Trust Deed Bank Account Options

The matter of changing bank accounts prior to starting a Scottish trust deed (or bankruptcy or the debt arrangement scheme) often arises on our trust deed forum. While the majority of people are informed that changing their bank account ahead of the trust deed starting is vital, the actual reasons why and the potential alternative bank accounts are often explained less well.

For the assistance of anyone who needs to open a new bank account prior to signing a trust deed we have added a new guide to the subject to Trust-Deed.co.uk. As well as focussing on the very important reasons for getting a new bank account open (and the risks of not doing so), the page also goes into detail about several trust deed Scotland bank account options that we think are worthy of consideration.

It’s typically the case that persons considering a trust deed owe their current bank money. Even if the current account is not currently overdrawn there may be credit cards or bank loans that fall within the remit of the same financial institution. If that isn’t the case, but you have an overdraft (no matter how small it is) all creditors on the date that you sign your Scottish trust deed must be included in it. The same is true for bankruptcy and the debt arrangement scheme in Scotland.

Where there is any kind of debt to the existing bank an account holder will be at risk of “setting-off” if they fail to set up new banking arrangements. Setting-off can be summarised as being a scenario in which a bank takes control of funds in an account to satisfy a debt that exists to the same bank (even if it is an entirely different account). If this happens before or during your trust deed you could be left in a very financially vulnerable position.

A change of bank account might also be needed even if you don’t owe a penny to your existing bank and it will not be included in your trust deed.

If your current bank discovers that you have entered a trust deed (or the debt arrangement scheme or have become bankrupt) they may consider whether the account that you are currently using should remain available to you. Banks have acceptance criteria for each bank account that they offer, and many such accounts aren’t open to persons in trust deeds or other debt solutions. The threat is that your account is suddenly closed by the bank which would always be a difficult situation but perhaps will be even more tricky if you’re in a protected trust deed and cannot rely on credit temporarily to manage while new banking arrangements are established.

To learn more about banks accounts during trust deeds please visit our trust deed bank account guide and review the information and suggestions.

If you have further questions after reading this please visit our trust deed forum. Experts from four Scottish trust deed firms are available to answer any questions that you still have.

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