Taking back control of your finances

[Bookworm]

Debt:

 

We know how hard it is, when you feel that there is no stopping the flow, the banks are relentless. They bounce a direct debit, charge you for it, then the money you had coming in is swallowed up by the charges, and more payments bounce. And there's so many charges that you can never catch up, and you are sinking further into debt. Sounds familiar?

 

There are however steps to make it stop, at least temporarily, and start regaining control.

 

First of all, you should have another account. Then, cancel your direct debits on your existing account. But don't start new d/d on your other account. D/d give them the right to help themselves to your money, however much they want, when they want, it gives them all the power, and you none of the advantage.

 

Before you do all that follows, make sure that your incoming money gets transferred to your new bank from now on. If it's benefits, tell DWP asap. If it's wages, tell your payroll people asap.

 

Set up Standing Orders instead. They work in the same way, except that you call the shots. YOU say when, YOU say how much. Combined with Internet Banking, s/o are the most powerful way to get control of your finances, IMO.

 

Then, this is what you need to do, if you haven't yet. You need an accounts book, just a plain old lined A4 Poundland jobbie will do. From now on, it will be your bible. ;-)

 

I am going to work on the assumption that you have Internet Banking, if you don't, set it up asap, on both accounts.

 

Either way, you need to get a bill for every one of your d/ds. Some companies are already clued on the internet thing and at the back, will give you the details on how to set up online payments. Those who don't, you'll need the payment slip, it has a sort code and an account number, that's what you need to set up online payment, with your own reference number. Sort out the amounts and dates so that they coincide with your incoming money, paying attention to due dates on credit cards and so on.

 

Some companies say they only do D/D and can't accept a S/O. Find a bill and do a S/O anyway - if it's a new product and they'll only accept a DD or they won't give you the product without DD, set it up to get the product, then cancel it and turn it to a S/O*.

 

*WARNING: Some companies charge you a fee for not paying by D/D. These can, and have been, successfully challenged and paid back (see in the Telecoms forum), but you have to weigh up the pros and cons in this instance. However, remember that "saving" £5 a month by paying by D/D could end up costing you £30 + if it takes you over your limit, or pays itself before your money clears in your account.

 

Write down in your book all the reference numbers, sort codes and account numbers, in case you ever need them again.

 

Once it's all set up, cancel the d/ds with your first bank. Contact the relevant companies like insurances and so on to tell them that you are changing banks, and that normal service will be resumed as soon as possible. On things like electricity, gas, insurances and so on, they are usually quite flexible on the payment dates, so you can change the payment date to one that suits you better, make sure you tell them when you phone them.

 

You have now taken the first step to take control of your finances. You will have to monitor it daily, and you will have to learn to juggle around, but it can be done. I am not good with numbers, but if I can do it, anyone can.

 

Now both your income and outgoings are going through your new bank, you are left, presumably, with a previous bank overdraft. That's ok, that can be dealt with too. You need to work out how much of it is made of charges, how much is it you would actually owe if it wasn't for the charges, and take it from there. Remember, once they no longer have first access to your money, they can add all the charges they want, it is no longer a major issue.

 

If the bank tells you to repay the overdraft in full, don't panic.

 

Work out how much you can repay per week/month without leaving you in financial dire straits. Write to the bank telling them that you can not possibly repay the o/d in one go, and that you will pay back £xx per wk/mth/4 wks/whatever until o/d is cleared. Enclose 1st payment in letter. If they cash the cheque, it will be all the harder for them, in the case of future argument, to explain why, if they didn't accept the agreement, they cashed the cheque. You need to say in your letter that this is the best you can do, and if they are not happy with it, they can and should take you to court and ask a judge to decide what and how much you should repay. Oh, and demand that they freeze interest onto the debt until it is paid off. (they probably won't, but it is aways worth a try)

 

Here's the news: The bank doesn't want to go to court on that either, for the following reasons:

 

a) Like the rest of us, they have a duty to mediate outside the court system. If you have made a reasonable offer, a judge will not take kindly to them litigating.

