Bank just said they are withdrawing facilities in one month - help!

[OvertiredandConfused]

Okay, am in a complete panic and not thinking straight but will try to include relevant information.

DH and I have about £13,000 worth of debt with one bank (two accounts). This accrued - with their blessing of course - whilst I was out of work. We have always been proactive in contacting them and upfront about our situation. I resumed work a few months ago and we now have a very decent income - about £5k per month between us.

We were offered the chance to convert the debt to a loan and signed and returned the papers about a week ago. We did ask for repayments to start one month later than the bank had asked. They didn't say we couldn't do this or suggest any possible consequence.

I've come home this evening to a letter saying overdraft facilities (on which we are living until the loan kicks in) will be withdrawn on 29th September and account will be closed at the end of October. We've had no warning, no phone call, nothing.

Obviously, I can't call them tonight as the department operates business hours only. The two big questions I have are how on earth can we find another bank to take us on and what do we do about this huge debt?

We have a mortgage, that we have always paid - with the same bank - and they are keeping that (surprise, surprise). We do have a decent amount of equity in the house and would be willing, albeit reluctant, to secure a loan against the property.

Our spending is completely back on track with at least £500 available monthly for repayment of this debt.

What do I do?

First thought is that day they envisage the loan starting hence that particular account being converted to a loan. I have to business loans and they both have 'bank account numbers'. So just wondered if this was what they were doing.
Speak to them tomorrow if they are it's drawing banking then contact another bank to open a new account.

Surely you're no worse off - just paying the o/ds off with the loan and monthly repaying that instead. Otherwise you have £26,000 credit available. (?)

I'm slightly confused - is this withdrawal of your overdraft facilities what you were expecting or do you think they've done it because they were expecting you to start to pay off the loan but you haven't? Or have they changed their mind about the loan? or what?

Either way, work out exactly what your total debts are to them, and what you can afford with the date you can make the first payment. Then call them in the morning, clarify what they think they are doing, make them a proposal, and see what happens. If you owe about £13k but can afford £500 repayments per month and have equity in the house then you're actually quite a good customer and they may want to hang on to you!

But do compare the interest rate of the loan with the interest rate on your mortgage - it may be much cheaper for you to increase the mortgage and increase the mortgage payments than to carry a separate loan.

Thanks for the replies.

To clarify, we don't have the loan, they're withdrawing credit and closing the accounts.

I can work round finding a new account - although with our credit rating it won't be with a high street branch - but I can't magic £13k and no-one else will touch us with our current credit rating and recent history.

purplewithred I thought we'd be a pretty good bet too, especially if you add in the fact that we've always been open with them and have a good level of reliable income. DH should get a big bonus in a couple of months too.

DH is, fortunately, at home tomorrow and will call them.

I feel, and have been, sick. Really thought we'd turned a corner and were finally back on track.

Implies to me that the loan money is being paid into your account on 29th Sept, so the overdraft facility will be gone same day. This is standard and what I always did when arranging loans for customers, otherwise a lot of people see the available funds and end up spending some of the money, which doesn't leave them with enough money to repay the overdraft at a later date. Not saying you would do that, but better safe that sorry!

The part which isn't standard is the account being closed. The only reason I can think of for this is that you have poor credit rating and the loan was arranged to basically get rid of your accounts so that you can have a fresh start with a basic bank account. This would have been made very clear to you. Simply having a large overdraft isn't a situation that would warrant this course of action, it would only be if you were getting frequent charges, exceeding your overdraft limit a lot. You will have been dealing with a specific department if this is the case - in the bank I was at it was Collections but don't know if other banks use a different name.

You need to ring up and find out what is going on. If they are closing the account you will be able to get a new account elsewhere however it will be a basic account with no overdraft, credit cards, cheque book etc. Still fine for direct debits, cash card and normal transactions though. Barclays and co-op spring to mind.

Surely this is a istake? They're expecting it to have converted to a loan and the dates have got muddled? Can you go in to a branch and talk to someone - I'm sure it can all get sorted.

Oh sorry, missed the bit where you said they're closing your account

I still don't understand, have they said you can't have the loan despite offering it to you in the first place ?

Positive update.

I did understand the letter correctly - no loan and closing the account requiring repayment of debt in full immediately. BUT they sent it in error because they hadn't married up the signed loan forms with the account and saw it as a debt with no repayment prospect!

Loan forms all now processed and we can keep the accounts.

Phew.

Feel like I should be furious that their error caused us so much stress but I'm so relieved I just can't get cross.

Thanks again everyone.

Brillisnt :)

Brilliant - that must be a huge relief.

P.S. Was it Lloyds?

Nah, bet it was bloody Santander.

NatWest