You can operate a normal, basic bank account during a Trust Deed or DAS in Scotland – Entering into an arrangement doesn’t stop you from having a basic account.
However when you’re exploring options for the best bank account to have while in a Trust Deed or DAS there are some considerations.
You may need to switch to a new bank account before the Trust Deeds starts.
The two main reasons for needing to switch bank account:
Frozen Bank Accounts & Bank Account Closures
Some banks may choose to freeze your bank account if you enter into a Protected Trust Deed or Debt Arrangement Scheme.
Banks monitor insolvency registers. However, your bank account is more likely to be frozen if you owe the same bank money, and in that case – a tactic known as ‘setting off’ is more likely to be used.
The term ‘Set-off’ describes a bank taking money from one account to repay another. They do not need to seek permission fro you to do this.
This is a commonly used tactic where you had a credit card or personal loan with the same company that you have your current account with. You may, or may not also have an overdraft facility with that company; expect that to be removed also.
You can avoid set-off by moving your current account to a bank that you do not owe money to.
A frozen bank account will leave you unable to pay your household bills and other priority bills so it is therefore important that you seek expert advice on this.
What Do I Need To Open A Basic Bank Account?
You’ll normally need proof of identification and proof of your address in order to open a new bank account when entering a Trust Deed.
Proof of identification includes:
- A passport
- A photocard driving licence
- A letter confirming your benefit entitlement
- HMRC tax notification letter
You can then use one of the following documents for proof of your address:
- A driving licence (either new or old)
- Your TV licence
- A recent electricity or gas bill
- A recent council tax bill
- A recent letter about your benefits
- A recent letter or statement from another bank
If you don’t have a passport or photocard driving licence you may need to ask the bank what types of ID that they’ll accept before you try and open an account with them.
What If The Bank Won’t Let Me Open An Account?
Banks can’t use your credit rating as a reason not to give you a basic bank account. However, they don’t have a legal obligation to provide you with one either.
They’ll normally prevent you from having a bank account if you’re an undischarged bankrupt. I.e. you’ve only just Sequestrated yourself. Or if there’s any record of fraud on your credit file.
If you’ve applied for an account and a bank has turned you down, you need to make sure that they were assessing you for a basic account rather than a current account. However, as a leading provider of debt advice in Scotland, fortunately – Trust Deed Scotland has experience of this and we can, therefore, recommend the best banks to open an account with prior to entering a Trust Deed.
Recommended Best Banks In A Trust Deed
Before committing to a Trust Deed, a personalised illustration should be carried out to find out who you owe monies to and any potential solutions that you may qualify for.
Our current list of recommended banks for individuals entering Trust Deeds are as follows:
Many people we’ve spoken to ask us which is the best bank account for bad credit and its more important that you ensure that it’s a basic bank account rather than a current bank account. Whether you have a good, or poor credit rating is not as important when seeking a bank account that you can use in a Trust Deed.
There are also some lenders who specifically advertise bad credit bank accounts and these usually come with a chargeable amount. Therefore, if you decide to open up a new bank account, it is recommended that you consult with an expert debt advisor beforehand, in order to get a better understanding of your options.
Joint Bank Accounts In A Trust Deed
You can continue to use a joint bank account during your proposed debt solution.
However, there will be a financially associated link, so this is perhaps best avoided if the other person has a good credit rating.
Dealing With Bank Account Issues While In Debt
If you have debt with your bank or you’ve had money taken from your account to cover a debt, let us know and we’ll help you to find out what your options are.
You can try our debt repayment calculator to get started, or give us a call on 0141 221 0999. We’re here to help and will always have your best interests at heart.