If you go Bankrupt you are allowed to have a bank account. Nevertheless it is likely that the account you are currently using will be frozen. As a result you will need to open a new one.
- Can you ever keep the Bank Account you currently use?
- Opening a new Account before going Bankrupt
- Should you consider paying for a Managed Account?
- What happens to a Business Bank Account?
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Can I keep the Bank Account I have already if I go Bankrupt?
If you go bankrupt you will often need to open a new bank account. This is because there is a risk that the account you have been using up until the date of your bankruptcy will be frozen or even closed. This can happen whether you owe the bank money or not.
If you have a simple account with no overdraft facility you may be able to keep using it. However you should check with the bank first. If they are unsure it is always best to open a new account.
Your bank may want to you move to a simple account which will remain open after you are Bankrupt. This is generally known as a Card Cash account. It will not offer borrowing facilities. However you can pay in wages and set up direct debits and standing orders. You will also normally be given a debit card.
Can I have a bank account if I am Bankrupt?
It is possible to have your own bank account if you go Bankrupt. What happens to the account you are using now? When and how should you open a new account? To find out more please visit: http://beatmydebt.com/bankruptcy-frequently-asked-questions/will-i-be-allowed-a-bank-account-if-i-go-bankrupt
How do I open a new Bank Account if I am going Bankrupt?
You may decide that you need to open a new account with a different bank. The best time to do this is just before you go Bankrupt. This way you can have it up and running and start to use it so there will be no period without an account once your old accounts are frozen.
**Update** Many high street banks now offer simple bank accounts which are free and which can be kept open after you have gone bankrupt. These include the following:
- Barclays Basic Account (Internet banking withdrawn after you go bankrupt)
- Co-Op Cash Minder Account (Can only be opened before going Bankrupt)
- HSBC Basic Account
- Nationwide Flexbasic Account
- Virgin Essential Current Account
- Yorkshire Readycash Account
Once you are speaking to someone at the bank there is no reason for you not to mention that you are considering going bankrupt. You can then be sure that they will open the right account for you.
Should I use a Managed Bank Account?
Some companies offer a service called a Managed Bank Account. You will certainly be able to open this type of account if you are going bankrupt or are already bankrupt.
The account is managed because it is normally split into two areas. Once your salary or other income is paid in, the amount you need to pay all of your fixed monthly bills is moved automatically into a “bills account”. The remaining money is made available to you in an “access account”. You can use this to pay for all your other variable living expenses such as food, clothing and petrol.
The advantage of a managed account is that the money you need to pay your regular bills should always be available. However these types of accounts normally have a monthly fee of £10-£20 a month.
Given the monthly fee a Managed Account is really only a benefit if you truly believe you cannot manage your money yourself. If you are happy you are able to do this you should open one of the free accounts listed above.
Can I have a Business Bank Account if I am Bankrupt?
If you are self employed your business bank account will often be closed if you are declared bankrupt. This will certainly be the case if you owe money to the bank.
Clearly if you want to carry on running your business having an account that you can use will be important. However if you have had to close your business account it may not be easy to open a new one.
One of the only banking groups who offer new business accounts to people with poor credit ratings is Lloyds banking group (including HBOS). However if you already owe money to Lloyds banking group then even this will not be an option.
The solution to the problem is therefore normally to open a second personal account and use this for your business. Clearly you will have no credit facilities. However you will be able to pay in cheques if necessary and keep your business and personal transactions separate.
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