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Keeping A Bank Account During Your Trust Deed

Reason 1 - Set-Off

Reason 2 – Frozen Bank Accounts & Bank Account Closures

 

Banks may choose to freeze your bank account if you start a trust deed. Banks monitor the public insolvency registers. Freezing is more likely if you owe your bank money. A frozen bank account will leave you unable to pay bills.

 

Your trustee may be able to get a bank to unfreeze your account. This may not be immediate.

 

Your bank may choose to close your account. This is more likely if you owe them money. It’s more likely if you have credit facilities. Until you open a new bank account you may face serious problems. This could take several days or longer.

 

What Type Of Bank Account Can You Choose?

Choose a current account with a bank that you owe no money to.

 

Most banks offer a basic current account. You may need to check their websites in detail to find their basic accounts. They aren’t promoted as well as other current accounts. Choose the basic current account that they offer.

 

It’s important to check that you can keep the account while in a trust deed. This will reduce the risk of your account getting closed or frozen.

 

Basic bank accounts are often free. They don’t come with credit facilities like an overdraft. You won't normally have a chequebook.

 

They do provide a debit cards. Online banking and banking apps are common. You can set up standing orders and direct debits.

 

These accounts are basic, but functional and usable.

 

Which Bank Should You Use?

The service-levels and products offered by banks vary. Which? (the consumer website) provides an annual ranking of banks. You can view the 2019 report here.

 

Be aware that the following banks scored poorly in 2019:

 

• TSB

• RBS

• HSBC

• Bank of Scotland

• Clydesdale Bank

 

How To Open Your New Bank Account

 

Most banks will allow you to apply online. Electronic ID checks are common. Provided you pass the check, physical ID (like a passport) isn't needed. This can be the fastest option.

 

You can visit a local branch. Beware of staff trying to sell you upgraded accounts (with extra fees).

 

The Switching Guarantee

 

Most banks subscribe to the “current account switching guarantee”. Your old and new bank should work together. They can transfer direct debits and standing orders for you. This should happen within seven days. Read more about how it works here.

 

You will need to arrange for your income to get paid into your new account. Contact your employer, pension provider, or benefit provider to arrange this. You’ll need your new bank account details.

 

Switching your bank account is much easier than it used to be.

 

Move Funds To Your New Bank Account

 

If you have money in your old bank account, it will be at risk of set-off.

 

Move any surplus funds to your new bank account.

 

Joint Bank Accounts

 

You can use a joint bank account during your trust deed.

 

Remember that this will create a link between each of your credit files. You will be “financially associated”.

 

If the other person has a good credit rating, this is best avoided.

 

Getting Advice

 

Are you thinking about starting a trust deed? Our advice team can help you.

 

Please get in touch for high-quality debt advice and support.

 

As part of this process, we can guide you to a suitable new bank account.

 

 

Author: Andrew Graveson

Qualified Debt Adviser & Trust-Deed.co.uk Founder

 

Page Last Updated: 20/08/2019

 

 

 

 

(c) Channel Active Limited. Company Number: 06412452. Data Protection Registration: Z1332750.

Telephone calls may be monitored or recorded. Authorised and regulated by the Financial Conduct Authority.

Trust-Deed.co.uk, Clyde Offices, 2nd Floor, 48 West George Street, Glasgow, G2 1BP. Tel: 0141 2490416.

 

(c) Channel Active Limited. Company Number: 06412452. Data Protection Registration: Z1332750.

Telephone calls may be monitored or recorded. Authorised and regulated by the Financial Conduct Authority.

Trust-Deed.co.uk, Clyde Offices, 2nd Floor, 48 West George Street, Glasgow, G2 1BP. Tel: 0141 2490416.