 

b) Depending on what you offered to repay and what your existing debts are, a judge could well decide to award them LESS than what you have offered to repay in the first instance. Because a bank o/d is not a "necessary" debt, it is at the bottom of expenditure, and before a judge decides how much you should repay the bank, he'll look at all your other outgoings, mortgage, food, electricity and so on... Then, on a sliding scale of importance, until it gets to the overdraft... And since you had made an offer of repayment as it is, and kept to it, he is not going to put the bank very high in the order of priority. And the bank knows this.

 

The 3 important things to remember are these: Enclose 1st payment with your proposal. Keep up the payments. Don't budge once you have made your proposal, no matter what they say.

 

In all likelihood, when you win your charges back, they will pay them against the o/draft. Fair enough. Think of it as one less debt hanging around your neck on the way to financial recovery.

 

 

 

Thanks to Janet-M for her help & suggestions.

[cwhytew]

very informative. thanks

[PKea]

Great Post

 

Should be of Great help to many people.

 

I think i may start to sort my accounts out like that

 

Paul

 

"Wisdom Begins In Wonder"

My advice is based on my personal experience and should be taken as such.

If I have helped you, Please click the Scales

Guide To Claiming Back Charges

Guide to Court

Abbey WON - MNBA WON - BARCLAYS WON - HALIFAX(1) WON - BT WON

[tpjava]

Great Advice.

If only I had this sort of information to start with.

 

Tony

 

[jet_black]

I will be following this advice, thanks:D

[felix24]

Very useful thread

 

Here's what we did.

 

1. Cut up ALL credit and store cards

2. Cancelled ALL dd's

3. Registered for internet banking

4. Got in touch with a company called PAYPLAN based in Grantham - they charge no fee and deal with all creditors on your behalf. It was all done over the phone with a few forms to fill in by post.

 

It's a whole new life (and it only took 4 weeks) ..no calls, no letters, no reminders, just the knowledge that our standing order to them every month pays all our creditors a proportion, leaving us with plenty enough money left to live on.

 

All interest stops - and 3 of our creditors actually knocked 75% off what we owed to get it paid off all at once rather than over five years.

 

Gone are the days of hiding bin liners full of bills/reminders/ other various threats in the garage!

 

The difference internet banking has made to us is also remarkable. Instead of guessing if you can afford to go shopping, you check. If you can't, you go on the day you can. No more interest, all we earn is ours.

 

...Dont use any fee charging debt management plan - I've heard lots of bad stories about them. Payplan is (So i'm told) the only one that was set up by the government to help people in their time of need, and like i said, they charge NOTHING.

[sequenci]

 

...Dont use any fee charging debt management plan - I've heard lots of bad stories about them. Payplan is (So i'm told) the only one that was set up by the government to help people in their time of need, and like i said, they charge NOTHING.

 

Payplan were not set up by the government but they do offer a FREE Debt Management Plan. They are not the only people who do this, The Consumer Credit Counselling Service also offer a Free DMP.

[bluewater babe]

Bookworm - Fantastic advice thank you - Now i have a couple of questions for you - or anyone who knows about standing orders..

 

... if i organise my mobile phone bill (for example) to be paid by standing order, does that mean each time i get a bill I have to change the amount of the standing order on-line?

 

Also with my council tax (where the payment doesn't change for 10 months of the year) I don't have to change this, until Jan when i stop it for two months?

 

I know you are talking about checking your balance everyday on-line, so you will be completely aware of what is going in and out of the bank, but i need to get my head round how much more organised i will have to be!

 

Thanks

 

bbx

[t2suggas]

Standing Orders are controlled by you, so you need to change any amounts payable. Another alternative via online banking, is the bill payment feature. Not sure if all online banking facilities offer this though.

[debt helper UK]

Bookworm,

 

Great Advice about dealing with your debt and controlling your finances. I just want to add something, once you have paid your debts off, never borrow again, instead start saving instead, luxuries that we may want now will still be there later, always consider "do I really want it?, what happens when I get it?, will i feel happier?. always weigh up the pros and cons of buying luxury goods. If that is a situation you are in then promise yourself.

