Coping with Bankruptcy
Coping with bankruptcy can be tough. Depending on your situation, you might have to make payments for three years, you could lose your home (if you’re a homeowner) and it’ll have a serious impact on your credit rating for six years as well.
On top of that, there’s the effect it’ll have on your bank account – and on your ability to open another bank account, if that’s what you want / need to do.
Your ‘old’ bank account(s)
When a bankruptcy order is made, you’ll need to stop using your cheque book(s) and bank card(s) at once, and give them to the official receiver.
Your bank will ‘freeze’ your bank account(s), meaning you’d have to find another way of receiving money and making payments (the ones you’ve usually made by Direct Debit or standing order).
Your bank might let you keep on using your account, but any money in there when the bankruptcy order is made will be classed as an ‘asset’ in the bankruptcy, to be put towards your debts (although the official receiver or trustee may ask the bank to let you have some money for your essential expenses).
Please note that your bank has the right to use any money in your account to put towards what you owe it (if you’re carrying debt in the form of an overdraft, credit card or loan with that bank).
Looking for a new bank account
If you do look for a new bank account, it could be difficult to find a bank that’ll let you open one. You might choose to open a basic bank account (an account which is open to people with poor credit ratings).
Having said that, even basic bank accounts are often unavailable to people who’ve not yet been discharged from bankruptcy, so you might want to look specifically for a ‘bankruptcy bank account‘. This kind of account is usually open to just about anyone aged 18 or over – even if they’ve recently been made bankrupt.
Bankruptcy is a big step, but for someone who’s really struggling with their finances and unable to repay the money they owe, it could be the best way of tackling their money worries and making a ‘fresh start’. Finding out a bit more about your options can make the whole process that bit smoother.
