Bankruptcy and bank accounts, does anybody know.......

Entrepreneur_en_faillite

Just a quickie....

A friend of mine is thinking of becoming a bankrupt, she has been struggling to cope with her IVA and has been advised by an insolvency adviser that she would be better off bankrupt. I have explained all the implications and the stress etc etc, but she has been convinced that bankruptcy is best for her.

She has been told that she will be allowed to keep her bank account. My understanding is that all accounts are frozen at the point you become bankrupt, and that you will have to open a new one the day after your bankruptcy for salary credits etc etc.

Her adviser says that she can keep it because she is not in debt with that particular firm, but does anybody know for sure?

kevker

My reading of the way it works (from experience), is that even though she is not in debt to that bank, her account will be frozen and the Official Receiver will lay claim to any money in that account at the bankruptcy date. The law states that she must not use that money in that account except for day to day essentials. She will need to open a new account. If the bank she is currently with does not mind giving her an account they may open another one for her, but as far as I know, she will not be able to keep her current one. Bear in mind, she will not be able to get a cheque book or a Visa or Switch debit card. Some banks provide a visa electron or a solo card, which are almost as good.

Entrepreneur_en_faillite

Thanks for that. Tis is pretty much what I had assumed, but as I haven't had my meeting with the OR yet I wasn't absolutely sure

fatbelly

Suggest a search on this forum. Addicted2Chocolate has dealt with this a few times recently. I did find this post

but think that somewhere she said that even if the OR doesn't freeze the account, the bank might. She said Halifax always do. I've heard Nat West don't.

I think that if your salary is paid into it, and it's a small amount (how much is that?) in credit, the OR will pass on it.

Entrepreneur_en_faillite

Thank you for that fatbelly, extremely useful!

:xmassign:

I opened a new bank account yesterday with Nationwide - who incidentaly are one of my creditors - it's an online account, no facilities, but it will accept salaray credits and allows SO's and DD's.

Addicted2Chocolate

hello again!
If the account is not overdrawn and is used for receipt of income ( benefits or salary) and the credit balance is needed for day to day living expenses, the OR will not claim the credit balance and a letter will be sent informing the bank of this. Sometimes the bank freezes the account when they see the advert, before they receive the letter. But the OR can contact the bank and request the withdrawal restriction to be lifted. The bankrupt shpould discuss with the bank whether they are going to be allowed to keep the bank account open. It is the banks decision and somne banks do not allow undischarged bankrupts to operate any accounts. Obviously any direct debits to creditors should be cancelled, as no paymetns should be made to creditors after the bankruptcy order.

Entrepreneur_en_faillite

Thanks again a2c

The account I have opened with Nationwide is a brand new one even though I already have an account with them (with approx £8 in it!)

I don't actually want a bank account with anything other than a simple cash card. I'd rather not ever look at another peice of plastic ever again!

My letter from the OR still hasn't arrived, I'm gonna call them again today because this is really tearing me apart, I need closure!