[Bookworm]

That is good advice, yes. It doesn't however always work like this, especially for big-ish purchases. And some things can't actually always wait, whether be the car that died and must be replaced, or for example in my case, a foam memory mattress for my very very bad back (worth every penny for me, by the by ;-)).

 

It takes a fair amount of money discipline, and enough disposable income to play with, but what I do in cases like these is go for BNPL, set up a standing order straight away for 3 or 6 months to make sure that the item is indeed paid off before they whack on the interest. Or find an interest-free deal, they can be found.

Anything that rolls on interest from month to month unless paid in full, however, should always be avoided at all costs (if you'll forgive the pun! ;-)), so credit cards, stores cards, and anything with a fluctuating rate, or indeed secured.

 

I should also have added this: If you do have credit cards, store cards, or even overdrafts, there is one thing you can do to get rid of them slowly, but surely, if you can't pay them off in one go: Every time you manage to pay a chunk of it (like when you get some of your charges back, for example), immediately contact the company and get them to reduce your credit limit accordingly. Before you know it, the balances will be whittling away, and you'll be paying less interest. However, keep on paying the same amount that you were, knowing that it helps reducing the balance further. Every time you can, pay another lump sum, small or large, it all helps. Sooner than you ever thought, you will have paid them off. Then close your account. Don't think, "ooh, I can manage now, I'll never fall back into that one", because you will, guaranteed.

[debt helper UK]

Sounds great,

 

see my thread on controlling your spending, hopefully I have some ideas of increasing your disposable income so you can pay off your debts quicker.

[itsamomentintime]

Debt:

 

We know how hard it is, when you feel that there is no stopping the flow, the banks are relentless. They bounce a direct debit, charge you for it, then the money you had coming in is swallowed up by the charges, and more payments bounce. And there's so many charges that you can never catch up, and you are sinking further into debt. Sounds familiar?

 

There are however steps to make it stop, at least temporarily, and start regaining control.

 

First of all, you should have another account. Then, cancel your direct debits on your existing account. But don't start new d/d on your other account. D/d give them the right to help themselves to your money, however much they want, when they want, it gives them all the power, and you none of the advantage.

 

Before you do all that follows, make sure that your incoming money gets transferred to your new bank from now on. If it's benefits, tell DWP asap. If it's wages, tell your payroll people asap.

 

Set up Standing Orders instead. They work in the same way, except that you call the shots. YOU say when, YOU say how much. Combined with Internet Banking, s/o are the most powerful way to get control of your finances, IMO.

 

Then, this is what you need to do, if you haven't yet. You need an accounts book, just a plain old lined A4 Poundland jobbie will do. From now on, it will be your bible. ;-)

 

I am going to work on the assumption that you have Internet Banking, if you don't, set it up asap, on both accounts.

 

Either way, you need to get a bill for every one of your d/ds. Some companies are already clued on the internet thing and at the back, will give you the details on how to set up online payments. Those who don't, you'll need the payment slip, it has a sort code and an account number, that's what you need to set up online payment, with your own reference number. Sort out the amounts and dates so that they coincide with your incoming money, paying attention to due dates on credit cards and so on.

 

Some companies say they only do D/D and can't accept a S/O. Find a bill and do a S/O anyway - if it's a new product and they'll only accept a DD or they won't give you the product without DD, set it up to get the product, then cancel it and turn it to a S/O*.

 

*WARNING: Some companies charge you a fee for not paying by D/D. These can, and have been, successfully challenged and paid back (see in the Telecoms forum), but you have to weigh up the pros and cons in this instance. However, remember that "saving" £5 a month by paying by D/D could end up costing you £30 + if it takes you over your limit, or pays itself before your money clears in your account.

 

Write down in your book all the reference numbers, sort codes and account numbers, in case you ever need them again.

 

Once it's all set up, cancel the d/ds with your first bank. Contact the relevant companies like insurances and so on to tell them that you are changing banks, and that normal service will be resumed as soon as possible. On things like electricity, gas, insurances and so on, they are usually quite flexible on the payment dates, so you can change the payment date to one that suits you better, make sure you tell them when you phone them.

