DMP & Joint Account Closure

debtermined

Long time lurker, first time poster. 

I've amassed £32,000 debt in the last three months due to a terrible gambling addiction. I've now registered with GamStop to permanently self exclude myself from future betting. 

I'm looking to start a debt management plan with StepChange once my existing debts have defaulted and I've built up an emergency fund, per the common advice on here. 

My question is about account closures after defaulting / starting a DMP. 

I have a £10,000 personal loan with one of my creditors - a well known digital bank. The loan is in my name only and repayments are taken automatically from that account on the same date each month. 

I also have a joint account with the same bank which my partner and I use to pay our priority bills - rent, groceries and utilities. There is a large chunk of money in this joint account at the start of each month as we wait for those payments to go out. 

How likely is it that the bank will look to close my personal account and/or the joint account I have with them after defaulting on the loan and starting a DMP? 

Also, I've been reading about banks having the right to set-off unpaid debts by taking funds from another account you hold with them if debts go unpaid.

StepChange's website says the "Right of set-off cannot be used to transfer money: • From your joint account to a sole debt in your name", which has given me some reassurance that they wouldn't look to take the money in mine and my partner's joint account to cover the debt. That said I can't find much more information about this online and so I'm not sure how reliable StepChange's advice is, if anyone else has been in a similar position and could share their experience with that side of things please? 

MattMattMattUK

debtermined said:

Long time lurker, first time poster. 

I've amassed £32,000 debt in the last three months due to a terrible gambling addiction. I've now registered with GamStop to permanently self exclude myself from future betting. 

I'm looking to start a debt management plan with StepChange once my existing debts have defaulted and I've built up an emergency fund, per the common advice on here. 

My question is about account closures after defaulting / starting a DMP. 

I have a £10,000 personal loan with one of my creditors - a well known digital bank. The loan is in my name only and repayments are taken automatically from that account on the same date each month. 

I also have a joint account with the same bank which my partner and I use to pay our priority bills - rent, groceries and utilities. There is a large chunk of money in this joint account at the start of each month as we wait for those payments to go out. 

How likely is it that the bank will look to close my personal account and/or the joint account I have with them after defaulting on the loan and starting a DMP? 

Also, I've been reading about banks having the right to set-off unpaid debts by taking funds from another account you hold with them if debts go unpaid.

StepChange's website says the "Right of set-off cannot be used to transfer money: • From your joint account to a sole debt in your name", which has given me some reassurance that they wouldn't look to take the money in mine and my partner's joint account to cover the debt. That said I can't find much more information about this online and so I'm not sure how reliable StepChange's advice is, if anyone else has been in a similar position and could share their experience with that side of things please? 

It will cause you problems, it is not worth the risk of it going wrong. The best advice is to open a new joint bank account (without an overdraft) and move over all key payments to that account (mortgage/rent, council tax, car insurance, broadband, phone etc.). Also making sure your income goes into the new account. In the process of doing this make sure your new accounts are not within the same banking group as your existing debts.

Are you and your partner married, property owners or renters? If you have a mortgage is it with the same bank as any of your other debts? 

If you want people on here to help you with the debts and to verify the advice from StepChange adds up could you post an SOA? https://www.lemonfool.co.uk/financecalculators/soa.php

RAS

For your partner's sake, you need to close all joint accounts. That will protect their credit record as much as possible (obviously a joint mortgage can't just be sorted like that but isn't as much of a problem).

So new basic bank account for you, taking in your income and paying out a SO straight into your partner's new standard bank account. Your partner needs to set up the monthly DDs from their sole account.

debtermined

RAS said:

For your partner's sake, you need to close all joint accounts. That will protect their credit record as much as possible (obviously a joint mortgage can't just be sorted like that but isn't as much of a problem).

So new basic bank account for you, taking in your income and paying out a SO straight into your partner's new standard bank account. Your partner needs to set up the monthly DDs from their sole account.

Well the joint account we have together doesn’t have any overdraft facility or other credit available. It’s literally just used for direct debits and SOs for monthly bills and as such is equivalent to a basic account.

From what I’ve read this shouldn’t have any impact on partners credit history, it only would if we shared a financial product with credit involved?  

Superhoopza

debtermined said:

RAS said:

For your partner's sake, you need to close all joint accounts. That will protect their credit record as much as possible (obviously a joint mortgage can't just be sorted like that but isn't as much of a problem).

So new basic bank account for you, taking in your income and paying out a SO straight into your partner's new standard bank account. Your partner needs to set up the monthly DDs from their sole account.

Well the joint account we have together doesn’t have any overdraft facility or other credit available. It’s literally just used for direct debits and SOs for monthly bills and as such is equivalent to a basic account.

From what I’ve read this shouldn’t have any impact on partners credit history, it only would if we shared a financial product with credit involved?  

No, having any shared financial product, regardless of whether credit is available, would mean you are financially linked. So close that account, open your own account, get your partner to do the same as mentioned above and then send them any money monthly to pay for your half of bills, groceries etc. I am in the same boat and said we should not get a linked bank account to pay for these things and she has opened it in her name and I send her my monthly contributions whilst I restore my credit history.

RAS

debtermined said:

Well the joint account we have together doesn’t have any overdraft facility or other credit available. It’s literally just used for direct debits and SOs for monthly bills and as such is equivalent to a basic account.

From what I’ve read this shouldn’t have any impact on partners credit history, it only would if we shared a financial product with credit involved? 

No doubt you can get a joint basic account without a credit check, but there's still a risk of a financial link.

And even if you've been reading different advice, if you respect your partner, protect them.