You can have a bank account if you go Bankrupt. However it is likely the one you are using at the moment will be frozen.
- Can you keep the Account you currently use?
- How to open a new Account for use when Bankrupt
- Should you pay for an Account?
- What if you have a Business Bank Account?
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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
Can you keep the Bank Account you are currently using?
There is nothing to stop you having a Bank Account in your own name if you go bankrupt. However most banks will not allow you to use a current account. This type of facility will be frozen whether the bank is owed money or not.
As an alternative you can open a basic account. These accounts are free and can be used during bankruptcy. They provide all the facilities you need such as a debit card and internet banking but offer no credit.
You should open a new basic account before you go Bankrupt. You can start using it straight away. It will remain functioning after you go through the application as long as you use it simply to deposit your regular income and pay everyday living expenses.
If you are already using a basic account it is likely that you will be able to continue using it after you go bankrupt. However you should check with the bank first.
How to open a new Bank Account for use when Bankrupt
Many high street banks now offer basic accounts which can be used while you are bankrupt. It is therefore relatively simple to chose one which is convenient for you.
Depending on the one you pick you will need to go into the branch and ask to open a basic account or request a postal application form. It may also be possible to open the account over the internet.
A list of banks which are known by Beat My Debt to offer basic accounts which remain open after bankruptcy is given below.
- Barclays Basic Account (Internet banking withdrawn after you go bankrupt)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
If you are unsure whether the account you are considering is suitable do not be afraid to ask. Explain to the bank that that you plan to go bankrupt and check the account will remain open.
Should you pay for a Bank Account?
Some companies offer a service called a Managed Bank Account. You will certainly be able to open this type of account for use after you go bankrupt.
The account is known as managed as it helps you budget. Once your income is paid in the cash you need to pay all of your regular monthly bills is moved automatically into a “bills account”.
As a result of this you should always have sufficient funds available to pay your priority expenses. However these types of accounts come with a cost. There is normally a monthly fee of £10-£20.
A Managed Account is really only beneficial if you truly struggle to manage your money. If you can organise your budget yourself it is unlikely to be worth paying for this service.
What happens to Business Bank Account if you go Bankrupt?
You can go bankrupt if you are self employed. However your business bank account will normally be closed given it is a current account facility.
Clearly if you want to carry on running your business having an account that you can use will be important. However most banks will be reluctant to offer you a new business account once you are bankrupt.
One way to resolve this is to open a second personal account to use for your business. 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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