I am in a somewhat similar situation. Last week I paid in a cheque that was returned, but in the period between me depositing it and it bouncing, the bank allowed me to draw on it. I am somewhat unfamiliar with the cheque clearing process (more so now!) and when I saw on OnLine banking that my available balance had increased, I assumed it had cleared.
So the bank debited my account by the amount I spent. I have no overdraft facility (NatWest Step Account).
The next day, my Incapacity Benefit and Income Support were paid in. Obviously the bank "ate" all of this, which had the effect of partially repaying the overdraft. They also apparently cancelled my debit card, and a cashpoint ate it when I tried to check my available balance (However online banking still works).
I was relying on this money to pay for essentials such as food, bills and essential medication for both myself and my also unwell father who lives with me.
I am going to the bank tomorrow to see the manager and will claim both hardship and the Social Security 1992 Act, I have written a legally worded letter and hope that he will allow me to withdraw my benefits immediately.
In terms of the bounced cheque, I am in contact with the person who gave it to me and hopefully he will soon make it good - but it might take a week or so(!!!)
I've read here that some people have had success this way, so I'm going to give it a go. I know the law is not necessarily on my side re: the 1992 Act.
If the bank won't budge, I will be going to the County Court to serve an N244 Application notice seeking that the bank refund the money they took and also seeking an injunction restraining them from doing it again. I imagine the DJ would just throw it out, but I have nothing to lose, perhaps the judge will be sympathetic even if s/he can't do anything, and the bank might not appreciate the adverse publicity.
I know it is somewhat my fault that I drew on the cheque before it cleared but Online banking showed that it apparently had, and being somewhat naeive to the clearing process I took it as gospel. Hopefully the guy who gave me the cheque will make good, but in the meantime I desperately need this money.