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How do I choose a bank account before I get an IVA ?

When you begin an Individual Voluntary Arrangement (IVA) you will need to open a new bank account as soon as possible. This is because, in the majority of cases, people with debt problems will have at least one debt with their current bank. Therefore your new account should be with a bank that is not one of your creditors.

Why do I need another bank account?

When considering an Individual Voluntary Arrangement as a method of becoming debt free you must make sure that your creditors are treated equally.
For this reason it is necessary for you to open a brand new account that is not related to your debt. Make sure that you check an up-to-date list of which banks and financial companies are linked. You will not need to open a new account should you have one with a completely different bank already.

It is vital that you select a bank unrelated to your debt because if you start missing repayments then they may take any money that is being paid into one of their other accounts and use this to pay and set off the debt. This means that your IVA and creditors will be missing out on vital money. Whereas if you have an entirely new account the bank will be unable to touch the money and it can be put towards the IVA. For this reason you will be told to open the new account before commencing your IVA.

What type of account should I open?

When it comes to opening a new account you will not be able to open anything other then a basic bank account. You should not try to open an account that will have any form of credit attached to it. This means no overdraft, credit card or cheque book as you are unlikely to be allowed credit under your IVA.

You may have a debit card facility but only to have access to money that is in the account already.

If at any point you are unsure of what to do then please contact a professional for help and guidance, specifically with opening a bank account for an IVA.