When you start thinking about an IVA, one of the first things that crosses your mind will be what do I do about my bank account. Will I be able to keep it? Will I be asked to change it. How difficult will changing it be?

Can I have a Bank Account in an IVA?

Actually, the answer to this question is pretty straight forward. When you enter into an IVA, absolutely you can run your own bank account no problem. In fact it is difficult to do an IVA without one because you will need to make regular monthly payments and these normally come directly from your own bank account.

Can I keep the Account I use now?

You will normally be able to keep your account if you do not owe the bank any money. For example, if you bank with Barclays and all your creditors are with other banks, there will be no need to change you account. If you do owe your current bank money (perhaps in the form of a loan, credit card or significant overdraft) then it is likely that you will have to change the account.

Choosing a New Bank

The first thing to do will be to choose the bank. You should go somewhere where you do not already owe any money. Make sure you choose a bank which does not have any connections with your creditors. For example, it is no good opening a new account with Halifax if you owe money to Bank of Scotland as Bank of Scotland own Halifax.

I have found in the past that Halifax, Nationwide and Abbey have all been very helpful particularly if you are looking for a Card Cash Account (see below). More recently, Barclays, NatWest and Bank of Scotland have also been happy to help IVA clients I have worked with.

Current Account v Card Cash

Once you have chosen the bank to speak to, be aware that there are two different accounts. The standard Current Account and the simpler Card Cash. The type of account you choose will depend on your credit history.

If your credit history is currently fine (i.e. you have not missed any monthly creditor repayments), then you will be able to apply for a standard current account with a cheque book and debt card. I suggest however, you decline any offer of an overdraft facility or new credit card. When you are in an IVA, using these lines of credit may mean you breach the terms of the IVA.

If your credit history is already poor, you will need to apply for a card cash account. This is a simple bank account with no credit facilities. There will be no cheque book and normally no debit card. Just a cash card with which you can take out cash from the bank’s ATM machines. You will be able to have your wages paid into this type of account and set up direct debits and standing orders.

Having no debt card can be inconvienient. However, if you feel you can not live without one, you can now apply for a Pre-Paid Debit Card facility. You can get a prepay mastercard from www.mycashplus.co.uk. It costs around 16 pounds initially and 5 pounds per month to use. There is also a prepay maestro card available from www.extremecred.com their card is nine pounds, but you need to purchase online with another debit card, so someone would have to do this for you.

This entry was posted on Tuesday, March 20th, 2007 at 2:37 pm and is filed under IVA Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.