Should I change my bank account after an IVA?
As you’ll no doubt already know, we recommend all of our clients change their bank accounts upon entering an IVA. That helps protect you from creditors who may try to freeze or take funds from your account, even though you’ve entered an arrangement to deal with your debts.
But what about once your IVA is finished? In this guide, we’ll explore whether you should consider setting up a new bank account after your IVA, the potential benefits of doing so, and which banks are best suited to people who have completed an Individual Voluntary Arrangement.
Why should I consider changing my bank account after an IVA?
First up, we want to be clear on something – there’s no obligation for you to change your bank account once you’ve successfully completed your IVA.
You already changed your bank account once, when you first set up the arrangement. This offered you extra protection from your creditors during the arrangement, and now that your IVA is coming to an end and your debts are about to be settled, your existing bank account shouldn’t be in any danger.
That being said, many of our clients like to make a completely fresh start once their IVA comes to an end. That process can involve setting up a new bank account, one that hasn’t been associated with making IVA payments over the previous five or six years.
Will I have trouble opening a new bank account after my IVA?
As someone who has recently left an IVA, your credit rating won’t be in the best position. As you know, even though an IVA is a tool to help you deal with your debt, it will have a negative impact on your credit score, at least temporarily.
Your credit rating will be impacted for the first six years after your IVA has concluded, and having a lower credit score will send a signal to potential lenders that offering money to you represents a risk.
These lenders may include certain high street banks, many of whom will reject people for new bank accounts if their credit rating fails to clear a certain threshold. That doesn’t mean you can’t open a new bank account after your IVA, but it does mean you have to choose your bank carefully.
How long will it take me to improve my credit after an IVA?
Improving your credit score is an ongoing process, whether you’ve been in an IVA or not. No matter how much you focus on it, it’s never really ‘complete’.
So while you should never stop striving to improve your credit rating, you will find that life after an IVA gets easier once six years have passed from when you completed your arrangement. That’s when you IVA will be wiped from your credit history, and your credit score will improve as a result.
Until then, you can make gradual improvements to your credit score by building up a positive payment history which demonstrates to lenders that you now have a record of repaying what you borrow.
Parkfield Insolvency will not charge you a fee for initial information and signposting. If you were to proceed and implement a recommended debt solution where fees are applicable, full details will be provided before setting up. Parkfield Insolvency proposes and administers Individual Voluntary Arrangements (IVAs). Advice is provided on the basis that there is reasonable contemplation of an insolvency appointment, once it is apparent that an IVA is likely to be the most appropriate debt solution. The debt solutions offered by Parkfield Insolvency Limited only apply to residents of England, and Wales.
Parkfield Insolvency is a trading style of Parkfield Insolvency Limited, Company Number 14371483, registered in England and Wales, at Dalton House, Cross Street, Sale, M33 7AR.
Peter Jackson is authorised by the Insolvency Practitioners Association to act as a Licensed Insolvency Practitioner.
To qualify for an IVA with Parkfield Insolvency, you must have a minimum of £6,000 of qualifying unsecured debt owed to two or more creditors
There is potentially a debt write off in some IVAs. However, the amount of debt written off differs for each customer depending upon their individual financial circumstances and is subject to the approval of their creditors.
Data Protection Act Registration Number – ZB399874. To find out more about managing your money and getting free advice, visit Money Helper, an independent service set up to help people manage their money.