 

You have now taken the first step to take control of your finances. You will have to monitor it daily, and you will have to learn to juggle around, but it can be done. I am not good with numbers, but if I can do it, anyone can.

 

Now both your income and outgoings are going through your new bank, you are left, presumably, with a previous bank overdraft. That's ok, that can be dealt with too. You need to work out how much of it is made of charges, how much is it you would actually owe if it wasn't for the charges, and take it from there. Remember, once they no longer have first access to your money, they can add all the charges they want, it is no longer a major issue.

 

If the bank tells you to repay the overdraft in full, don't panic.

 

Work out how much you can repay per week/month without leaving you in financial dire straits. Write to the bank telling them that you can not possibly repay the o/d in one go, and that you will pay back £xx per wk/mth/4 wks/whatever until o/d is cleared. Enclose 1st payment in letter. If they cash the cheque, it will be all the harder for them, in the case of future argument, to explain why, if they didn't accept the agreement, they cashed the cheque. You need to say in your letter that this is the best you can do, and if they are not happy with it, they can and should take you to court and ask a judge to decide what and how much you should repay. Oh, and demand that they freeze interest onto the debt until it is paid off. (they probably won't, but it is aways worth a try)

 

Here's the news: The bank doesn't want to go to court on that either, for the following reasons:

 

a) Like the rest of us, they have a duty to mediate outside the court system. If you have made a reasonable offer, a judge will not take kindly to them litigating.

 

b) Depending on what you offered to repay and what your existing debts are, a judge could well decide to award them LESS than what you have offered to repay in the first instance. Because a bank o/d is not a "necessary" debt, it is at the bottom of expenditure, and before a judge decides how much you should repay the bank, he'll look at all your other outgoings, mortgage, food, electricity and so on... Then, on a sliding scale of importance, until it gets to the overdraft... And since you had made an offer of repayment as it is, and kept to it, he is not going to put the bank very high in the order of priority. And the bank knows this.

 

The 3 important things to remember are these: Enclose 1st payment with your proposal. Keep up the payments. Don't budge once you have made your proposal, no matter what they say.

 

In all likelihood, when you win your charges back, they will pay them against the o/draft. Fair enough. Think of it as one less debt hanging around your neck on the way to financial recovery.

 

 

 

Thanks to Janet-M for her help & suggestions.

 

bookworm you should be up for a gong for this advice, nice one!

[Bookworm]

Awww, thank you. I aim to please! (and fail dismally on a regular basis! )

[larneylarnes]

Hi Bookworm

 

Re your first post on this thread, will this process work for business overdrafts as well?

We have received two letters today, one refusing our proposals, see attached and one demanding immediate repayment of the whole (£12.5k) od. Haven't claimed charges....yet, but about £2k.

Obviously haven't got that in spare change so HELP what do we respond with.

 

And thanks for this utterly life changing site, knowledge most definitely is power!

Larnes

letter to hsbc 13.6.07 forum copy.doc

[Bookworm]

Larnes, I am very sorry, but I don't know the answer.

 

I would have thought yes, on principle, as the duty to mitigate is paramount, but maybe they're thinking in terms of assets they could recover? I don't know, love. By a very quick calculation, your proposal means it would take at least 5 yrs to pay off your o/d, and that's probably why they said no.

 

I would suggest that you make an income and expenditure sheet, be brutally honest, no embellishment, and write again, offering the maximum that you can, and tell them that this is the best you can honestly do, and tell them that otherwise, you'll let the judge decide, and take it from there. TBH, I don't know what else you can do if they are determined to make your life a misery.

 

One thing that I just thought of, and that is to tread very carefully if any part of your business is secured against your home.

 

It might be worth having a chat with CCCS, and see what they say as well, as I would hate to be giving you bad advice through ignorance.

 

Take care.

[larneylarnes]

Thanks for reply, sorry for delay in replying, only just finished work, mmm, catering!!

 

Totally see what you are saying about the length of time it will take to repay the debt, so will have a rethink about that.

