Bankruptcy And Your Bank Card

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Do you lose your bank card when you go bankrupt?

Bankruptcy affects you in many different ways. It makes it very difficult for you to get credit. It can affect your ability to be a director of a company. And, it can mean you losing your home or other assets.

But, how does going bankrupt affect your bank account? Can you keep your bank card or will your bank cancel it and take it off you? We answer your questions here.

  • What happens to my bank account in bankruptcy?

When your bank finds out about your bankruptcy order they will freeze your account. You should also immediately stop using your cheque book and bank cards and hand them over to the official receiver. However, this may not be the last you see of your bank cards, as we explain later.

As your account will be frozen, you will also need to make alternative arrangements for receiving money into your account (for example, wages) and for paying direct debits and standing orders.

If you try and open another account before your bankruptcy is made, this will also be frozen.

  • What happens next?

After the bankruptcy order has been made and your bank account has been frozen, the official receiver will find out from the bank what is in your account.

If you have money in your account at the date of your bankruptcy, this will be claimed by the official receiver or the trustee in bankruptcy as an asset. It will be used to repay some of your debts to some of your creditors.

However, if the official receiver decides that you need some of the money in your bank account for necessary living expenses they will tell the bank to release it to you. The official receiver will tell your bank how much to release to you and ask for the balance to be sent to them to distribute to your creditors.

In every case, it is your bank that will then decide whether or not it will let you carry on using the account. The official receiver is not involved in the decision. Your bank will also decide whether it returns your bank card to you and lets you continue to use it.

If your bank account only contains the money that you need for your day to day living expenses, it is likely that you will be able to keep your bank card.

  • Can I open a new bank account?

After your bankruptcy order has been made, you may open a new bank or building society account if you wish. If your existing bank won’t let you continue to operate your account or use a bank card, you may have no choice but to do this.

However, you should tell the new institution that you are bankrupt. It is for the bank or building society to decide whether they will let you operate an account.

As a bankrupt you might find it difficult to open a new bank or building society account. The BBC reported in September 2012 that here is now only one bank that will offer a bank account to you in the 12 months after a bankruptcy order has been made.

Undischarged bankrupts can typically only open a ‘basic bank account’. These accounts have no overdraft or monthly fee and a limited number will come with a very basic bank card.

  • What to do next?

If you have debt problems and you are worried about what will happen to your bank card and bank account, you should speak to a professional. By taking advice on your options you may be able to tackle your debts while keeping your debit card and your bank account.

Money Helper (formerly The Money Advice Service) is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here. is not regulated and is for fact-finding only. We can help assess your circumstances and point you to someone who can provide available options that suit your debt criteria.

If an individual meets the required criteria for an IVA based on our packaged case, this will be passed to one of our partnering Insolvency Practitioners to get direct advice. If the individual does not meet the criteria for an IVA, The Insolvency practitioner is able to provide contact information for other third-party organisations that offer advice on other available debt solutions. For full details view our Privacy Policy.

If you decide that an IVA (Individual Voluntary Agreement) is not the best option for you after we have prepared the necessary information, you can opt out of the process and have all of your details removed. We receive a fee from the third party that we refer you to for introducing you and for the work we have completed. However, you will not be responsible for paying this fee. The third party will contact you directly to continue the process of your IVA application or to explore other solutions, but only with your permission after we have introduced you.