10 Oct What Happens to Your Overdraft During Debt Review?

The weight of financial debt can be crushing, and for many of us, an overdraft feels like a never-ending cycle of financial pain. It’s the feeling of constantly owing more than you have and being stuck in a never-ending loop. As a result, you might be considering debt counselling and are asking yourself: “What happens to my overdraft when I go under debt review?”. Keep reading to find out all you need to know when it comes to undergoing debt review with an overdraft.

Understanding Overdrafts

Before delving into the impact of debt review on overdrafts, it’s important to understand what an overdraft is. An overdraft is a financial arrangement offered by banks that allows you to use more money than is available in your account, essentially “borrowing” money from the bank. While it can be a helpful financial tool in emergencies, it can also lead to substantial debt if not managed properly.

Overdrafts typically come with high-interest rates and fees, which can accumulate quickly if the overdraft is not repaid on time. Many people find themselves trapped in a cycle of overdraft usage, making it difficult to break free from the debt cycle.

The Harsh Reality

One of the harsh realities of undergoing debt review is that you cannot continue to use your overdraft facility. As per the terms and conditions of debt review, you are prohibited from taking on any new debt, and this includes using your overdraft.

The moment you enter debt review, your overdraft will be frozen. This means that you will not be able to withdraw any more money from your overdraft, and you will not be able to use it to make any payments. While this may initially seem restrictive, it is an essential step towards regaining control of your finances.

Even though your overdraft is frozen during the debt review process, you will still be liable for any interest and fees that accrue on it. This may seem unfair, but it’s important to remember that these fees were part of the original terms when you agreed to the overdraft.

However, when you undergo debt review with True North Debt, we will work diligently to negotiate with your creditors to reduce your monthly repayments, which includes addressing your overdraft. While the interest and fees continue to accumulate, the negotiated repayment plan should ease the burden of these costs.

The Light at the End of the Tunnel

The light at the end of the tunnel comes when you complete your debt review process and all of your debts have been paid off. At this point, your overdraft will be unfrozen, and you will regain access to it. This moment is a testament to your commitment and dedication to getting back on track financially. With your debts settled and a clearer financial outlook, you’ll have the opportunity to use your overdraft wisely and responsibly, should you need it in the future.

Apply for a Debt Review Now

If you find yourself overwhelmed by debt and in need of professional assistance, don’t hesitate to contact us. Take the first step towards financial recovery by applying for a debt review at True North Debt. It’s time to regain control of your finances and embark on a brighter financial future.