Unfortunately, it's an increasingly common experience with the economy leaving more and more people financially vulnerable.
One of the biggest problems with being made bankrupt is the loss of amenities which many people take for granted, such as a bank account.
We take a look at the rules around bank accounts for bankrupt people and ask the question, can you have a bank account if you go bankrupt?
Opening a bank account when bankrupt
Once you have been declared bankrupt, the chances are that your current provider will close your account and you will lose access to all debit and credit facilities. Your Trustee in Bankruptcy may allocate you a small sum of money in order to purchase essentials, such as food.
This means that you will need to find a new bank account, a task which can feel almost impossible. But without a bank account for bankrupt facility, it can be very difficult to pay for things, a situation which means that those who are bankrupt miss out on all the best deals.
Unfortunately, finding a bank account for bankrupt individuals is not an easy task as many providers will no longer offer this facility.
However, many high street banks provided basic bank accounts for undischarged bankrupts .
There is nothing to prevent banks from legally offering a bank account; if you want to open a bank account online when bankrupt, or even in the branch, there is no law which says you can't.
However, in theory the Trustee in Bankruptcy could pursue the bank for money they let leave your account. Although this is highly unlikely and only possibly in certain circumstances, it's enough to deter many banks from offering current accounts for bankrupts.
The good news is that there is currently an amendment to a Bill going through Parliament which if passed, will provide banks with more protection in the hope that it will encourage them to help a bankrupt open a bank account.
Does this mean I can't open a bank account if I am bankrupt?
Thankfully, no. Although the vast majority of the main providers will not provide this facility, there are other banks who will.
If you carry out a basic bank accounts for bankrupts comparison you will see that there are a number of providers, who you may not be as familiar with, who are willing to not only offer bank accounts for discharged bankrupts, but also those whose bankruptcy is still ongoing.
So what bank or building society can you have when bankrupt?
Because the deals on offer change so frequently the best way to find out what's currently available is to compare bank accounts. This will provide you with the most up to date information without having to trawl through numerous bank websites.
However, because there is an element of risk which is higher than normal, you might find that there are only bank accounts that have to be paid for available to bankrupts. This may seem frustrating, especially whilst money is a problem, but the amount you could save by having accessing to an account probably outweighs the potential cost.
Getting a bank account once you are discharged from bankruptcy
Finding bank accounts for ex bankrupts is far easier although the chances are that you still won't be able to access any credit, such as an overdraft facility for some time to come.
Bank accounts with cheque books for bankrupts may be difficult but you could get access to some types of debit card, such as a Solo card. This can be a real help in managing your money more efficiently.
Bank accounts for people who have been bankrupt are available from some high street providers but you can expect to be credit checked. It's therefore essential that your credit file has been updated with your discharge from bankruptcy.
If you don't want to go through the hassle of a credit check, you can still opt for one of the prepaid accounts. These often come with a Mastercard, VISA card or the equivalent, again with no credit limit just a prepaid top-up facility. These are usually available to undischarged bankrupts too, as well as other individuals with a less than perfect credit rating.
Despite the restricted choice you should still take the same approach to finding a bank account if you're bankrupt.
Compare your options and find the bank account for bankrupts that gives you the best facilities for the lowest cost.