 

One good thing, I don't have a house they can take! In fact we have no assests at all they can use, only a personal guarantee that we signed at the beginning of the od in 2003.

 

And CCCS? Scuse my ignorance, who are they?

 

Many thanks for your advice

Larnes

[Bookworm]

Sorry, I missed your reply:

 

CCCS - Free Debt Advice from the UK's Leading Debt Charity

 

Unlike those who advertise on TV, CCCS are a charity, so you can trust their advice knowing there's nothing in it for them. ;-)

[larneylarnes]

Thanks again!

[wrangler1]

Hi, I hope this is the right thread for this posting. I have been reading the advice on the site and it is so helpful. We are in the process of taking control of our money, which is something we should have done ages ago - and part of that is understanding how and why we got into debt. The thing is I have been looking at current account mortgages. My husband is self employed, and salary varies drastically each month. As we've been struggling he ended up using the money he needs to put by for tax. My salary also varies month to month. This has made it really hard to manage or budget. My plan is to snowball our debt as much as poss until next year when our mortgage is up for renewal. Then I think if we put all our remaining debt into a current mortgage account it could work out better for us, in that we'll have reduced our monthly outgoings,(by reducing the interest on our borrowing) and can leave the tax money and any surplus in the account reducing our interest on the overall mortgage debt. At the end of the year we can pay the tax, our mortgage interest would go back up again and then we can start the process again. What I'd like to know is given that we both have variable incomes, and including the additional debt added in we would still have around 50% equity on our home does this sound sensible ? Are there any dangers that I might not have considered? the main danger I can see is that we will have to keep a very tight rein on our budget and not be tempted to overspend, and MUST ensure that the mortgage debt is reducing in line with the plan so we do reduce the time it takes to pay it all off.

Any advice?

[djgordyp]

At the end of July Halifax Retail collections department wrote to me saying they were going to withdraw my overdraft on 10th August. So thinking I was going to be left without money when my wages go in, I moved to another bank. Unfortunatly in the process I forgot to cancel one standing order and therefore ended up paying a charge. August 10th came and went and the overdraft was still in place. In fact I received a letter a couple of weeks ago saying that my overdraft had been renewed. Whatever they were playing at, they have actually done me a favour as I now seem to be able to manage my money better .

[serajen]

Thank you so much for this advice. I am going to trawl the banks tomorrow to try and open a new account. Halifax have slapped £900+ charges on me in past 6 months and I'm crippled. Visited HSBC today to ask what documents are needed to open an account with them, they want statements from my current bank, once they see all the charges will they refuse me an account, do you think?

[The GodMother]

Bookworm.

 

That brilliant advice is so handy. A certain non cable digital tv company said they dont do standing orders and i cant find there details for banking on any payment slips so i cancelled the agreement and told them i would pay them £20.00 a month for the debt which is £60.00. They told me that if it was not paid back in 8 weeks from closing send the account to there debt recover departmentand theat would take anything up to 4 weeks for them to contact me.

Well needless to say when i did recieve a letter from the debt management company i had already paid the final £20.00 and proved it by sending all the payment slips. A few days later i recieved an appology from the company and a gift voucher for argos for £20.00. what a shock for that one. So i just paid the bill of £60.00 off and recieved some money back it cant be bad.

 

Some companys i have found have been awkard about the standing orders as they cant be on the take but i have politley told them they accept my payment or a judge decides what i pay them whcih has stopped them in there tracks and they have reluctanly accepted payment. One company decided to argue over £1. Well book worm ty for ur advice.

[barneydouble]

Thank you so much for this advice. I am going to trawl the banks tomorrow to try and open a new account. Halifax have slapped £900+ charges on me in past 6 months and I'm crippled. Visited HSBC today to ask what documents are needed to open an account with them, they want statements from my current bank, once they see all the charges will they refuse me an account, do you think?

 

if you go to citizens advice they will give you a list of banks with accounts that you can open especially with low credit ratings.

i just recently signed up to one high street bank on line(no paperwork reqd) its only a basic account but i am back in control of my money.

[tomterm8]

Just a little bump, it being January and all;)