Most people these days need a bank account to receive wages and to pay priority payments such as household bills. So if you're declaring yourself bankrupt you’ll need to think about an alternative account. It’s a good idea to plan this in advance of going bankrupt so your income and household bills aren’t affected.
Will my bank account be closed when I go bankrupt?
If you’re banking with any of the high street banks, there's a risk your bank account could be closed.
First, the official receiver will contact your bank straight after you go bankrupt and the account will be frozen while your finances are investigated.
The bank may then close the account. This depends on the type of account you’re using and whether you have other debts with the bank. Any money left in your account if it’s closed will usually be given to the official receiver.
If you use a joint bank account, it’ll still be frozen. The bank may:
- close it and refund half of any money in the account to the other person named on the account, or
- remove your name from the account and allow the other person to keep using it as a sole account
Are there any high street banks I can use while I’m bankrupt?
For the last few years it has been difficult to get a high street bank account if you’re bankrupt. However, a change in the law in December 2015 means that most high street banks should offer basic bank accounts which are suitable for bankrupts from 1 January 2016.
Until further details of these accounts are published, we recommend the following if you’re looking for a new account to use after bankruptcy:
• Don’t apply to a bank for a new basic account if you already have other debts with them
• Ask the bank for a basic bank account, not a current account
• Tell the new bank that you’re opening a basic account because you have financial difficulties and you’re looking for an alternative to the account you’re using at the moment
• Make sure you ask when you open the account if the terms and conditions would allow you to continue using it after bankruptcy
Should I open a new bank account before or after I go bankrupt?
If you open a new basic account before you go bankrupt, you can move all your income and your priority payments to the new account. This reduces the risk of missing any bill payments. The new account will still be frozen for a short time after your bankruptcy.
If you wait until after your bankruptcy the new account won’t be frozen and you can use it as soon as the bank opens it. But you’ll need to move your income and bill payments over to the new account, and you may miss some payments to household bills if you don’t do this straight away.
When can I get an ordinary current account again?
Most banks won’t allow undischarged bankrupts to have an account. This means once you’ve been discharged from your bankruptcy you should be able to open an account with any bank or building society. You’ll normally be discharged 12 months from the date of your bankruptcy order.
After you’re discharged, you may still find it difficult to open some types of bank account. For example, it’ll be very unlikely that you’ll get an account with an overdraft facility. This is because banks will credit check you and because of your recent bankruptcy, they’ll be unwilling to give you an account where you can go into debt.