What to do if…
you are charged for an old negative balance you believed was settled

What to do now

1. Protect your essential money first.

   • If money has already been taken and you cannot cover rent, mortgage, food, council tax, utilities, or travel to work, contact your bank the same day and say the deduction is causing financial difficulty.
   • Ask whether they can return the money, stop further charges, or give short-term help while the dispute is checked.
   • If you are worried the same banking group may take more money from another account, you can consider having your next income paid into an account with a different banking group for now. Before doing this, make sure essential direct debits and standing orders are still paid.

2. Work out what kind of charge or demand this is.

   • If a Direct Debit was taken by mistake, ask your bank for a refund under the Direct Debit Guarantee and ask them to reverse any fees or interest caused by the error.
   • If money was moved between your accounts, ask whether the bank used set-off, what debt they say was due and payable, what notice or account terms they rely on, and whether they considered your financial difficulty.
   • If a debt collector has written to you, treat it as a disputed debt and ask for written proof before discussing payment.

3. Make a quick proof pack.

   • Save any settlement letter, “paid”, “settled”, or “closed” confirmation, final statement showing a zero balance, app screenshots, reference numbers, and messages agreeing a final amount.
   • If you do not have these, ask the bank or firm for the final statement, transaction history, and a full breakdown showing dates, interest, fees, reversals, payments, and adjustments.

4. Send a written dispute.

   • Put this at the top: Formal dispute: old negative balance believed settled.
   • Include your name, address, account or reference number, the amount taken or demanded, and the date you noticed it.
   • Write: I dispute that this balance is owed. I understood it was settled. Please provide the evidence and a full calculation before taking further recovery action.
   • Ask them to mark the account as disputed, pause recovery action and further charges while they investigate, and explain in writing if they refuse.

5. If a debt collector is involved, keep it short.

   • Write that you dispute the debt and ask for proof of the debt, the original creditor, the date and source of the balance, and a full statement showing how the amount is made up.
   • Ask them to pause collection activity while they check the dispute with the original creditor.
   • Keep copies of every letter, email, and screenshot.

6. Check for credit-file damage.

   • Check your reports with the three main UK credit reference agencies: Experian, Equifax, and TransUnion.
   • Look for a new default, arrears marker, balance change, or reopened account linked to the old balance.
   • If something looks wrong, dispute it with both the credit reference agency and the company reporting it.

7. Start the complaint route if the firm does not fix it quickly.

   • Tell the bank, lender, or collector that you want this handled as a formal complaint and ask for a complaint reference.
   • If you receive a final response and are still unhappy, you can usually take the complaint to the Financial Ombudsman Service within six months of the date on the final response.
   • If you have not received a response within eight weeks, you can usually ask the Financial Ombudsman Service to look at it without waiting longer.

8. Get free debt advice if pressure is heavy or essentials are at risk.

   • A free debt adviser can help you decide what to send, whether to pay anything, and whether Breathing Space is suitable.
   • A standard Breathing Space generally has to be started through an authorised debt adviser or a local authority debt advice provider; you usually cannot start it yourself.