To complain to the bank about withholding money?

[Hurtyhead00]

I’m not sure where I stand with this and please feel free to move this if I’ve written in the wrong category.

I’ve recently entered into an iva (individual voluntary arrangement - aka all debt is managed by a third party to stop bailiff action etc and I make one monthly payment to said third party for 60 months. Credit is wrecked until the 60 months is up but then I’m debt free with a new credit file).

My current account was included in my iva as I had an overdraft I was unable to pay off. So I was recommended to switch to a new account and have money etc paid into that, which I have. However, my universal credit was paid into my old account. I called my bank for a completely separate reason (overdraft charges still being applied) and had a really rude woman tell me that my account would be blocked immediately as it was now under an iva. I explained to her that I needed to withdraw my money first to which she said that I would have to call back to see if they would release it to me. Tried to transfer via online banking and my account was already blocked. I called them back and had someone mess me around and didn’t really know what they were talking about and said that I needed to call whoever paid the money in (aka universal credit) and get them to tell the bank that they “weren’t interested and didn’t want the money back”.
Got off the phone and called universal credit who didn’t have a clue what I was talking about and said that once they release payments to me then it’s not their business and would not ask for it back unless they overpaid in which case they would write to me and take it back out of next months payment or by instalments.
Called the bank back and it turns out I needed a LETTER OF NO INTEREST from my INSOLVENCY company 🤦🏻‍♀️ and would have to take this into branch to withdraw my payment. I got this letter and took it into branch where I was sat for at least two hours with my crying baby while the staff tried to make sense and made various phone calls to their collection team. Eventually got the money but then my child benefit was paid in a few days later. Again I got another letter of no interest and took it into branch for the same process and this time the man from the collections team wanted to speak to me over the phone to explain what had happened in terms of the account being locked etc. Then he interrogated me about what I needed the money for.
Am I correct in thinking they are NOT allowed to withhold benefits? And surely they aren’t allowed to question me on what I spend my money on LET ALONE my child benefit? I just said it was child benefit so it was for my child.
Can anyone advise if i have grounds for a complaint? I don’t want any compensation etc I just feel like I was mistreated.
Thanks

Did you not advise the banks of the new bank details?

Sorry not banks benefit agencies

@HaudYerWheeshtYaWeeBellend yes I’ve done a switch to a different bank but I obviously did it too late for the payments to be changed. Next month they will just go to my new account

You should put this under money matters or legal OP. You will get lots of posters telling this is terrible, but you need actual legal advice.

Or try CAB?

I don't know the legalities of this, but as per PP, you should have asked for your benefits to be paid into your new bank account. This may well come down to not being able to take money out of an account that is overdrawn as it is considered to be increasing your debt. But don't rely on randoms on the internet - you need proper advice.

I think there is a rule where they can only take so much they are not allowed to leave you hungry and homeless but I'm uncertain

Have you got the money now?

A switching service does not have the ability to change your bank details with universal credit, only you do, you need to log on and change your bank details on your UC account now if you haven't already. Onc uc have realeased your money what happens to it is nothing to do with them.

With the bank - no there is no such rule that they cannot withhold benefit.

Presumably your current account was overdrawn?

So the money there isn't yours to begin with and anything you pay the bank towards the debt you owe them is unlikely to be returned.

If you go via a charity like StepChange you might be able to get the deposits since you entered IVA back on compassionate grounds but don't count on it.

You really should have advised the benefits agency of the new details BEFORE you did the IVA stuff.

I’ve got all of the money back now, yes my account was in arranged overdraft so I was able to withdraw whatever was left of it.

What would you complain about? You have the money back now don’t you? This is obviously an unusual thing for the bank staff to deal with which is why it took a while to sort out

To be honest, given that the bank are going to have to write off the overdraft money you owe them I don’t think you have the moral high ground here

If you feel you've been treated badly by then by all means make a complaint to the bank. They'll be obliged to investigate and provide a response, whether or not they believe its justified or not. It might stop someone else from experiencing similar.

Side note related to your credit file - I don't think you'll have a brand spanking new credit file in 60 months. Info on your credit file lasts for 6 years, so I think it'll be on there for 6 years after you finish the IVA. I may well be wrong, but it's just worth checking out to be sure. I know someone who struggled for years after their IVA.

@HuntIdeas why would the bank be writing off my overdraft? I’m obviously paying it back which is why I’ve switched accounts so that the account can come under my iva.

@Wattagoose90 I believe after the 60 month term has finished, providing I’ve made all 60 payments then my credit file will show the iva for another 12 months and then be refreshed as new.

It's six years from the start of your IVA. The money saving expert website has some really useful info on its forum

Ah that's good to know, thanks for correcting me :)

When an IVA is successfully completed (and the relevant credit reference agencies informed) then it remains for a further year and then it is removed.

Defaults covered by the IVA still remain on your credit file for six years after the default date but should be updated to show as satisfied, therefore lenders will know the debt has been repaid.

As for freezing your current account with your overdraft, the overdraft is classed as accessible credit and therefore falls under the category of debt or potential debt and as per the IVA rules you are not able to apply for further credit whilst under it’s terms - utilising an overdraft would be classed as further credit borrowing.

As for the remaining money in your account, unfortunately if you were in your overdraft when your payment came through and it didn’t push you into the positive balance, this would still be classed as part of the debt on the account.

If you are in desperate need of assistance in finding out your rights to the child benefit I would recommend either the CAB or your local welfare rights team. Good luck OP

I never fail to be amazed by people's lack of compassion. I'm so pleased that these people have never been in such dire straits and hope they never find themselves in desperate need. It only takes redundancy, illness, marriage breakup etc for any of us to be overcome by what was once an average level of debt.

I am an IP specialising in personal insolvency. The bank have the right of set of against any money in the account towards the debt (overdraft). However this is only prior to the approval of the IVA and anything post appointment should be returned to you. They will have to check with the IP that you can have the money back as on occasion, savings etc may be pledged into the arrangement. Given it was clearly your benefit money, it’s quite obvious it was yours however they will have protocol to check with the back. Your IP shouldn’t have sent your proposal out to creditors without first checking that you had switched back accounts and all income had been directed to the new account. If the person at the bank was rude to you, you may have a complaint about their behaviour, but otherwise they appear to have been following their company policy.

Apologies for my awful spelling in that message, it’s late ha!

My bank did this to me, it was the most fucking stressful time. I had nothing. They have the right to do it, but to leave you with zero is fucking disgusting. I had to borrow money for food, petrol etc

I have no advice, just sympathy and well done for dealing with it. I promise it will get better

The same thing happened to me when i set up my iva, bank refused to return it as i had an overdraft leaving me with no money for weeks except borrowing off family

I hope I didn’t come across as dispassionate OP - I was in exactly the same position last year with my IVA and I just wanted to pass on the bits I learned (my local welfare rights office helped me deal with the bank as I was grieving and it was impacting my state of mind badly) - I hope you find a way to sort it ASAP