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JGM
JGM, Solicitor
Category: Law
Satisfied Customers: 10092
Experience:  30 years as a practising solicitor.
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I have a small company with an overdraft of £180,000 and assets

Customer Question

I have a small company with an overdraft of £180,000 and assets of £330,000 I have always paid the interest on the overdraft. about 9 months ago i got a letter from RBS saying they wanted their money repaid in full, they also upped the interest rate on the overdraft from 3.5% to 7.5%. Today they stopped the 1 company credit card from being used although it had always been paid off in full monthly and i expect them to close the main account shortly..
What can i do about this situation as i am still trading aand expect trade to get better in the future.
The bank wont listen to anything i have to say and just want their money back
Submitted: 2 years ago.
Category: Law
Expert:  JGM replied 2 years ago.
Thank you for your question.

This, I am afraid is typical of this bank. You will have to have someone read over all the various paperwork you have with them but the difficulty you face is that an overdraft is generally payable on demand (unlike a loan which is contractually paid over the loan period). Again the interest rate on an overdraft is generally the subject of negotiation but from what the bank has done, whilst they may be within their rights legally, they have acted in poor faith, and in a manner as could pull you down in circumstances where you are servicing the debt and intend to bring the indebtedness down in the future.

I presume your accountant has given over cash projections to this effect. If not these may be helpful. You may also want to try to get to a higher level within the bank so as to try to get a more meaningful discussion.

You will have read in the press stories of this bank putting businesses under so much pressure that they can't carry on and then the bank buy up their assets at knock down prices. I'm not saying that that is the agenda here but you might want to take advice from your accountant and discuss whether an approach should be made to the Financial Services Ombudsman and ask him to investigate.

Happy to discuss further.

Please leave a positive response so that I am credited for my time.
Customer: replied 2 years ago.

Hello


The bank have raised the interest rate from 7.5% to 8.86% today and demanded payment on the 24th September. Can these people legally just raise the interest rate indefinately until they ruin me.
Expert:  JGM replied 2 years ago.
As advised before, you have to examine the paperwork to see what the bank can and can't do. Generally though an overdraft facility is repayable on demand.

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