{"id":9900,"date":"2011-02-09T11:18:36","date_gmt":"2011-02-09T11:18:36","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=9900"},"modified":"2021-05-06T16:04:49","modified_gmt":"2021-05-06T15:04:49","slug":"keep-bank-account-in-an-iva-2","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/keep-bank-account-in-an-iva-2\/","title":{"rendered":"Keep Bank account in an IVA"},"content":{"rendered":"\n

Can I keep my Bank account in an IVA?<\/h2>\n\n\n\n

A current account is like a best friend of long standing, someone you have known for a long time, whom you trust, who is reliable and dependable, who doesn\u2019t let you down and who knows all your (financial) secrets. <\/p>\n\n\n\n\n\n\n\n

Like a good friend your current account gives even when there is nothing left to give i.e. when you are overdrawn. Sometimes you make unreasonable demands on it like exceeding your authorized credit limit. If your current account could talk it would have a real 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 find yourself in financial difficulty and are considering entering into an Individual Voluntary Arrangement (IVA), you may have to say goodbye to your old friend. The problem is the overdraft facility. If you are insolvent \u2013 as you need to be to enter into an IVA \u2013 all of your debts have to be entered into the arrangement. Chances are that your current account is overdrawn at any given time although it may be in credit at times such as when your wages, salary or other income is paid into it. However, if you are like the majority of ordinary people in these recessionary times, your current account will usually be overdrawn, often up to and sometimes over your authorized credit limit. In any case the balance of your current account is likely to fluctuate somewhere between your overdraft limit and a small credit balance. As soon as your bank becomes aware that you are considering entering into an IVA, it is likely to freeze all current account transactions (apart from lodgments, obviously).<\/p>\n\n\n\n

This could be a disaster for you particularly since your account might be in a reasonably healthy state comparatively speaking. For example, your salary may have just been paid into it and suddenly you cannot access cash from the hole in the wall. On top of that, direct debits mandates for your mortgage or rent, vehicle HP, utilities such as water, gas and electricity, TV license, house and car insurance, life assurance, council tax, Sky and so on might cease to be executed by your bank. This is particularly so if you have other credit accounts with the same bank \u2013 such as personal loans or credit cards. <\/p>\n\n\n\n

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

The one exception is that you will usually be allowed to have a \ncurrent account. Before you proceed with your IVA, your IP is likely to \nadvise you to open a brand new current account with a bank (or other \nfinancial institution) with which you have no liabilities. The new \naccount will normally have no overdraft facility or at best a very small\n one. For example, with the express permission of your IP, a nominal \noverdraft facility of perhaps up to \u00a3100 may be permitted. Your IP may \nrequire that the new account be restricted in other ways relating to the\n use of checking or debit card facilities. Having opened the new account\n you must arrange to have your salary (or other income) paid directly \ninto it. You must also ensure that direct debits mandates for your \npriority debts such as your mortgage, car HP and utilities are set up on\n the new account and that all your old direct debits mandates and \nstanding order instructions for non-priority debts (such as personal \nloans, credit card accounts, store card accounts and other unsecured \nliabilities) on your old account are stopped. You will cease making \npayments on all of your unsecured debts other than your priority debts. \nThe timing of these activities is important and it probably should be \ndone well in advance of the circulation of your IVA proposals.<\/p>\n\n\n\n

Of course, provided that your existing current account is not \noverdrawn and that you have no other liabilities to that lender you may \nretain that current account, although you will be obliged to remove any \noverdraft facility that applied to it. However, people often prefer to \nopen a new account rather than have to try to explain matters to their \nold bank with whose staff they may have longstanding and close personal \nrelationships. Your IP will be able to suggest alternative banks or \nbuilding societies which are not associated with your existing current \naccount provider and with whom you have no other liabilities. Indeed \neven if you are not insolvent now but fear that you may become so at \nsome time in the future, you might consider opening and maintaining a \nclean current account now, given the potential difficulty in doing so \nwhen your credit file begins to be impaired.<\/p>\n","protected":false},"excerpt":{"rendered":"

In an IVA, you might not be able to keep your current bank account<\/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":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-9900","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\/9900","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=9900"}],"version-history":[{"count":3,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/9900\/revisions"}],"predecessor-version":[{"id":13573,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/9900\/revisions\/13573"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=9900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=9900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=9900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}