What are the requirements and processes for applying for a Non-Immigrant O Visa in Thailand?

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Just because you don't think something should be a requirement, doesn't change the fact that it IS a requirement.

Yes, you must be married at least 2-3 months to apply for a non-O visa at immigration.

Yes, you must have a Thai bank account already and be able to show proof of required funds in that Thai bank account to be able to apply for a non-O visa at immigration.

Yes, the photos must meet immigration requirements to apply for a non-O visa or extension at immigration. Fix the photos before you apply for your extension or you'll be denied again for the same reason.

You would have had to go to the embassy regardless since you didn't have a bank account, so it would've been easier to just do that from the beginning.

Now you should get the list of requirements for the extension from your immigration office and begin preparing for that, since you'll have to apply for that next. But first thing you need to do is open a bank account ASAP because the 400,000 baht needs to be in your account for 2 full months already at the time you apply for your extension, which means you only have approximately a month to get your bank account open and the money transferred.