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i This solution is only available in England, Wales and Northern Ireland.

How bankruptcy affects me

Bankruptcy and my bank account

Banks should let you open basic bank account after you go bankrupt.

During bankruptcy, your bank is unlikely to let you keep your account if you have:

  • An overdraft
  • Other debts with them

If they close the account:

  • Any money left in your account will be given to the official receiver (OR)
  • The OR may let you access some of the money if they think you need it

The rules around debt relief orders (DRO) have changed. These changes could help people thinking about an insolvency solution like bankruptcy. Sometimes a DRO is cheaper than full bankruptcy.

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Will my bank close my account when I go bankrupt?

Banks freeze your account as soon as you go bankrupt. Even if you have no debts with them.

This lasts a few days while the OR checks your account history.

The bank may close your account after these checks. This means either:

  • You need a new account with a different bank. Or,
  • The bank may let you keep a basic account with them

Most people use their bank account to:

  • Get their wages
  • Pay important bills

Think about opening a new account before if you are declaring yourself bankrupt.

Joint bank accounts and bankruptcy

If you use a joint bank account, it will be frozen. The bank may:

  • Close it and refund half the money in it to the other person, or
  • Remove your name from the account
  • This means the other person can keep using it
  • Half of any credit balance is paid to the OR

Bank accounts for bankruptcy

All high street banks offer bankruptcy-friendly basic bank accounts.

If you are looking for a new account to use after bankruptcy:

  • Do not apply for a basic account at a bank you have debts with
  • Ask the bank for a basic account, not a current account
  • Tell the bank you are having financial difficulties
  • Ask if you can keep using it after bankruptcy

Should I open a new bank account before or after I go bankrupt?

Opening it before

You can move your income and bill payments to the new account. This lowers the risk of missing payments.

The new account will be frozen for a short time after your bankruptcy.

Opening it after

You can use the new account when the bank opens it. It will not be frozen.

You need to move your income and bill payments over quickly or you might miss payments.

When can I get a current account again?

Most banks will not give you a current account until you are discharged from bankruptcy.

Afterwards, you should be able to open an account with any bank or building society.

You are normally discharged 12 months from the date of your bankruptcy order.

It may still be hard to open some types of bank account. Like accounts with overdraft.

This is because banks will credit check you.

Due to your recent bankruptcy, they may be unwilling to give you an account where you could get into debt.

Bankruptcy will affect your credit rating. This makes it harder to get a loan or other types of credit.

Alternatives to high street bank accounts while bankrupt

These are options for you, but:

  • They may not have all the facilities of a basic bank account
  • They may charge a monthly fee

Post Office card account

If your income is from benefits or a state pension, you could open a Post Office card account.

  • This is free
  • You can get any benefits paid onto the card
  • You cannot use it for wages or other income

You can withdraw money using the card. But you cannot:

  • Use it as a debit card
  • Pay bills by Direct Debit or standing order

This mean you lose the Direct Debit savings offered by many utility companies.

Although there are no fees to open the account, it could end up costing you more.

Pre-paid card accounts

Pre-paid card accounts:

  • Are available to undischarged bankrupts
  • Can be expensive
  • Have a monthly fee of up to £20
  • Can charge you for adding money to the card
  • Can charge you for taking money out at cash machines

You ‘top up’ the card by adding money to it. You can use it like a debit card to spend money.

Most pre-paid cards let you pay wages (and sometimes benefits) onto the card.

Some cards let you set up Direct Debit payments for your bills.

Free bankruptcy advice

If you are considering bankruptcy, make sure you get free, impartial debt advice. We can recommend the best solution for your situation.