of valuables if the money is preferable to having the material thing. Think of a service you can offer that may make you money. Try a second/evening job. Anything that brings in money and stops you spending it. Its not for life, just till you get back on an even keel.

In reply to dread-i:


Are they?

In reply to outtathaway:

I've been there. Remember that willpower is not a good strategy - you need to trick yourself / limit your options.

here are a few tricks which I used to pay off an overdraft and then start saving. It might work for you.

1. Open a second account
2. Account 1 should receive your salary and pay out any bills.
3. Set up a direct debit from account 1 to account 2 for your monthly spends. Account 2 is spending money only.
4. burn / cut-up / otherwise destroy cards to account 1. you should not be able to access money from account 1.
5. Only allow yourself cards to account 2.
6. Get rid of credit cards unless you need them (there are only really 2 reasons: you travel often or need to rent a car)
7. If you do have a credit card keep it at home and only take it out when you are going to need it (business trip, renting a car etc). And keep it on a low credit limit.
8. Pay for as much as you can with cash. Having to get money out from the hole in the wall and hand it over physically will remind you how much you are spending.

In reply to Bob Hughes:

Writing down everything you spend is another surprisingly effective tactic - but it does require you to take the time to record *everything*, and it's better done at the time than trying to remember later. I've used a little notebook in my purse for this purpose before. It's a good way of recognising how little bits of day-to-day spending add up.

In reply to JJL:

Most people with overdrafts will put their accounts in credit, probably when they get paid. Of course one, two or three weeks in to the month they go back in to their overdraft. The fact that an overdraft isn't being used on one particular day, doesn't mean that the facility isn't required and can be withdrawn without allowing the account holder to make reasonable transitional arrangements.

It appears the OP missed a letter, but there needs to be more dialogue between the bank and the account holder before they withdraw the overdraft.

In reply to ThunderCat:


They are. What that means in practical terms though can be quite limited.

In reply to outtathaway:

Question: were the funds put in by your parents a way of reducing your overdraft or was it for some other purpose?

In reply to The New NickB:


Maybe so. But that 'getting paid' is generally a regular event, for salaried employees. So the bank (or, more specifically, the bank's computing systems) will know about that history. A large, one-off payment, out-of-the-blue, from a different source, does not meet this pattern, and appears to be a deposit to clear the overdraft; it brings a step change to the regular behaviour of the account. Their computing systems will factor that into the recommendation for reduction of overdraft level. That missed letter will have been initiated by the computing system in response to the change in the account circumstances.

In reply to Tall Clare:


This does help. With regard to my previous post....I went a bit overboard and now everything is recorded on a spreadsheet.

I've also found that only using cards helps - if I need to buy something for £5.99, I only spend £5.99, rather than taking a tenner out and having a couple of quid burning a hole in my pocket

In reply to ThunderCat:

>Are they?

"There are industry codes and regulations that cover consumer lending. All acknowledge that lenders should respond helpfully and fairly where the consumer is in genuine financial difficulty."
http://www.financial-ombudsman.org.uk/publications/technical_notes/financia...

I would say that if you have a large overdraft that is being rolled over and not paid down, then that might suggest that you are not able to pay it down.

'Helpful', is relative. Helpful might be seen as they have removed an unaffordable overdraft that was costing you money in fees.

In reply to outtathaway:

Talk to another bank - the Bank of Mum and Dad. The worst they are likely to do is throw you out and/or disinherit you.

In reply to captain paranoia:

Which is why I have suggested talking to the bank, they have a code of practice, they are obliged to try and resolve these sorts of issues.

My experience of automated bank systems is pretty poor, they often need a fair bit of human input.

In reply to outtathaway:


Do not do this. If the overdraft can't be reinstated this is a sign you're a liability and you may balls up another overdraft, which will worsen the problem. If you can't get the original overdraft back and aren't up to robbing a jeweller's, you need to throw yourself onto your parents' mercy and take it as a lesson.

You have my sympathy and empathy, having been there and worse myself. Chin up.

In reply to The New NickB:

We're all saying 'talk to the bank', I think...

In reply to outtathaway:

I think most folk screw up at some point, it's what you do about it that makes the difference. If you hunt for loans, tell your parents you can't pay, find a credit card, borrow off mates or just stick your head in the sand - and if that stuff works, you go one way.

If you sell what you can sell, repay what's already spent, then, I think, you go another way.

I think the second route is best done asap in life. Not that I figured it out all that quick!

In reply to captain paranoia:

Yes, but understanding the reasonableness or otherwise of the banks behaviour, be it an automated system or otherwise is a good starting point.

We don't know why this money was paid into the bank as the OP hasn't told us, more importantly neither does the bank!

In reply to The New NickB:


Hence my question at 15:12.

In reply to outtathaway:

Many years ago I went through a period of poor financial management. I was working in London whilst my folk were some 200 miles away. In order to clear my debts and re-establish some sort of fiscal stability I left my digs in the south east, moved all my belongings to my parent's house and lived out of a holdall in the back of my car.

It worked.

In reply to Bob Hughes:











Excellent advice. Pretty much sums up how I recovered from a 40K debt that I was left with when I ended a relationship. It is not easy, and it is a long road, but when you pay that final payment it is worth it.

Mind you, I wish I could spend the money on a time machine and a sniper rifle...

In reply to Greasy Prusiks:

What do you call a group of bankers?

A wunch!

In reply to outtathaway:

Not a great fan of Martin Lewis on the TV but I agree when he says that the banks are not your friend and treat them appropriately and be on your guard,they are in business to make money out of you. Unfortunately they are a necessity to function in this world.