Notice of defaults: everything you need to know
Find out which debt solution is right for youGet started
Answer a few simple questions
See if you are suitable
Understand your next steps
If you're on an IVA (Individual Voluntary Arrangement) and you try to find a bank account, you might find it difficult.
This is because, although an IVA can help you deal with your problem debts, it does damage your credit rating in the medium to long term.
When you try and get a High Street bank account, they more often than not look at your credit report. If your credit rating is poor, they may reject your application - and your credit rating will be damaged for six years from the day you start your IVA.
However, this doesn't mean that you can't get any bank account. After all, there are accounts that don't credit check when you apply.
Which bank accounts accept people on IVAs?
There are accounts known as 'basic bank accounts' that usually accept people no matter what their credit rating is like, as long as they can prove their identity. Basic bank accounts work in much the same way as 'normal' bank accounts, i.e.:
- You have an account to keep your money in
- You have a cash card, or a debit card for spending online and in-store as well as withdrawing funds
- You usually have online and/or telephone banking so you can manage your money and pay your bills wherever you are
However, there are usually a few important differences too. For example, basic bank accounts do not generally offer an overdraft facility (although there are a few that do offer fairly limited overdrafts or 'buffer zones').
So if you're on an IVA, or considering one, it's well worth looking into what's available.
For example, there's the thinkmoney Personal Account, an alternative to a bank account. It doesn't run a credit check and comes with a built-in 'Money Manager' service that's designed to help you stay on top of your finances.
Is an IVA worth it, then?
Not being able to get a 'normal' bank account may be a bit of a hassle. However, it shouldn't dissuade you from looking into an IVA if you're really struggling with your unsecured debts (things like credit cards, overdrafts and personal loans).
That's because the benefits of an IVA include:
- Lower monthly payments based around your budget - so you can actually afford your payments every month
- Interest and charges are frozen automatically
- A dedicated debt expert will deal with all contact with your lenders for you
- At the end of your IVA (usually five years) any remaining unsecured debt will be written off, as long as you've upheld your side of the agreement.
- Homeowners can keep the home they're living in (unlike with bankruptcy) - although you may have to remortgage to release equity. If you can't do this for any reason, your IVA may be extended by a year.
You can find out more about IVAs on our Frequently Asked Questions page.
IVAs aren't suitable for everyone, though. If you're not sure, you can out our debt solution finder tool below. It will recommend an approach that might be suitable (whether that's an IVA or not) and a friendly debt expert will be in touch for an informal, no-obligation chat about your circumstances.
They can also talk you through some of the other downsides of an IVA - for example the fact that you might have to release some equity in your home (if you own it).
by Kyri LevendiBack to blog home