DMP and bank account change - advice please

steph606

Hi,

I have just completed the StepChange DebtRemedy online. It has advised us that a DMP is the best course of action to manage our debts.

We are very keen to proceed with this however I have £5500 on my Natwest overdraft and StepChange have stated that I need to open a new bank account and transfer all of my direct debits and get my wages paid in to the new account before setting up this plan.

Has anyone ever been in this position - how easy is it to do? I am just wary as I have been with my bank for over 20 years and have a lot of direct debits/standing orders etc to change over.

Do I then just leave the Natwest account open with no ingoings/outgoings until the DMP is set up?

Any advice very welcome

Thanks,

Steph

matttye

If you use the current account switching service everything will be transferred for you within 7 days without you having to lift a finger apart from fill out the application form and confirm that you want to use the switching service.

Natwest account - you can't close it while you owe money, so you'll have to leave it open with no incomings/outgoings.

steph606

Thanks Matttye

If I use the switching account tool, will it make me transfer the overdraft too? Want to open the new account and stay in credit. Is it possible to have the two accounts open at the same time?

Cheers,

Steph

matttye

steph606 wrote: »

Thanks Matttye

If I use the switching account tool, will it make me transfer the overdraft too? Want to open the new account and stay in credit. Is it possible to have the two accounts open at the same time?

Cheers,

Steph

I think there is an option to apply for an overdraft with the new bank but don't quote me on that. You would not want to apply for an overdraft with the new bank because the idea is to open an account with a bank which you don't owe money to. That way your wages are safe. Any application would be subject to the bank allowing you to have the same overdraft with them anyway.

Overdrafts are repayable on demand and the bank could effectively reduce your overdraft the day your wages are paid in to shut off access to funds, if that makes sense. That's why Stepchange is suggesting you open a new bank account with a wholly independent bank to your current one.

It needs to be with a different banking group. E.g. Halifax, Bank of Scotland and Lloyds are all owned by Lloyds Banking Group, so if you had an account with any of those brands you would not want to get an account with another of those brands, but someone wholly independent.

steph606

Thanks so much for your response

One last question - can I select which direct debits to switch or does the switching tool automatically switch them all??

StepChange advise that the new account should not include any direct debits for unsecured debt hence I will only want to switch my household bills etc.

Thanks

matttye

I think it's all or nothing with regards to direct debits, but you can always cancel the DD's prior to switching.

Former_StepChange_Rory

steph606 wrote: »

Hi,

I have just completed the StepChange DebtRemedy online. It has advised us that a DMP is the best course of action to manage our debts.

We are very keen to proceed with this however I have £5500 on my Natwest overdraft and StepChange have stated that I need to open a new bank account and transfer all of my direct debits and get my wages paid in to the new account before setting up this plan.

Has anyone ever been in this position - how easy is it to do? I am just wary as I have been with my bank for over 20 years and have a lot of direct debits/standing orders etc to change over.

Do I then just leave the Natwest account open with no ingoings/outgoings until the DMP is set up?

Any advice very welcome

Thanks,

Steph

Hi steph606,

We've got a page for existing clients that covers basic bank accounts in more detail for you. You can visit the page here

If you have any other questions then please don't hesitate to contact us

Hope this helps,

Rory

sourcrates

I would think you would only be able to obtain a basic bank account if entering a DMP, you wont be able to use the switching service as you owe Natwest money, the overdraught will not be switched, that's up to you to clear with Natwest.
Coop do a good basic account, cashminder, I would simply cancel all DD`s on my old account, and just provide each payee with your new bank details, not that hard to do.
Par for the course with a DMP.

seanavfc92

sourcrates wrote: »

I would think you would only be able to obtain a basic bank account if entering a DMP, you wont be able to use the switching service as you owe Natwest money, the overdraught will not be switched, that's up to you to clear with Natwest.
Coop do a good basic account, cashminder, I would simply cancel all DD`s on my old account, and just provide each payee with your new bank details, not that hard to do.
Par for the course with a DMP.

Please do NOT use the switchover service. It's a good service if you're moving away from a bank you don't owe money to.

However, because you have an overdraft with Natwest, they are obliged to send ALL payments made in to that account to your new bank. Any payments StepChange make will be forwarded to your new choice of high street lender.

Switchover services are only availavble on current accounts, not basic accounts. The current account can allow uoverdrafts, which is something you don't want.

Not only this, but when your new bank gets in touch with Natwest, not only will Natwest transfer the DD's and SO's, but also the overdraft debt. It doesn't always happen, but it can!

Best thing to do would be to open a BBA yourself and transfer any essential DD's manually by calling the providers directly and giving them your new bank details. A little bit more time consuming, but this way you know that the only DD's set up in your new account are the one's you ACTUALLY want, not the one's you were stuck with before.

StepChange can delay sending paperwork to Natwest anyway, so you're not in any rush as such.