Do I Need To Change My Bank Account With An IVA? Hamilton Price

Do I need to change my bank account with an IVA?

Do I need to change my bank account with an IVA?

There is a lot of confusion across the web in regards to whether you will be required to open up a completely new bank account with a different provider when you enter into an IVA. It is not always necessary for you to move banks when proceeding with an IVA. However, there are certain circumstances when it is essential you move bank accounts prior to IVA proceedings.

If you do not hold any debt with your current account provider, such as an overdraft, loan or credit card debt, then you needn’t change bank. If, however, you do hold debts with your current account provider, it would be greatly recommended you switch bank accounts.

The reason a change of bank account is highly recommended under these circumstances is because banks have the right to “set-off”. This basically means they are able to transfer funds from one of your accounts, for example, your current account where you wage is paid into, to pay off debts held on another account that you hold with them.

The main concern here being they needn’t seek your authorisation at any point to do this either. As a result, if you were to remain with your current bank account while entering into an IVA your bank is within its rights to transfer money from your current account to pay back debts owed to them through the IVA. Your bank is also within its rights to deduct funds to pay back debts held in the IVA at any point, meaning if you bank account funds become insufficient due to the IVA deductions, you may face penalty charges from your bank for missing any other direct debit or standing order payments you may have set up. For this reason, you may find that it is in your best interest to switch banks prior to your IVA proceedings.

Another change you may want to seek is moving your current account to a ‘basic account’. This means there is absolutely no credit facility attached to it. You will find that most basic accounts still come with the standard internet banking so you can shop online and pay for items electronically. As well as that all basic accounts provide you with a debit card, and are able to facilitate direct debits and standing orders. So there really is minimal difference between a current account and a basic account.

You may find that even if you do not hold debt with your current account provider they may seek to close your account with as little as a 30-day notice period once they are aware of your IVA proceedings. So it is best to have a basic account set up prior to your proceedings.

If you would like more information on what to do about your banking situation and how to initiate IVA proceedings, Hamilton Price provide 24-hour advice 7 days a week on Freephone 0800 088 2599 – or you can request a call back by visiting www.hamiltonprice.co.uk

 

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