Bankruptcy or IVA or DRO?

ManyWays

So opening a DRO will close existing bank accounts even if there's no overdraft on them?
It is very possible, but not certain

bery_451

https://forums.moneysavingexpert.com/discussion/comment/81862916#Comment_81862916

So how to reduce this risk as having the banks accounts closed down out of the blue can be disruptive to ones life?

Closed down as in banks ask you you attend their local branch and withdraw your balance before they close your bank account and say goodbyes or they freeze your bank account meaning frozen means still positive balance on your account that you cant even use to buy a loaf of bread with your debit card from the grocery store?

Why would a bank do any of these when you have not taken out credit with them nor have a overdraft agreement with them after a DRO? Why are banks scared of the DRO?

bery_451

https://forums.moneysavingexpert.com/discussion/comment/81862741#Comment_81862741

Okay can you please explain why with these Insolvency options that a bankruptcy fee costs over £600quid and a DRO is £0 fee. Clearly there is a price discrepancy between such options otherwise if not then why one is not free while the other is free?

Best to ask and do Due Diligence because going on those companies sites and I can clearly see they ask a lot of private invasive sensitive personal info from a person and I do know there's hungry loan sharks out there praying on such people with insane interest rates.

So can you guarantee if a person applies to these 'charities' then they wont get unsolicited phone calls or emails from loan sharks?

Best to find out and ask because for example your private personal sensitive data is your home and you want to know who has the private keys to your home at what times they access your data and exactly how they enter your to access your data. This is not paranoia, this is just one protecting oneself from 3rd parties who have a vested interest in obtaining your data. In this day and age of computers and Ai data is more valuable than money itself because money itself is data stored on a computer server somewhere that displays your balance on a screen unless you hold physical cash and have no bank accounts.

ManyWays

The £600 bankruptcy fee goes to the Insolvency Service, none of it to the debt advisor that has recommended and helped the client to apply.

The DRO fee is zero because DROs are effectively a very easy low cost form of bankruptcy for the Insolvency Service, with no property to sell or monthly payments to collect or tax codes to change etc. The IS has effectively outsourced the large majority of the remaining tasks in setting up a DRO to the debt adviser , so the IS does not need to charge. And the poor debt adviser does all the work and gets £10, I think from the treasury. But at least with no fee this makes things quicker and simpler.

So can you guarantee if a person applies to these 'charities' then they wont get unsolicited phone calls or emails from loan sharks?

If they do, it's not because their details have been sold by the charities I listed.

ManyWays

Why would a bank do any of these when you have not taken out credit with them nor have a overdraft agreement with them after a DRO? Why are banks scared of the DRO?

This is the default some banks do with all forms of insolvency, including bankruptcy, IVAs and DROs. Debt advisers have long argued that it is pointless; you would have to ask the banks why they do this.

The way to avoid it it to open a new basic bank account.

RAS

Almost all banks refuse to offer accounts to bankrupts. It's been that way for decades, used to be the Co-op, Barclays and one other would consider them. Co-op would kick you out if you went overdrawn more than once, maybe twice.

Insolvency agreements do not allow access to credit without the IP's permission. These days, you might be allowed £500 without getting your IP's permission, enough for a phone, insurance or internet contract.

Banks aren't set up to monitor client's behaviour to that extent and want those who are solvent. So anyone with an insolvency arrangement is going to need a basic account, for which there is no credit check.

You get a debit card, can set up DDs, SOs and make on-line payments. But there's no overdraft and no credit credit card.

It's not personal, it's just a way for banks to manage customers with a poor credit record, or no previous one.

bery_451

https://forums.moneysavingexpert.com/discussion/comment/81863473#Comment_81863473

So the person has to open up a new basic bank account and transfer all their balances from their existing accounts to the new basic bank and also transfer direct debits and standing orders to this new basic account before the DRO becomes active to prevent disruptions?

Or can the person downgrade their existing currents accounts to 'Basic'?

What about bank accounts at Wise & Revolut, do these accounts gets affected by the DRO activation?

Otherwise what kind of bank accounts get affected by the DRO activation, just retail high street banks or any bank accounts that offers FSCS deposit protection excluding basic bank accounts?

If a person opens up a new basic bank account then how do they keep it basic for life even after 6 years as basic bank accounts sounds like necessity to avoid disruptions to life.

bery_451

https://forums.moneysavingexpert.com/discussion/comment/81863648#Comment_81863648

Okay refuse to offer/open a accounts for bankrupts however im talking about already opened existing banks accounts with no credit facilities on them like no overdrafts, does the person still has to open up a new basic account after a DRO even they have existing bank accounts?

Sorry who is the IP?

RAS

Try reading my answer to you at the bottom of page one.

Ask a debt advisor specific questions before you sign up for a DRO, as they will probably know whether others with your account have been OK or not.

Be prepared by opening a new basic account before becoming insolvent, just stick a fiver in it. You can close it later if not needed.

Time your submission if possible, so your rent and essential DDs have been paid that month. Take out 10-14 days cash to cover living costs.

Don't submit just before a major festival like Christmas when half the decision makers are on holiday.