Will I have to Change my Bank Account if I go Bankrupt?

James Falla

• 24 Mar 2022

You can have a bank account if you are bankrupt. However you may have to change the bank account you are currently using.

Included in this article:

• Will you have to change your account
• When should you change your account
• Can you still use a joint account?
• Getting a new account if already bankrupt

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Will you have to change your Bank Account if you go Bankrupt?

If you are planning to go bankrupt you are likely to have to change your bank account. Most bank’s internal policies mean they have to close any current account in your name within a week or so of you going bankrupt.

However there is no need to panic. You can have a bank acount while you are bankrupt. It just has to be a basic one. Most banks will allow you to operate this type of account during your bankruptcy.

Many banks offer basic accounts with a debt card and internet banking for free. However this is not always the case (for example Barclays withdraw the internet banking facility once you go bankrupt). You should check with the bank before you apply.

If you do not owe money to the bank you are currently using they should allow you to simply transfer to their basic account. If you do it is best to open one with an unrelated bank.

When should you change Bank Account?

Generally speaking it is sensible to open a new basic account before you go Bankrupt. This way you can ensure it is up and running by the time your old one is closed.

You can approach your current bank if you do not owe them money or an unrelated one. Be honest and tell them that you will be going bankrupt. They will then understand the requirement and normally be able to help.

Some banks will only be willing to open a basic account for you after you are bankrupt. If so do not worry. The account you are currently using will usually remain open for 7-10 days after the date of your bankruptcy. This will give you plently of time to get a new one open.

Some banks have specific rules regarding their basic accounts and bankruptcy. For example the Co-Op basic Cashminder account can only be opened before you go bankrupt not afterwards.

Can you still use a Joint Bank Account after you go Bankrupt?

It is normally best not to try and continue using a joint account if you are planning to go bankrupt. It would only ever be possible to do this if the account is a basic one.

Where you have a current account in joint names you will need to remove your name prior to bankruptcy. This will ensure that it will remain open and the other account holder can continue to use it.

If there is an outsanding overdraft on your joint account the bank will not allow you to remove your name. In these circumstances it might be best if you both stop using the account and open separate accounts elsewhere.

You will be protected from any overdraft on a joint account by your bankruptcy. However the other account holder will remain liable to pay the outstanding balance.

Options for getting a new Bank Account if you are already Bankrupt

If you are already bankrupt but have not previously made arrangements to open a new bank account you can do so now if you wish. Most banks will allow you to open a new basic account with them at any time during your bankruptcy.

You will not be able to apply for a new current account until after you are discharged. However even then you may have to wait until your credit rating has improved.

The record of bankruptcy will remain on your credit file for 6 years from the start date. It may not be possible for you to get a standard current account until this record has dropped off your file.

Need more advice about your bank account and bankruptcy? Call us on 0800 044 3194 or complete the form below.