Published in Debt Advice Features on Wednesday, November 29 2006 by Ideal Debt Solutions
The myth behind bankruptcy is that once an individual is bankrupt they can no longer hold a bank account. This is not true there are no restrictions to say that an individual cannot hold a bank account while an undischarged bankrupt, read more.
If you become subject to bankruptcy then dependant on which bank you bank with is completely dependant on what happens to your account. Most of the high street banks will not allow you to hold an account with them while bankrupt, a couple of weeks after the date of bankruptcy order the bank will have been notified and they will close the account, it is always best to open a brand new account with a bank who will allow an undischarged bankrupt as a customer.
If you can keep the account with the bank who you was with prior to your bankruptcy order then it is still advised that you open a brand new account, the reason for this is that while bankrupt and you still have the old account, the bank will need to contact your bankruptcy trustee every time you want to make a withdrawal from the account, this would also mean that you will have to go into the branch to withdraw the money and not have the facility to draw the money out of the hole in the wall.
Important: If you are opening a new account ensure that it is done after your bankruptcy order and not before. There is no time limit until you can apply, you could go to court have the bankruptcy order made and then go directly to the bank and open the account there and then.
There are no restrictions on obtaining a bank account, you will find that you will only be restricted to the type of bank account you have; normally this is the banks basic bank account that they offer.
The majority of banks within England and Wales will not deal with people who are bankrupt, there are a few exceptions that I know about who will allow people to hold bank accounts while bankrupt here is a list of accounts that I know about and what facilities they will allow a bankrupt to have.
- Nationwide will allow you to have an account with them, however the account is a savings account, you will only be able to have a cash card with the account, no credit facilities such as a basic debit card, you cannot have standing orders or direct debits. This account is ideal for people who have no commitments where they have no need for standing orders or direct debits.
- Barclays Bank will allow you to have an account with them, again this is their basic account, no basic debit card just a cash card, you cannot setup standing orders with them, however you can have direct debits from the account, which are ideal for paying you normal household bills such as utilities and insurances.
- The Co-Operative Bank will allow you to have an account with them, this is probably the best account to use while bankrupt, you will get a debit card such as a “Visa Electron, in addition you can have standing orders and direct debits. One draw back dependant on how you look at it is that the actual branches are few and far between compared to the rest of the high street banks, to open the account is best done over the telephone and through the post if a branch is not close to where you live. They also offer an online banking facility which makes life easier, another issue with the Co-Op is that you may struggle to open the account straight after the bankruptcy order, and you may have to wait a few months while everything is tided up on your credit file before the account is offered.
More and more people are petitioning for bankruptcy and the above accounts are accounts that I know about who will deal with people who are bankrupt, other banks may accept you however it is best that you call the bank and enquiry if they will deal with people who are bankrupt.
The basic facilities a person will normally need in order to pay for their living expenses are “Standing Orders and Direct Debits”