Joint bank account and bankruptcy
- 29 Mar 2022
You are allowed to have a joint bank account if you go bankrupt. However it will have to be a basic account. A joint account with an outstanding overdraft is unlikely to remain open.
Included in this article:
- Can you have a joint bank account if you go bankrupt?
- Are you allowed to use someone else’s account?
- Could you open a new joint account while you are bankrupt?
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Can you have a joint bank account if you go bankrupt?
There is nothing to stop you having a joint bank account with someone else if you go bankrupt. Perhaps you want to bank jointly with your partner or spouse. However, there are a number of restricting factors you need to consider.
If you already have a joint facility, you will only be able to keep using it in this way if it is a simple basic account. This is the only type of account a bank will allow you to have your name on while you are bankrupt.
Where it is a standard current account, the bank will not allow you to keep your name on it. In these circumstances, you have the option of simply taking your name off. You should be able to do this if there is no outstanding overdraft. The other account holder can then continue using it as normal if they wish.
However, if there is an outstanding overdraft, you will not be able to simply remove your name before going bankrupt. Once you are bankrupt, the bank will stop you from continuing to use it. The debt will automatically be included in your bankruptcy. However, the other account holder will remain liable for 100% of the overdraft balance (not just half).
You can open a new basic bank account in joint names with someone else before you go bankrupt if you wish.
Are you allowed to use someone else’s account while you are bankrupt?
Yes. If you have a joint bank account you will no longer be able to use, you don’t have to open a different one in your name. There is nothing to stop you using someone else’s account if you don’t want your own.
It is possible to have your income paid into your partner’s, spouse’s or any other third party’s account if you want. Any direct debits you need to set up can also be paid from their account.
The downside with this is it is not very convenient. If you want to access your money, you will have to borrow the other person’s bank card or wait for them to draw cash for you. This may work for you, but for most people it’s not ideal.
There is no need to use someone else’s account if you don’t want to. You can easily open your own basic account which will remain open while you are bankrupt. This will give you your own debit card and internet banking facility.
Basic accounts are available for free from most high street and on-line banks. Some that are easy to open on line include the C0-Op Cash Minder and both Monzo and Starling standard accounts.
Having a bank account in your own name will help you improve your credit rating after you are discharged from bankruptcy.
Could you open a new joint account while you are bankrupt?
If you are already bankrupt, you can open a new joint bank account if you want.
Generally, the easiest way to do this is to first open a new account in just your name or the name of the other person first.
Of course, you must choose a bank you don’t owe money to and make sure you apply for the basic account only. There is no credit check required to open this type of account. This means you shouldn’t have a problem being accepted by the bank you choose.
Once the new account is up and running, it should then be easy to add either you or your partner’s name, thus making it joint. You will then both be able to use the account as normal.
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