{"id":1077,"date":"2013-12-16T14:50:21","date_gmt":"2013-12-16T14:50:21","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=1077"},"modified":"2019-01-30T10:15:56","modified_gmt":"2019-01-30T10:15:56","slug":"iva-and-bank-account","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/iva-and-bank-account\/","title":{"rendered":"IVA and Bank Account"},"content":{"rendered":"\n

A current account is like a best friend of long standing, someone you have known for a long time and trust to help you. It is reliable and dependable. Sometimes you make demands on it that are bordering on unreasonable but it never lets you down.<\/p>\n\n\n\n\n\n\n\n

Like a good friend it gives even when there is nothing left to give. It knows all your (financial) secrets. If it could talk it would have some story to tell. Your ups and downs for many years are chronicled in its records and you have confided in it to an extent that you couldn\u2019t or wouldn\u2019t confide in a human best friend. <\/p>\n\n\n\n

\"Bank<\/figure><\/div>\n\n\n\n

It comes as a bit of a shock then that if you are in financial \ntrouble and are considering entering into an Individual Voluntary \nArrangement (IVA) that you may have to say goodbye to your old friend. \nThe problem is the overdraft facility. If you are insolvent \u2013 as you \nneed to be to enter into an IVA \u2013 all of your debts have to be entered \ninto the arrangement. Chances are that your current account is overdrawn\n at any given time. It may be in the black at times when your wages, \nsalary or other income is paid into it but if you are like the majority \nof people in these recessionary times, its usual colour is an \nembarrassing red. In any case the balance of your current account is \nlikely to fluctuate somewhere between your overdraft limit and a small \ncredit balance. Your bank is likely to freeze all transactions on the \ncurrent account as soon as it becomes aware that you are planning to or \neven just considering entering into an IVA.<\/p>\n\n\n\n

This could be a disaster for you. Your account might be in a \nreasonably healthy state comparatively speaking for example when your \nsalary has just been paid into it and suddenly you cannot access cash \nfrom the hole in the wall. Direct debit mandates for your mortgage or \nrent, vehicle HP, utilities such as water, gas and electricity, TV \nlicense, house and car insurance, life assurance, council tax, Sky and \nso on cease to be executed by your bank.<\/p>\n\n\n\n

If you enter into an IVA<\/a>, you will have to stop using all forms of credit except with the express permission of the Insolvency Practitioner<\/strong> (IP) supervising the IVA. If your IVA is approved by your creditors, you will be expected to cut up any credit cards or store cards you may have. Furthermore, you will not be permitted to obtain any new credit cards or store cards during the term of your IVA, which is frequently of five years duration. Breaching this requirement will almost certainly lead to the failure of your IVA.<\/p>\n\n\n\n

The one exception is that you may have a current account and the \nusual practice is that before you proceed with your IVA, your IP is \nlikely to advise you to open a brand new current account with a bank (or\n other financial institution) with which you have no liabilities. The \nnew account will normally have no overdraft facility.  However, with the\n express permission of your IP, a nominal overdraft facility of perhaps \nup to \u00a3100 may be permitted. Your IP may require that the new account be\n restricted in other ways relating to the use of checking or debit card \nfacilities. Having opened the new account you must arrange to have your \nsalary (or other income) paid directly into it. You must also ensure \nthat direct debits mandates for your priority debts such as your \nmortgage, car HP and utilities are set up on the new account and that \nall your old direct debits mandates and standing order instructions on \nyour old account are stopped. You will cease making payments on your \nunsecured debts other than your priority debts. The timing of these \nactivities is important and it probably should be done well in advance \nof the circulation of your IVA proposals.<\/p>\n\n\n\n

Of course, if your existing current account is not overdrawn and you \nhave no other liabilities to that service provider you may retain that \ncurrent account, provided that any overdraft facility is removed. \nHowever, people often prefer to open a new account rather than have to \ntry to explain matters to their old bank. Your IP will be able to \nsuggest alternative service providers who are not associated with your \nexisting current account provider. Indeed even if you are not insolvent \nnow but fear that you may become so some time in the future, you might \nconsider opening and maintaining a clean current account now, given the \npotential difficulty in doing so when your credit file begins to be \nimpaired.<\/p>\n","protected":false},"excerpt":{"rendered":"

A current account is like a best friend of long standing, someone you have known for a long time and trust to help you. It is reliable and dependable. Sometimes you make demands on it that are bordering on unreasonable but it never lets you down.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-1077","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=1077"}],"version-history":[{"count":4,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1077\/revisions"}],"predecessor-version":[{"id":1186,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/1077\/revisions\/1186"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=1077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=1077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=1077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}