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Suggested Bank Accounts While You’re In A Trust Deed

On this page we suggest three bank accounts you may wish to consider opening before you commence with a debt solution in Scotland.

Further down the page you’ll find additional information about why so many people are required to switch their bank accounts at this stage (and what the consequences might be if you don’t).

Co-operative Bank Cashminder Account

Advantages:

  • No monthly account charge.
  • Available if you’re in a protected trust deed
  • Apply by telephone, or in-branch.
  • Bank online, by telephone, or in-branch.
  • A debit card is provided.
  • You can set-up standing orders and direct debits.
  • You can nominate a local Post Office for basic banking transactions if necessary.
  • 7 day switching service available.

Disadvantages:

  • Limited branch network.
  • Not available if you’re an undischarged bankrupt.
  • Charges will apply for unpaid items or going overdrawn.
  • Repeated instances of unpaid items likely to result in account closure.

Our view: The Co-operative Cashminder Account May Suitable If:

  • You do not regularly have insufficient funds in your account to make standing order or direct debit payments (otherwise bank charges will apply and your account may be closed).
  • You are comfortable with the limited branch network (Post Office access available).

Learn more on The Co-operative Bank’s website: Cashminder Account

Barclays Basic Current Account

Advantages:

  • No monthly account charge.
  • Available if you’re in a Scottish trust deed.
  • Also available to undischarged bankrupts.
  • Bank online, by telephone, or in-branch.
  • A debit card is provided.
  • You can set-up standing orders and direct debits.
  • 7 day switching service available. You do not owe money to Co-operative bank, Smile, or Britannia.

Disadvantages:

  • Account applications must be made in a branch.
  • Branch network limited in some regions.
  • You will be unable to go overdrawn, so important payments might be stopped.

                                                              
Our view: The Barclays Basic Account may be suitable if:

  • You do not owe money to Barclays Bank.
  • You’re bankrupt (few other mainstream banking options exist).
  • You do not regularly have insufficient funds in your account to make standing order or direct debit payments (otherwise important payments might not be issued).
  • You have reasonable access to a local branch.

Learn more on the Barclays website: Barclays Basic Current Account

thinkmoney Personal Account (*monthly account fee charged)

Advantages:

  • Help with budgeting
  • No credit check as part of the application process.
  • Apply online or by telephone.
  • Bank online or by telephone.
  • A debit card is provided.
  • You can set-up standing orders and direct debits.
  • No charges apply for unpaid items or going overdrawn.

Disadvantages:

  • It’s expensive - a monthly account fee of £17.50 applies (£24.50 for joint accounts).
  • No branch network.

Our View. thinkmoney Personal Account May Be Suitable If:

  • It would be useful to have extra help with budgeting. This appears to be the primary potential benefit of this account (a benefit that not everybody will need).
  • You are having great difficulty opening a bank account elsewhere.
  • You wish to avoid bank charges for unpaid items or going overdrawn (remember some other banks also offer basic bank accounts that do not impose these charges).
  • You are comfortable with banking only online and by telephone.

Learn more on the thinkmoney website: thinkmoney Personal Account

Why You May Need To Change Banks Before Your Scottish Trust Deed

If you are about to enter a Scottish trust deed (or DAS or bankruptcy/sequestration) you are likely to be advised to move your current account to a new bank.

The reason for this is that (generally) you will currently owe your own bank some money. This might be in the form of an overdraft, loan, or a credit card for example. These are debts which will become creditors in your protected trust deed, debt arrangement scheme, or bankruptcy.
If you do not change your bank (to a bank that you do not owe money to) you are at risk of “set-off”. This is where a bank seizes money from one account to pay another. An example would be a situation where you did not pay your credit card bill to ABC Bank when it was due. If ABC Bank then discovers that you have just been paid, they may take this money from your current account to pay off your credit card. This risks you being left without cash to pay your mortgage/rent, council tax, utility bills, and housekeeping costs.

A second risk is that your bank is likely to prevent you from continuing to use your account if you owe them money. When they are informed that you are proceeding with a trust deed in Scotland, DAS, or sequestration (bankruptcy), they are unlikely to wish to retain you as a customer. This could leave you temporarily without any access to banking facilities or cash. This is likely to cause extremely inconvenience at the very least.

Thanks to the new “7 day bank account switching” initiative, it’s now much less work to get a new account up and running than it used to be.

Why Apply For A “Basic” Bank Account

If your credit record is damaged already you are unlikely to get a new bank account with additional features like an overdraft or a chequebook.

Even if you were successful in obtaining such an account, your new bank is likely to close the account if they subsequently discover that you have entered a formal debt solution. These solutions (trust deeds, sequestration, DAS) are recorded on public registers which the banks tend to monitor.

If your credit record is not currently damaged you may be able to obtain bank accounts that incorporate extra features such as an overdraft or a chequebook. However, you are then at significant risk of the account being closed once you have entered a formal debt solution such as a protected trust deed.

Common sense suggests that it’s a bad idea to continue using credit during a trust deed. With bankruptcy and DAS, there are formal controls in terms of new credit that you’re expected to observe.

Basic bank accounts typically do not offer credit facilities. However they can still provide good levels of functionality, convenience, service, and support.

Further Questions About Bank Accounts

You may wish to visit our trust deed forum if you have further questions regarding bank accounts during a trust deed, sequestration, or a debt arrangement scheme. Representatives from a panel of Scottish insolvency practitioner firms are available to answer your questions.

* Affiliate link

Wylie & Bisset Grant Thornton

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Data Protection Registration: Z1332750