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Can you have a bank account if you go bankrupt?

Published: 13 June 2024

Your bank account and bankruptcy

Are you worried about what will happen to your bank account if you go bankrupt? Don’t be. You are allowed to have an account in your name.

This guide explains which bank accounts stay open while you are bankrupt and how to make sure there is no interruption to your day to day banking needs.


Will your bank account be closed if you go bankrupt?

When you go bankrupt, some types of accounts are closed and others remain open. It depends on the type of account you have.

All standard current accounts in your name will be closed. This will happen regardless of whether you owe money to the bank or not. The bank will close the account even if you don’t have an arranged overdraft facility.

The reason for this is simply banking industry policy. Banks just don’t allow people who are bankrupt to operate current accounts.

The good news however is that you can have a basic bank account. Any such account in your name will remain open.

When you complete your section 3 of your application form – ‘Bank Accounts and Savings’ – make sure you list your basic account and mark it as your main account. The Official Receiver will send a letter (known as the BANK2 letter) to the bank confirming they have no interest in it.

Unsure whether your account is basic or not? Check the name of the account on the bank’s website or give them a call to get confirmation. If it’s not, you will have to change it.

Should you open a new bank account before going bankrupt?

If you have a current account, the bank will freeze you out shortly after you go bankrupt.

Under normal circumstances you will be locked out of your internet banking and mobile banking app within a few days. Because of this, you need to open a new basic bank account to use instead.

Your new account needs to be basic. This type of account still gives you all the banking facilities you need. These include internet and mobile banking, a debit card and the ability to have your income paid in and to set up direct debits. However, it will not offer you any credit facilities.

Generally speaking, it is best to open your new basic account before you go bankrupt.

This will give you the opportunity to ensure it works properly before your old account gets closed. It will mean you have no time where you have no access to a bank account at all.

You must list your new account on your application as your main bank account. It will remain open after you go bankrupt. The bank does not mind because they will not offer you any credit with the account. 

Here are some examples of basic accounts which we know remain open after you go bankrupt:

  • Monzo standard account
  • Starling standard account
  • Co-Op Cash Minder
  • Nationwide Flex Basic
  • NatWest Foundation
  • Virgin Money M Account

You can open a basic bank account even if you already have a poor credit rating.

new bank account before going bankrupt

Can you open a bank account after you go bankrupt?

If you are already bankrupt and the bank has frozen your account, what can you do?

Unfortunately, if it was a current account, it will not be possible to re-instate it. For this reason, you now need to focus on opening a new basic account. You are allowed to do this after you have been made bankrupt.

It is possible to apply for a basic bank account at any time after you have gone bankrupt. Your application should be successful because you don’t need to pass a credit check.

You can apply for more than one account if you wish. So if you start with one bank and find you don’t like them for some reason, you can just open another.

Alternatively you might want one account for household bills and another for different expenses. If you want this type of facility, consider one of the online banks such as Monzo or Starling. These allow you to create different ‘pots’ of money within the same account to use for different purposes.

Basic bank accounts do not require yo to pass a credit check. As such, they are accessible if you are already bankrupt or are using another debt solution such as an IVA or Debt Management Plan.

What happens to a joint account if you go bankrupt?

How bankruptcy affects your joint bank account depends on whether or not it is a current account. If so, the account will be at risk of being frozen.

If there is no outstanding overdraft on the account, the best policy is to take your name off it before going bankrupt.

The other account hold will then be able to continue using it as normal. You can open a new basic account in your name only to use while you are bankrupt.

If there is an outstanding overdraft on your joint account, you will not be able to take your name off it.

Your bankruptcy will protect you from the overdraft debt. However, because it is a joint and several debt, the other account holder will still be liable to pay 100% of the outstanding balance (not just 50%).

what happens to a joint account

How long after going bankrupt can you get a current account again?

You will not be able to get a new current account until after you are discharged. Under normal circumstances this happens automatically after 12 months (1 year) from the date you went bankrupt.

That said, even after you are discharged, you will normally need to wait for your credit rating to start to repair before you can successfully apply for a current account.

The credit repair process takes time. As a rule of thumb you might have to wait a further year or two.

However, there should be no reason for you to be in a rush. Other than access to an overdraft facility, there is usually nothing a current account will give you that you don’t already have with your basic account.

Focus first on repairing your credit file. One way of doing this is to us a credit repair credit card. Once your score starts to improve, your chances of a bank accepting you for current account will greatly improve.

   Written by James Falla

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