www.iva.co.uk

Hello forum,
I have seeked advice on entering into an IVA and definatly think its the way forward for me. I am slightly confused though as to what I do with regards to my lloyds account. I have a £9000 loan with them and I also have various credit cards with different companies. I have cancelled all my direct debits today from my Lloyds account and I am going to draw out what little money I have in my Llyods account and open another account, what I am confused with is when Lloyds come to take out the loan on the 1st of the month and no money is there, do I have to try and close the account afterwards and if so how do I go about this without lots of problems, because I know it take about 6-8 weeks for my iva to go into place. Anyway advice would be good as I am finding it all very confusing.
Thanks

Hi Claire, welcome to the forum. I had exactly the same problem. Lloyds TSB will take the loan payment, bounce it and then charge you, but don't worry as the final overdrawn balance will be included in your IVA. They won't let you close the account, just make sure nothing else goes out. Keep posting, we're all here for advice and support.

Hi Claire

Viki is probably right, and the bank will most likely "Rob Peter to pay Paul" themselves - however this makes no difference to your overall financial position.

The important thing is for you to open your new account and get your salary and direct debits/standing orders transferred across.

Good luck with the IVA and let us know how you get on.

Open a new account and then ensure everything is transferred over - the quickest way I found to transfer all our direct debits was to ring the companies direct and give them the new account details ! Biggest thing to sort is your payroll department - ensure they know in plenty of time !

Make sure you inform the child benefits agency and the tax credit people too,we had no end of hassle when our supposedly closed TSB account was creditted with £75 of child allowance. Got it back but it was a big fight!!!(not sure if this applies to you Claire but thought it worth mentioning).

Thanks for the advice everyone. So Lets say I have £500 in my Lloyds account, do you advise that I take all this out over the next two days and open a new account elsewhere and leave £0 balance in my Lloyds? I understand then that I will go in the red, how long afterward do you think I should expect a call from them? Do I then just explain that I am going into an iva? I am not looking forward to the calls but I no I have to face up to it to see light at the end of the tunnel. With regards to closing the Lloyds account, does that just stay open then for the next 5 years till I have paid them back what is agreed in the iva?
Thanks for your help

I would get the money out of the Lloyds account as soon as you can, as presumably it is needed for ongoing living costs. You must not run up an overdraft with Lloyds, as this would be creating a new creditor at a time when you have recognised that you are insolvent.

Do keep your creditors informed of what your intentions are, and once the IVA is accepted the bank will generally close the account.

HSBC did this to us, we had opened a new account and tried to stop the loan payment, but were unable to. They used to bounce a payment every month!

They eventually sold the debt onto another company and our account was closed.

If claire takes out all of her money, Melanie, and they take out the loan payment, that will make her go overdrawn won't it? Will it be a new creditor though as she has a loan with Lloyds TSB

No - it will be the bank "robbing Peter to pay Paul" and the net effect is neutral.

Thank you. I hadn't thought of it like that.

I had a current account with First Direct and a loan with them.

I took all my wages out, then I told them that I was going to open a new account elsewhere, and that I would contact them with the new account details for the loan DD. Which I didn't.

The next day I then closed my First Direct account. They never tried to take the loan payment out.

Therefore it didn't create an overdraft.

You were lucky then - I lost count of the number of times I tried to cancel the payment and wasn't allowed to.

I got fed up of writing and speaking to HSBC as well telling them I couldn't afford to pay it and offering a lesser amount. I might just as well have spoken to the wall!

I was totally surprised when they allowed me to cancel the dd, I didn't expect them to. Perhaps I got the 'new girl' on the phones!

They have since wrote to me advising me that as I am applying for an iva I can no longer have an account with them. Lucky that I had already closed it then.

I had seen a previous post about their policy, so I wasn't too surprised to get the letter.