Bank accounts for people with a DRO

8 June2012

If your situation requires it, there are some serious advantages to taking part in a DRO (Debt Relief Order). If you meet all the criteria, your unsecured debts will be frozen for a year. During this time you won't be required to make payments towards these debts, and interest and charges will be frozen. After this year, your financial situation will be reviewed and - if it hasn't improved enough - your unsecured debts will be written off.

If you have a low disposable income, few valuable assets and debts under 15,000, you may be eligible for a DRO. Find out on this page.

However, writing off debt through a DRO does damage your credit rating for six years, and when your credit rating is poor, you may find it difficult to obtain further credit - or even open a bank account.

Basic bank accounts

You may have already applied for a current account and been turned down after the credit check - which could lead you to believe that you will never find a bank account.

This may not be the case, however. For one thing, just because one bank has turned you down doesn't necessarily mean that they all will. 'Basic' bank accounts are there to help people who need an account, whatever their credit rating.

Features of basic bank accounts

One huge benefit of a basic bank account for people who have a DRO is that they do not carry out credit checks. It doesn't matter if your credit rating is poor.

Basic bank accounts also do not have an overdraft facility. This may seem limiting, but if you have struggled with debts in the past, you might like the idea of an account that means you can't accidentally go into debt like this.

In fact, you wouldn't be able to enter a DRO unless you had very little disposable income (under 50 each month). So the thought of unexpected bank charges for going overdrawn could be particularly worrying.

Basic bank accounts usually have many of the features of 'normal' bank accounts too - for example, a debit or cash card that you can use to withdraw money (and shop online or in store if it's a debit card). They may also offer online or SMS banking, so you can keep an eye on your money wherever you are.

Basic bank accounts are also open to people who don't have a damaged credit rating - who might just want a simpler banking experience with no unexpected charges.

For more about basic bank accounts, click here.

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Tags: debt, DRO, debt relief order, unsecured debts, credit rating, bank, bank account, overdraft, basic bank accounts

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