Debt advice charity, the Citizen’s Advice, has reported that some banks are leaving customers unable to meet mortgage and other repayments, as they have unknowingly taken money from their current accounts to cover debts held with them.
Debt help organisations have called for the underhand practice to be stopped, which allows banks to take money stealthily from customer’s accounts without their permission.
Citizen’s Advice claim to have seen a 25% rise in the number of people who have experienced this process in the last two years.
Trade body, the British Bankers’ Association (BBA), unsurprisingly backed members stating that the onus is on the customer to inform the bank that they are in financial difficulty.
The debt advice charity say they have received cases where people have had benefit payments removed from their accounts, leaving them unable to meet “priority bills” such as mortgages, utility bills and council tax.
If you are worried that your bank may take money from your current account to cover any outstanding balances, or if you are generally struggling to maintain other repayments, it’s sensible to seek impartial and free debt advice.
These agencies can suggest ways to protect your income from stealth collections by your bank and offer a number of ways to alleviate financial problems.
These debt help solutions may include a debt management plan or an IVA (Individual Voluntary Arrangement).
Debt Management gathers unsecured debts into one convenient and affordable payment – making balances easier to manage. The debt advice organisation who offer debt management programmes will negotiate with your creditors to reduce payments to a more affordable level, and spread the total amount owed over a longer period of time.
This is useful for people with multiple unsecured credit debts (store cards, catalogues, credit cards, personal loans etc), and enables customers to regain control of their finances.
An IVA involves an insolvency practitioner, who is legally qualified to offer IVA advice. Following this, they may recommend an IVA as a possible solution.
IVAs are useful solutions for people with unsecured balances over £15,000. Once agreed, an IVA is repaid over a set period (usually five years), after which time all unsecured balances may be written-off and the customer is free to start to rebuild their life.
These options are offered by a number of reputable debt advice organisations, including The Debt People, Chiltern Debt Management and Hamilton Locke.
Presently, banks can legally take funds from current accounts to cover outstanding credit card, loans and overdrafts held with them.
