My Bank Account and Bankruptcy
You are allowed a bank account if you go Bankrupt. However it is likely that the one you are currently using will be closed.
- Will your Bank account be closed if you go Bankrupt?
- Can you have a bank account while you are Bankrupt?
- Could you use your Partner’s account
- Bank account options after Bankruptcy
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Will your Bank Account be closed if you go Bankrupt?
The bank account you are currently using may well be closed after you have gone bankrupt. This will almost certainly happen if it is a current account.
It is usually the policy of most banks to freeze any current accounts in your name after they learn you have gone bankrupt. This is the case whether you owe them money or not.
The account will be frozen because in general banks provide automatic credit facilities with their current accounts. They do no want to you have access to these facilities after you go bankrupt.
Your bank will be informed that you are bankrupt both by the Official Receiver and by monitoring the Insolvency Register.
Can you have a Bank Account while you are Bankrupt?
You are allowed to operate a bank account in your own name if you are bankrupt. However it will normally have to be what is known as a Basic account. These accounts usually come with internet banking and a debtit card. However they do not offer any credit facilities.
Most highstreet banks now offer Basic accounts for free. Some examples are the TSB Cash Account, NatWest Foundation Account, the Co-Op Cash Minder and the Nationwide Flex Basic.
Basic accounts can be opened even if you already have a poor credit rating. It is normally possible to open one either before or after you have gone bankrupt (although a Co-Op Cash Minder can only be opened before).
It is recommended that you open and start to use a newbasic bank account before you go bankrupt. This way you you always have an account available.
Can you use your Partner’s Bank Account while you are Bankrupt?
You do not need a bank account in your own name while you are bankrupt. There is nothing to stop you using someone else’s account if they are happy for you to do this.
It is possible to have your wages and other sources of income paid into another person’s account. The account holder can also set up direct debits on your behalf to ensure any regular payments are maintained.
Generally speaking you should not try to add your name to your partner’s account. If you do this before you go bankrupt it could put the whole account at risk. If you try to do so after you are bankrupt it may not be allowed by the bank.
Using someone else’s account is generally less convenient than having your own. In addition once you are discharged it will be less easy to start repairing your credit rating without your own bank account.
Your Bank Account options after Bankruptcy
Once your Bankruptcy is over there is nothing to stop you applying for a new bank account. You could apply for a basic account with virtually any bank.
However it may still be some time before you are allowed to open a current account. Most banks will normally require that the record has come off your credit file before allowing you to have one of these accounts.
Although you may be able to start improving your credit rating after you are discharged the record of your bankruptcy will not come off your credit file until 6 years from the start date.
Before you can apply for a standard current account you will need to wait until the record of your bankruptcy has come off your credit file.
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