Bank Accounts and Debt

How debt will affect your bank account

If you are trying to solve your debt problem one of the first things you will need to think about is your bank account. Whichever debt solution you use you will need a bank account to help you manage your money.

Unfortunately you may not be able to simply continue using the account you have now. If you owe a debt to the bank where you have your account and this is going to be included in your debt solution you will need to move to a different bank. If you do not you may find that once you start the solution your bank begins to take cash from your account to repay the money it is owed without your authorisation.

How is your bank account affected by debt?

If you are struggling with debt then the money that is paid into your bank account could be at risk. There are two main reasons for this. The first is the banking set off rule which means that if you fall into arrears with any of the debts that you owe to your bank they can help themselves to the cash that is in your bank account to repay these. The second is if you owe money to a Payday loan company which is paid via a Continuous Payment Authority from your debit card it can be difficult to cancel this.  The only way to overcome these issues is often to open a completed new account with a different bank. More information about this is available here.

How to get a bank account if starting an IVA

If you are planning to start an IVA (Individual Voluntary Arrangement) you will usually need to open a new bank account if you owe money to the bank you are with now and this debt is going to be included in your IVA. The process of opening a new bank account might seem daunting however in reality it is very easy. You simply need to follow a few guidelines about which bank to choose and the type of account to apply for. These are explained in more detail here.

How to get a bank account if starting a DMP

If you are planning to start a DMP (Debt Management plan) you will usually need to open a new bank account if you owe money to your bank and this debt is going to be included in your plan. The process of opening a new bank account might seem daunting however in reality it is very easy. You simply need to follow a few guidelines about which bank to choose and the type of account to apply for. These are explained in more detail here.

How to get a bank account if going Bankrupt

If you are planning to declare yourself bankrupt you will normally have to open a new bank account and you should do this before you start the bankruptcy process. This is because any accounts you are currently using will normally be frozen after you have been declared bankrupt. Unfortunately the selection of accounts which you can open and use while you are bankrupt is relatively limited however there should always be an option for you. You simply need to follow a few guidelines about which bank to choose and the type of account to apply for. These are explained in more detail here.

Managed Bank accounts & Pre Paid Debit Cards

If you are trying to resolve a debt problem and you need to open a new bank account you do not always have to approach a high street bank. There are a number of financial organisations who offer so called Managed Bank accounts. These can be opened without a the need to pass a credit check and can be particularly useful if you are not good at managing your money as they are designed to help you with this. If you do not have access to a debit card with your bank account you may also consider getting a pre paid debit card. However these  type of cards are becoming less and less popular as most managed bank accounts and simple card cash accounts now come with a debit card as standard. More information about both of these types of facilities is available here.