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One of the most important things to do when you are in debt is to change your bank account. If you owe money to the same bank that your wages or other income is paid into then they are entitled to apply the Right to Offset.

The Right to Offset means that your bank is entitled to take any income in your bank account to offset against any debt you owe them. If you are looking to enter a Debt Management Plan, Individual Voluntary Arrangement, Bankruptcy, a Debt Relief Order or a plan of your own then it is extremely important you change your bank account.

Once a creditor is notified that you are entering into a plan, or are not going to be keeping up with the contractual payments, then they are more likely to try and exercise this right.

When choosing a new bank it is important that you change to one that is not connected to any of your creditors. Lots of ‘big’ banks are connected to each other or to other credit providers, so it is always best to check first. Here are a few examples…

Santander Group:

  • Abbey
  • Alliance and Leicester
  • Cahoot
  • GE Capital – eg Topshop store card, Debenhams store card etc…

Lloyds Banking Group:

  • Bank of Scotland
  • Halifax
  • Lloyds TSB
  • Intelligent Finance (IF)
  • Sainsbury’s Finance etc…

Royal Bank of Scotland Group:

  • Royal Bank of Scotland
  • Natwest
  • Tesco Personal Finance

*all of the above information was correct at the time of publishing.

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