It’s true you’ll need to change bank accounts. IVAs require that all unsecured debts are included in the agreement, even small overdrafts, so obviously, it will be necessary for you to move to another bank, who will be able to provide you with a functioning bank account for your day to day needs.
If you didn’t change bank accounts, IVA payments might become disrupted, should the bank decide to freeze any funds in lieu of other outstanding accounts they hold.
Changing bank accounts is necessary even if you do not have an overdraft.
In situations where you are unable to continue to make loan payments or order to stop making the payments, the bank will continue to take the funds out of your account whether the money is there or not, which will create an unauthorised overdraft. and anyone who has had an unauthorised overdraft will tell you the costs are extreme, and build rapidly.
So it is vital that all current account details are passed to the Insolvency Practitioner for inclusion into the IVA, and a new account is opened.
And remember, the new bank account should only be opened with a creditor you have no debts with, either directly or by associated companies.
Changing bank accounts can pose as one of the biggest mental barriers to overcome when applying for an IVA.
After all, many people have been loyal to the same bank account for many years, and often know the staff in the branch by name. The thought of changing the bank account they have held for a long time can take some getting used to.
But nevertheless, it is necessary, as changing bank accounts allows IVA payments to remain unaffected.
If you are experiencing trouble with opening a new bank account and would like some help, or if there’s another aspect of the IVA process you want to discuss, just call 0800 088 7503 and one of our IVA advisers will be there to guide you.
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