Our Suggestions For A New Bank Account During A Debt Management Plan
Co-operative Bank Cashminder Account
To review this account further please visit the Co-op Bank Page at: Cashminder Account
Debt Management Plan Forum View: This Account Could Be Suitable For You If:
Nationwide Cash Card Account
To review this account further please visit the visit the Nationwide Building Society’s Page at: Cash Card Account
Debt Management Plan Forum View: This Account May Be Suitable For You If:
ClearCash Prepaid MasterCard & icount facility (Various Fees Apply)
Further information on the ClearCash website: ClearCash Prepaid Mastercard *
thinkmoney Personal Account (Monthly Account Fee Applies)
Debt Management Plan Forum View: This Account May Be Suitable For Your Needs If:
Reasons To Change Bank Account Before Debt Management Plans
If you are about to proceed with a debt management plan (DMP) or other debt solutions (like an IVA or bankruptcy) you will generally be advised to get a new current account before you go ahead.
One reason for this is the likelihood that you already have debts with your current account provider. Such debts might be overdrafts, loans, or credit cards for example. These debts will generally become creditors dealt with by your debt management plan.
A failure to move your current account at an unconnected bank (that you owe nothing to) will put you at risk of “setting off”. Setting off is the situation in which a bank takes cash from one of your accounts to help repay another.
The following example may help to demonstrate the risk of setting off during a debt management plan. Let’s say you start your DMP and therefore you have not paid your bank loan directly to “Bank of NatWestShire” when it was due to be paid. If “Bank of NatWestShire” then finds out your monthly salary has just been paid into your current account (at their bank) they might remove funds from your current account to pay your missed loan instalment. You may then have no cash for essential costs like your mortgage, rent, utility bills, or council tax.
A further area of risk is that your bank could decide that they no longer want your current account business as you have other accounts with them that are now in a debt management plan. When told that your DMP includes debts owed to them there is a serious risk they’ll no longer allow you to use your current account at all.
Why Apply For A Basic Bank Account As Part Of Setting Up A DMP?
If you have already missed debt repayments your credit rating will probably be damaged already. The result of this is that banks will be unlikely to grant you a new account with facilities like an overdraft. The same may be true simply because you have significant debts even if you have not yet missed any debt payments.
There is also a risk that, if you did get a more complex account with extra features, the new bank might not wish to continue to extend these facilities to you if they were to discover your declining credit score in the future (after the debt management plan is up and running).
Basic bank current accounts will not generally offer credit facilities. However they should still offer good-quality functionality and customer service. The lack of credit facilities will generally be a bonus as continuing to use new credit after a debt management plan has started is likely to be a dangerous move for a number of important reasons.
Visit Our Debt Management Plan Forum If You Have Further Questions
If you have further questions about bank accounts you may wish to visit our debt management plan forum itself. Experts on debt management plans are on-hand to answer any questions you might have about banks accounts and the commencement of a DMP
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